Mozambique to set up Industry Fund, possibly by December – report

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Mozambique to set up Industry Fund, possibly by December – report

2:32 CAT | 23 Jul 2019

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A fund for the revitalisation of industry in Mozambique is expected to be set up by next December, with the World Bank and Chinese investors among those interested in financing the project.

The National Investment Investment Bank (BNI) said in Maputo on Monday that the creation of the fund for the revitalisation in the country of the industrial sector, which represents an average contribution of 9% to the country’s gross domestic product, was at a very advanced stage.

The initiative was launched about eight months ago with the signing of a tripartite memorandum between the Ministry of Industry and Commerce, the National Investment Bank and the Confederation of Economic Associations of Mozambique (CTA).

“Right now we are negotiating with several investors. China is one of the major stakeholders in the project, as well as the World Bank and other financial institutions already approached,” Tomás Matola, Chairman of BNI’s Board of Directors (PCA), said.

Regarding China, the BNI chairman said that a summit between Beijing and Maputo was scheduled for the near future, and would aim to address technical aspects and means of financing industrial projects.

Although declining to disclose the amounts already promised, Matola said that the most important aspect was the manifestation of interest. “I do not think this is the right time to talk about amounts. But there is a certainty: the fund will be ready this year,” he stated.

This experience could be replicated in other strategic sectors of the economy, with emphasis on the oil and gas industry, infrastructure and housing, among others.

In his opening address to the seminar on the challenges of the industrial sector in Mozambique, Minister of Industry and Commerce Ragendra de Sousa emphasised that the sector continues to be one of the government’s priorities in the structural transformation of the economy, growing gross domestic product, increasing competitiveness and trading in the world market.

The minister noted several challenges for the sector, with emphasis on access to adequate funding, as well as relevant information on access to raw materials and to the market for the exposure of their products.

Setting up a fund to promote, boost and finance domestic industry takes place within the implementation of one of the objectives advocated in the Government-approved Industrial Policy and Strategy 2016-2025, the minister said, and was designed to focus on sectors such as food production, agro-industry, clothing, textiles and footwear, non-metallic minerals, metallurgy, metal product manufacturing, wood processing and furniture, chemicals, rubber, plastics, paper and printing.

The president of the CTA, Agostinho Vuma, then traced the decline of Mozambique’s manufacturing sector over the last 10 years. By way of illustration, in 2017, its contribution to GDP was 8.7%, against 11.8% registered in 2008.

“It is noted that the loss of 300 medium-sized enterprises between 2003 and 2015 implied a fall in the gross added value of the manufacturing industry by about 9.4% in 2015 and about 13% in 2018, which has contributed to the reduction of the weight of this sector in the economic activity year after year,” Vuma said.

In addition, he said, one of the main obstacles faced by manufacturing was high operational costs and the lack of financing aligned to the reality of the country.

His analysis suggested that for every monetary unit generated in manufacturing, an average of 27% went to raw material. “We can consider that raw material has a crucial role in the sector’s competitiveness,” he concluded.

By Edson Arante

Source: O País