Mozambique: Some companies affected by riots will cease to exist, CTA tells Minister

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Mozambique: Some companies affected by riots will cease to exist, CTA tells Minister

5:37 CAT | 11 Feb 2025

Photo: Ministry of te Economy

The Confederation of Mozambican Business Associations (CTA) has warned that some companies affected by destruction and looting during the post-election crisis are facing such deep financial crisis that they will no longer be capable of operating.

A CTA delegation gave this warning on Monday, in Maputo, during a working meeting with the Minister of the Economy, Basílio Muhate. The meeting aimed at finding ways to repair the country’s economy, much of which is lying in ruins following the December looting.

The CTA estimates that between 30 and 40 per cent of the country’s industrial and commercial fabric has been wrecked.

According to CTA spokesperson, Paulo Oliveira, the confederation is still surveying the damage caused by the riots, but some scenarios can already be predicted.

“We’re carrying out the study at the moment, together with the Ministry of the Economy, to assess the destruction, but clearly there are hundreds of companies that won’t open again”, he said.

“We’ve come up with a set of measures to ease some of the burdens, including deferrals of tax payments. We’ve also come up with some real proposals so that our country’s economy can develop, namely the upgrading of the main south-north highway (EN1), which is very important. It’s our backbone, where all our goods pass from north to south”, Oliveira said.

READ: Mozambique: Minister of Economy meets with CTA, business representatives – photos

The CTA also called on the government to reduce taxes on basic products, especially fuel.

“We also talked about the payment of tollgates, about finding models that are more sustainable and more comfortable for all users”, he said. This follows the sabotage of tollgates, instigated by former presidential candidate Venancio Mondlane, in which eight tollgates, operated by the public company Revimo, were destroyed.

The CTA is also calling on the government to set up a mutual guarantee borrowing fund. CTA chairperson Agostinho Vuma argued that the Guarantee Fund is essential to allow the affected companies access to credit and to resume their activities. He argued that the banks demand guarantees before they will grant loans, and without the guarantee, many companies will not be able to survive.

“The Guarantee Fund can be an instrument for sharing the risk between the banks and the small and medium enterprises (SMEs), in that the banks need guarantees that the loans will be repaid”, said Vuma.

In response, Basílio Muhate guaranteed that the government is in talks with the commercial banks to facilitate the financing of the affected companies, and that the CTA will be included in this process to guarantee effective solutions, adapted to the reality of the private sector. “Work with the commercial banks is under way, and a representative of the CTA will be invited to participate”, promised Muhate.

READ: Mozambique: Chapo meets with bank CEOs

As for setting up the Guarantee Fund, Muhate said this measure is already at an advanced stage of implementation, and just needs some technical adjustments before it is put into operation.

Source: AIM