From the end of the 1970s up to the 2000s, governments in the developed and developing countries were involved in implementing economic, social, political, cultural and legal reform programs. The first wave of public sector reforms came under the Structural Adjustment Programs (SAPs) which were implemented in most of the developing countries from the late 1970s to the early 1990s. The second wave, which started in the early 1990s, was propelled by influence generated by proponents of the New Public Management (NPM) school of thought. The major objective of reforms was to enhance performance and productivity in public sector organizations including higher education institutions. This practice was grounded on certain theories and models, mainly public-choice theory and goal-setting theory under the New Public Management (NPM) model. The Government of Mozambique has adopted a performance-based approach to implementing public sector reforms. This study, which employs a qualitative literature survey with secondary data as its primary research source, discusses and analyzes literature on the design and implementation of a Performance Management System (PMS) in the public sector including public universities of Mozambique. The study also discusses the origins and evolution of the theories which are linked to PMS and their applicability to the public universities of Mozambique as they started embracing PMS as a tool for improving performance of individuals and the organization as a whole.