The Africa Connected series profiles emerging economies in Africa to highlight that the continent is open for business. This week, journalist Nikiwe Bikitsha flew into Mozambique to explore the investment and business opportunities on offer.
Journalist Nikiwe Bikitsha on the sands of Mozambique, with a ship and a hawker in the background. Two strands of the country’s economy.
Famous for its abundant natural resources, Mozambique emerged from a bitter civil war in 1992 that left little time for development. However, in the years that followed, it became one of the fastest growing countries in the world.
Unfortunately, earlier this year, the southern African country made the news for all the wrong reasons: evidence of secret government loans emerged, causing the IMF and Western governments to cut aid. Subsequently, the metical currency dropped by 40% and inflation soared into the double digits.
Interviewing Mhamud Charania, Chairman of Mozambique’s biggest fast-moving-consumer-goods (FMCG) company ADC, Nikiwe found that the current economic crisis is hitting consumers hard due to fiscal policies aimed at controlling inflation. As a result, everyday Mozambicans don’t have disposable income, so the FMCG sector is struggling. Mr Charania also shared that transporting goods is almost prohibitively expensive due to the dire state of Mozambique’s infrastructure and logistics networks. Thus, the company imports 70% of its products from abroad.
Yet, there is growing hope: Fausio Mussa, Standard Bank Chief Economist in Mozambique, believes that the currency is showing signs of appreciating and stabilising, and the propects of natural gas development has improved investor sentiment. But, he stresses “tight” policies must be implemented before macroeconomic stability is achieved.
Until the next economic turnaround, social entrepreneurs are still exploiting lucrative areas of investment. Maputo-based UX Technologies, for example, jump-started the underdeveloped tech space with Biscate, a feature-phone accessible platform that connects the labour force with potential employers, thus providing some relief to the country’s current unemployment crisis.
Located in Maputo’s largest suburb of Matola, the Sunshine Nut Company has also successfully struck a balance between profits and community outreach. While on a tour of the cashew nut factory, Nikiwe learned that the global cashew exporter reinvests 90% of its proceeds towards transformation initiatives.
No economic exploration of Mozambique would be complete without looking at its tourism industry. Though one of the mainstays of the economy, Jerry Manussa, Marketing Manager of the Mozambique Tourism Authority, says the sector is not doing as well as it could, decreasing to 1.6 million visitors in 2016 from 2.2 million in 2012. He attributes this mostly to news of political instability. However, Mr Manussa assures potential visitors – and investors – that Mozambique is completely safe, with the conflict limited to isolated areas.
Like it’s thriving arts and culture sector (in which the government has enthusiastically invested), resource-rich Mozambique will prosper if the right steps are taken by its public and private sectors. Mandisi Mphalwa, SA High Commissioner to Mozambique, believes the country remains a viable place to do business, while Standard Bank, having operated in the country for 120 years, sees signals of resilience.