Societe Generale to sell Burkina and Mozambique units
Screen grab: Miramar
Mozambican Prime Minister Adriano Maleiane declared on Wednesday, in the northern city of Nampula, that one of the immediate priorities of the government is to ensure a “more friendly” business environment.
He was speaking at a meeting with Nampula businessmen, in response to a litany of complaints, including the government’s delay in reimbursing Value Added Tax (VAT), the contraband in goods such as sugar and eggs, smuggled into northern Mozambique from Malawi, the precarious state of the roads, and the high cost and poor quality of electricity.
Maleiane said the government “is deeply committed to improving the business environment, because it recognises the environment in which we are working is very difficult. So we shall eliminate all unnecessary red tape in order to make investors’ lives easier”.
Maleiane, who is making his first trip to the provinces as Prime Minister, admitted that communication between the government and businesses “has not been the best”, but he considered the exchange of information as “a very useful tool”.
He added that current international events (clearly referring to the Russian invasion of Ukraine) are disturbing the commodity markets, and the effects on Mozambique include the rising prices of fuel, wheat and fertiliser. On the more positive side, the price of one key Mozambican export, natural gas, is rising.
Maleiane also ruled out the re-introduction of government subsidies on fuel and bread. Generalised fuel and bread subsidies, he said, have proved unsustainable.
The government has not followed its own rules on fuel prices – which are that consumer prices should be adjusted regularly in line with the key determinants, such as the world market price of crude oil, and the exchange rate between the Mozambican currency, the metical, and the US dollar.
In fact, the government postponed price rises, leading to losses for fuel distribution companies. Last month, the companies warned that petrol should be sold for 97.19 meticais (1.52 dollars) per litre, but the government imposed price is 77.39 meticais a litre. Diesel is sold for 70.97 meticais a litre – but the real price should be 97.26 meticais a litre.
“We have to know how to manage the crisis”, said Maleiane. “Some say the state should subsidise fuel, but let’s be honest – there is no sustainable subsidy. For the subsidy would have to come from taxation, and where will we get the taxes from if the companies aren’t functioning?”
Furthermore, subsidising the fuel distribution companies would mean all motorists, rich and poor alike, would benefit from cheaper fuel. The government only favoured targeted subsidies, aimed at those who really need them.
The same argument held true for subsidising bread, Maleiane added. Subsidising the wheat flour used by bakeries would benefit everybody who bought bread, and not just the poor who needed cheap bread.
Watch the Miramar report.
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