Last year it was difficult to find an optimistic business person. There was good reason to be gloomy.
The World Bank reports that Mozambique continues to suffer from the effects of the 2016 hidden debt crisis, in the form of secret loans of around US$2 billion, which led to the withdrawal of aid and support. Real gross domestic product (GDP) growth slowed to 3.7% in 2017, down from 3.8% in 2016 and well below the 7% GDP growth achieved on average between 2011 and 2015.
However, when measured by the increase in the volumes of freight moving through the country and the enquiries that logistics companies are receiving, it would seem that business is trading the country out of the mess the former government leadership created. For companies wanting to invest in Mozambique to be in at the start of any upturn, US government agency Export.gov says “creating local partnerships can be a useful way to help navigate the not so obvious business market”.
It adds: “Investors and exporters should make frequent visits to Mozambique to establish new contacts and maintain current ones.”
“Frequent visits” can be costly. All foreign passport holders need to apply for a visa prior to arrival in Mozambique. Multiple entry business visas are available. A three-month multiple entry visa will cost a South African passport holder around R3 000. Return flights between Johannesburg and Maputo are available for around R3 500. Once in Maputo, according to crowdsourcing site Numbeo, consumer prices in Maputo are nearly 3% higher than Johannesburg. Rental prices are 17% higher in Maputo, and groceries cost around 1% more in Maputo – particularly if you shop at the markets. That is where local knowledge is so important – Mozambique does not work the same way as South Africa or most of its trading partners. For a start, approximately 65% of the Mozambican gross national product is generated by informal businesses. The formal sector accounts for only 32% of employment opportunities. Then there is the red tape.
“Most companies cite the slow pace of conducting business as one of the main challenges in Mozambique, mainly due to the lack of human capacity in areas necessary for business,” says Export.gov. There are some improvements, as reflected in the more optimistic business mood. The 2018 Ease of Doing Business Report ranks Mozambique 109th in trading across borders, up from 129th in 2016. This is due to a combination of investment in the Maputo-Matola port complex, the implementation of an electronic single-window system, and a reduction in the time taken to clear goods by introducing administrative improvements at customs.
Thanks to these improvements and the resilience and local knowledge of the logistics sector, shippers and traders in the region are taking more interest in the three main ports of Maputo, Beira and Nacala. Freight is moving, and there is capacity to handle higher volumes at the ports – which is attracting investment in warehousing and the renewal of fleets.
Mozambique is very definitely worth a visit for anyone wanting to diversify their logistics chains or their manufacturing and trading bases.
More than seven million Mozambicans work in the informal sector, with open-air markets and roadside shops in both residential and rural areas continuing to compete successfully against formal retailers.
