Invest in Mozambique and see light at end of tunnel

Mozambique, like Angola and Guinea Bissau, is one of Africa's Portuguese-speaking countries which suffered heavily during the Cold War - a reckless battle of ideas, resources, territory and power between the communists of ruling Frelimo and capitalist South Africa-backed Renamo. It is now an impoverished country looking for investors to boost its socio-economic development.

“We have plenty of water, power and labour for potential investors, a huge availability of land at almost zero cost for any kind of business, and an easy access to regional and international markets,” Mussa Usman, deputy-director of Mozambique's Investment Promotion Centre, told delegates.

“Our government is committed to attract and keep foreign investment.”

However, Mozambique has a poor infrastructure - possibly a legacy of a lengthy civil war - and getting a high-skilled workforce for certain strategic positions is a major problem.

Furthermore, Usman conceded that getting a piece of land for business is a lengthy process and that long-term finance is also unavailable. Mozambique's bureaucratic processes and its snail-pace justice could also pose serious obstacles to potential investors looking to make money in poor-rich Africa.

Land is a state-owned asset which is not sold, mortgaged or pledged, but can be obtained on concession of 50 years renewable given that the deal is approved by the government, David Robbertze, SA-Mozambique Chamber of Commerce CEO, said.

Despite these challenges however, investment opportunities in Mozambique are plenty and begging to be grabbed with both hands.

Ernesto Mafumo, Institute for SMEs deputy director, said that countless opportunities exist, especially for SMEs, in the extractive industry (salt and ceramics), logistics (road transport, warehouse and silos), tourism (accommodation and hospitality), services (consultancy for SMEs) and construction (building materials).

Micro-enterprises account for 90.1%, small and medium businesses make up of 6.6% and 0.7% respectively, Mafumo said. Large enterprises account for a miserable 0.1%.

He also said that the owners of several out-of-business factories (glass, textiles, paper, garments, juice and batteries) are desperately looking for partners to put them back on track.

There are also investment opportunities in the agriculture sector, especially with products such as rice, sugarcane, cotton, corn, flour, tea, coffee, cassava, fruits, bio-fuels and many more. Opportunities also exist in mining (bauxite, uranium, diamonds, oil and gas, gold, titanium and marbles and granites).

Investments in the mining sector increased to US$804.3 million in 2008 from US$424.7 million in 2007 and a mere US$100.88 million in 2004, Dr Benjamin Chilengue, director in the Ministry of Agriculture, said.

Mozambique has a population of 20.5 million people. Its GDP grew by 7% in 2008, and exports totalled US$2.4 billion and imports amounted to US$2.9-billion in 2008. The inflation rate is estimated at 11% and coming down fast.

It takes about 29 days to start a business in Mozambique compared to 155 days in DRC and some 119 days in Angola, Robbertze said.

Hercilia Hamela, of the Ministry of Agriculture's CEPAGRI (Agriculture Promotion Centre), said that her country's farming structure is made up of 99% of small-scale farmers and only 1% of medium and large-scale farmers, adding that 7 million hectares of land is available for farming.

The provinces with a high availability of farming land are Zambezi (1.36 million ha), Niassa (1.22 million ha) and Inhambane (1.07 million ha). Gaza, in the south near Maputo, also has some 866.780 ha).

This information is not enough but vital to persuade SA companies to head north-east and invest there. Historically, SA is ‘indebted' to Mozambique in one way or another. So by investing there, SA companies could be indirectly repaying that ‘debt', harvesting higher returns and seeing light at the end of tunnel.

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