Watch: State business sector should be profitable – FinMin

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Watch: State business sector should be profitable – FinMin

7:11 CAT | 21 Aug 2017

TVM / Adriano Maleiane, Minsiter of Economy and Finance

The Mozambican Minister of Economy and Finance, Adriano Maleiane, on Monday challenged all companies in which the state holds shares to be more profitable, and to transform themselves into true management models.

Speaking at the opening of a planning meeting of the Institute for the Management of State Holdings (IGEPE), he stressed that the companies in the state business sector must cease to be a burden on the state budget, and instead become a source of revenue for the state.

“We have to look at the public companies, and the other companies in which the state owns shares, as models of management, models of governance and above all as contributors to the state”, declared Maleiane. “The state regards these companies as a source of revenue and not as something on which money should be spent”.

The meeting is intended to reflect upon planning and accountability, and how to attain sustainability. It is attended by the managers of the companies in which the state has holdings.

The companies concerned range from giants of the public sector, such as the public telecommunications and electricity companies, TDM and EDM, to small and bankrupt firms which IGEPE is attempting to liquidate.

IGEPE managing director Raimundo Matule said that 29 companies on IGEPE’s books are not viable and must be liquidated. Ten of these have now been dissolved, he added, and the process of winding up all these failed companies is expected to continue over the next four years.

These are small companies, most of which fell into the hands of the state at the time of independence in 1975, when their Portuguese owners abandoned them. As from the mid-1990s many were part privatised, but the new owners proved unable to make the investments required to rescue them.

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“For more than 20 years, these companies have not really existed, or their existence is merely legal”, said Matule. “It makes no sense for them to remain part of IGEPE’s portfolio”.

There are 43 companies on IGEPE’s books that Matule said are worth investing in. In 27 of them, the state is the majority shareholder, and in the other 16 it has a minority holding. A key target for the current five year period (2015-2019) is that all, or most, of these companies should pay dividends to the state.

Most of the dividends the state currently receives come from the companies in which it is a minority shareholder. These include the Mozal aluminium smelter, on the outskirts of Maputo, the Mozambican subsidiary of the Coca-Cola company, and the largest of the commercial banks, Millennium-BIM.

The dividends were on the increase, said Matule, but not all the companies are able to pay dividends. Among those not paying dividends are the publicly owned fuel company, Petromoc, and Mozambique Airlines (LAM).

As for the merger of TDM with the mobile phone company M-cel, Matule said this could take up to 18 months, after which “a strategic partner” would be sought which could invest in the development of the new company resulting from the merger.