Mozambique: High fuel cost stifling companies – CTA

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Mozambique: High fuel cost stifling companies – CTA

4:24 CAT | 28 Apr 2020

in file CoM

Taking stock of the first 15 days of state of emergency measures imposed to counter the spread of the new coronavirus, companies are reporting dozens of constraints on production.

The Confederation of Economic Associations of Mozambique (CTA), last Friday (23) said that businesspeople were unanimous in pointing out the high cost of fuel as contradicting expectations created by the fall in the price of oil in international markets, including in countries in the SADC region, such as Malawi.

Against this background, CTA is of the opinion that a downward adjustment in fuel prices would help minimise operating costs for companies, especially those in the transport sector, serving as a cushion for public and semi-collective passenger transporters currently facing restrictions on the number of passengers they can carry, with the resulting negative repercussions on their profits.

In a press conference led by the President of the Department of Financial and Fiscal Policy at CTA, Bernardo Cumaio, the business association pointed out that another challenge affecting the private productive sector is the continuing armed violence against social and economic targets, mainly in the centre of the country, where, in the districts of Sussundenga and Dombe in Manica province, armed men have been attacking industrial units, for example Mozbife, which guaranteed the supply of meat to the main consumption centres.

“The significant costs arising from the mandatory quarantine for Mozambican truck drivers, when they travel to unload goods in some countries in the region, such as Zambia, for example, where they are required to stay for approximately 14 days for each entry to that country. Here, the CTA believes that greater coordination at SADC level, suggesting the possibility of following the model adopted for truck drivers entering the Republic of South Africa,” Cumaio said.

During the first fortnight of the state of emergency, the CTA further found that companies in the tourism sector continued to face major challenges, mainly due to the seasonal characteristic of their activity, whose peak occurs only in the festive season and at Easter time. Having lost the first season (Easter), companies in the sector were suffering from the perverse effects of the current economic context while still enduring high electricity bills.

Entrepreneurs are unanimous in stating that the implementation of the measure on a third of workers and labour shifts has also challenged production and productivity, and called on the government to offer a better understanding of the measure.

“The CTA considers that, in addition to the (tax and customs) measures already approved by the government, the adoption of an exceptional measure to reduce water and electricity costs may contribute to ensuring the survival of companies in this sector and guarantee the maintenance of jobs,” Cumaio said.

Regarding the tourism sector, the CTA says it has registered excessive inspections of economic activities, for example in Mabote, Inhambane province, where the only hotel unit was forced to close its restaurant, which the association considers to be outside the provisions of the state of emergency.

According to the CTA representative, the scenario reported above is due to differences of interpretation within the various enforcement regimes, leading to undue sanctions. Businesspeople are calling for harmonisation and better training.

The CTA also voiced concern regarding the organisation of agricultural activity in the context of the restrictions imposed by the state of emergency, especially as the marketing of cereals such as corn, soybeans, pigeon peas and more will begin in May, pointing out the need to find exceptional ways to support this critical activity.

In view of the constraints the business sector is facing, the CTA considers it a matter of urgency to adopt corrective measures, and “will continue to work with the government to respond and guarantee the functioning of companies as guarantors of our economy”, Cumaio said.

By Evaristo Chilingue

Source: Carta de Moçambique