Mozambique and Portugal on Monday signed agreements on co-operation in the military and transport sectors and also amended a 1991 deal to scrap dual taxation on their countries' nationals.

Portuguese investment into its former colony has declined in recent years, and President Anibal Cavaco Silva began a three-day official state visit to Mozambique on Monday aimed at strengthening economic and other ties.

The new agreements, effective immediately, include the introduction of a single driver's licence for both countries, while Portuguese army officials will offer military training to their Mozambican counterparts.

"We hope that this visit could open a new cycle of cooperation especially in the economic and business spheres," Silva told a joint press conference with Mozambican President Armando Guebuza.

In 2007, Portugal ranked seventh for foreign direct investment into Mozambique, behind China, South Africa, UK, Mauritius, Switzerland and the United States.

"The environment is (now) favourable for intensifying our cooperation, and bilateral economic ties should be stepped up to the benefit of our peoples and our countries," Guebuza said on Monday.

Mozambique gained independence from Portugal in 1975.