Mozambique: Huge losses for business, claims CTA – AIM report

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Mozambique: Huge losses for business, claims CTA – AIM report

4:00 CAT | 30 Apr 2020

The Confederation of Mozambican Business Associations (CTA) estimates that during the state of emergency that began on 1 April the country’s businesses have lost an estimated 6.1 billion meticais (almost 90 million US dollars).

Speaking on Thursday at a Maputo press conference, the CTA’s deputy chairperson for financial policy, Paulo Oliveira, said that across the country 1,175 companies had suspended their activities, affecting more than 12,160 jobs. Companies still operating have reduced their activity to less than 25 per cent of normal levels.

Tourism and its associated services (such as hotels, restaurants, and travel agencies) was the sector most heavily affected by the economic fallout from the coronavirus pandemic. Of the companies that have closed their doors, 756 are in the tourism and hotel industries and they employ around 5,000 workers.

The occupancy rate in hotels had fallen to less than four per cent, said Olveira, and the huge losses this involved led many of them to close temporarily.

Oliveira called for exceptional measures to rescue these companies, such as a 50 per cent reduction in their water and electricity bills, and a postponement of tax and social security payments.

He also called for specific measures to support fishing companies, pointing out that the export of fisheries produce makes a vital contribution to the Mozambican balance of payments. The fisheries sector was now facing cancellation of orders, accumulation of stocks and an increase in operational costs. Furthermore the world market prices for fishery produce had fallen, making the Mozambican fishing companies less competitive.

The CTA wanted the government to support the fisheries sector by slashing the price of the fuel used by fishing boats. Oliveira said the diesel used in Mozambican fishing costs 956.35 dollars a tonne, whereas in the South African fishing industry the cost was only 306 dollars a tonne.

“Since fuel accounts for 42 per cent of the operational costs of the fishing companies, reducing the price of fuel to the levels of South Africa, could contribute significantly to the competitiveness of this sector on the international market”, Oliveira claimed.

Given the sharp fall in the price of oil since the start of this year, Oliveira thought there was room to slash fuel process, not only for fishing boats, but throughout the economy. He argued that this would cut the costs of public transport companies, and reduce their losses.