Limits, scope and challenges around economic stimulus measures – entrepreneurs remain critical – MediaFax

Login

Register

http://www.clubofmozambique.com/

Limits, scope and challenges around economic stimulus measures – entrepreneurs remain critical – MediaFax

3:43 CAT | 12 Aug 2022

in file CoM

The Association of Commerce, Industry and Services (ACIS), a business organisation with a little less formality in the face of political power, reacted less than 24 hours after President of the Republic Filipe Nyusi announced his Package of Measures to Stimulate the Economy.

The entity, unlike the conformist position demonstrated by the Confederation of Economic Associations of Mozambique (CTA), presents a critical position of distrust and, above all, demands that the ideas presented are effectively implemented.

Furthermore, there are issues which the organisation says that the government could adopt to ensure a vibrant business sector responsible for job creation and GDP growth.

Specifically, ACIS points to the fact that the measures announced do not point to solutions that can, in the short term, solve the most critical problems that companies face today. That is, the organisation notes, companies are experiencing difficulties and closing their doors at this present time. According to ACIS, these are the issues that should also be tackled in order to ensure that the evils that have plagued companies for years are corrected.

The point is that, for ACIS, attributing the problems that companies are currently complaining about to the war between Ukraine and Russia is neither real nor honest.

The organization notes that, for years, Mozambique has been facing structural problems for the progress of the business fabric and adds that, in recent years, the scenario has reached degrading rates due to, for example, issues related to natural phenomena [cyclones and heavy rains], and the political and military tension that, for many long years, characterized the central area of the country, as well as terrorism in Cabo Delgado.

“Mozambican companies have suffered a lot from natural phenomena such as cyclones, which occurred in the central and northern regions of the country, the phenomena of war, conflicts in the central region, terrorism in Cabo Delgado and Covid-19. And there were never any structural measures to recover the business fabric,” said Edson Chichongue, executive director of ACIS, pointing to the need for bolder solutions, but also for measures with immediate impact.

On the other hand, ACIS sees a big problem in the human resources of the state. That is, there is a history that points to the public employee as a figure who often “complicates” the entire process of implementation of actions legally provided for, aimed at the facilitation of business and the lives of citizens in general.

Faced with this reality, ACIS points out the need for the government to submit civil servants to training and alignment sessions, all in the perspective of bringing clarity on the procedures that they must follow in the processing of announced measures and others provided for by law.

“It would be necessary to bring measures that are operational in the short term,” Chichongue says. “The question that is not well answered in these [recently announced] measures is: how are they going to be operationalized? We are saying that even what is already provided for by the law, is not materialising on the ground. I hope that State agents have accepted the message of the President of the Republic because, in his address, he himself showed that it is clear that there are many officials who hinder economic agents.”

Chichongue also demands that the practical component must not encounter obstacles in the middle of the process, especially in relation to the particular way in which each employee deals with the processes.

The organisation says that apart from palliative and punctual approaches, there have never been structural measures to support companies that for a long time have been facing numerous challenges. And they are, as he said, challenges that cannot be controlled by companies, but only via appropriate government policies.

The issues of reducing the Corporate Income Tax (IRPC), as well as the reduction of the Value Added Tax (VAT) are all important and carry a structuring effect. But there are issues here that need to be addressed.

For example, the organisation says it has no doubt that the government should show more significant commitment and courage in reducing VAT to lower levels. Also because the regional average is around 15 percent, hence, it is perceivable that there was room to go a little further than a one percentage point reduction.

Regarding the IRPC, the understanding is that the measure must be operationalised immediately. Agriculture and transport need to feel the effects of this palliative immediately, because otherwise it will be too late.

“We had also expected bolder measures to improve logistics infrastructure. Especially because the effects that we are feeling from this crisis in the price of some products of first necessity is not because it is related to the world crisis, but it is also because of a logistical problem,” noted the association leader.

Quite problematic issues regarding work visa authorization and residence authorization for foreigners who carry out professional activity in Mozambique were also raised again, hence the appeal on the need for the State and officials to comply with what the law provide for, and not place themselves in a situation of excessive discretionary power to evaluate and decide on the situations with which they are confronted.

Source: MediaFax