Linking local business with mega-projects in Mozambique

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Linking local business with mega-projects in Mozambique

10:05 CAT | 02 Feb 2017

The INFRA-GAS PROJECTS 2017 summit highlighted the need to intensify interactions between multinationals and local operators.

It has become trite to say that Mozambique is emerging as a global gas giant. It is less evident, though, to what extent Mozambicans will participate in the country’s energy-driven growth. Interestingly, the second edition of the Infrastructure Gas Projects Mozambique Summit 2017 (the Infra-Gas Summit), held last Tuesday in Maputo, focused on the various potential interactions that could arise between foreign multinational companies and local Mozambican businesses.

According to Paulo Fumane, Head of the Confederation of Economic Associations of Mozambique (CTA), those interactions should start at the very beginning, when foreign companies seek to position themselves in Mozambique. “It may mean retaining local legal advisors, for example,” the director of the Mozambican government’s official private sector dialogue partner explains.

He also welcomes the US Embassy’s Maputo Trade Department initiative which will launch a series of oil and gas workshops later this month drawing local businesses’ attention to potential partnerships. The gas sector alone presents huge opportunities for logistics operators in construction, transport, storage, and in some parts of processing and distribution, accommodation, personal services and so on.

For its part, ENI East Africa, which also attended the summit, has launched an online application platform for Mozambican businesses. The platform requires exhaustive information about operations, financial situation, work ethics and experience, as well as legal documents. ENI wants to ensure that it contracts with the right local partner, while keeping records of their selection process for reasons of transparency.

For example, its Mamba project foresees, in the initial stage, the construction of two onshore LNG trains with a combined capacity of 10 million tons a year. It also plans to drill 16 sub-sea wells from 2022 on, producing some 340 billion cubic meters of gas. Non gas-related activities from which local businesses can benefit include catering, accommodation, import-export services, medical facilities, customs-related services and car-rental and maintenance.

What, though, is a “local business”? A Mozambican-registered company which hires the bulk of its workforce outside of the country? Or a foreign company employing a predominantly Mozambican workforce? So far, the first category seems to predominate. But a few players are making some attempts to reverse the trend – like the logistics giant Agility Africa.

This global efficient supply chain provider aims to build local capacity through skills transfer and the optimization of local contractors. Active in Africa for about 60 years and with annual revenues of more than US$4 billion, Agility Africa now offers internship training programs in logistics, management and leadership in Mozambique. Nearly a hundred percent of its employees in sub-Saharan Africa are actually Africans.

“At Agility, we’d rather put our dollars in Africa rather than anywhere else,” CEO Geoffrey White says. Speaking at the Infra-Gas Summit, White stressed the strategic importance of maximizing Mozambican-based facilities as well, so as to offer in-country end-to-end solutions to customers. “In quality and on time,” his slogan goes.

The group currently delivers logistics solutions such as freight and material management systems to the Afungi LNG projects in Cabo Delgado province in northern Mozambique. But the scope of its activities goes far beyond the energy sector, and includes chemicals, defense and government, automotive and retail components.

Organized by African Influence Exchange, the Infra-Gas Summit has indirectly touched the core issue related to energy-driven economies, especially in the developing world: productivity. Local contractors, wherever they are, will participate in the growth of their respective economies only to the extent to which they are capable of offering efficiencies to their larger business partners. This, in turn, depends on the quality of training and skills of their own employees, from management to staff workers.

According to British Petroleum, in a separate report, while Africa will account for almost half of the increase in world population over the next 20 years, it will contribute less than 10 percent of the expected increase in gross domestic product. This may well be the case unless productivity in the African continent finally starts to converge with best practice.

By Levi-Sergio Mutemba