Maputo to host 12th US-Africa Business Summit in 2019
Photo: CTA Facebook
The scarcity of commercial bank credit available to companies in Mozambique is one of the topics to be debated in Maputo on Monday at the XV Annual Private Sector Conference, organised by the country’s main business association.
The lowest indicative interest rate for any loan is 28%, about ten times more than the average interest rate paid by companies to banks in Portugal in 2017, according to the Pordata database.
“The large financing needs of the [Mozambican] Treasury, coupled with a tight monetary stance to stabilise inflation, continue to pressure interest rates,” the International Monetary Fund warns in its latest country report, published last week.
The situation “reduces the availability of credit to the private sector – particularly to small and medium-sized enterprises – affecting economic activity, employment and socio-economic conditions,” it concludes.
The Confederation of Economic Associations of Mozambique (CTA), which is organising today’s meeting in partnership with the government, hopes to analyse “financing facilities for the business sector”, suggesting a Financial Guarantee Fund, without specifying any details in advance of the conference.
President Flipe Nyusi will attend the opening session, where a 2018 Memorandum of Priorities for Reforms will be signed by the Minister of Industry and Commerce, Ragendra de Sousa, and CTA President Agostinho Vuma.
The role of the state in promoting a good business environment is another topic to be discussed.
“Despite significant advances, challenges remain in terms of cost reduction, time and number of procedures,” Vuma says, looking at the indicators of the World Bank’s international Doing Business Index, which puts Mozambique in 138th place among 190 countries.
“The CTA hopes to find ways to improve the implementation of reforms, that is, to ensure that what is approved is implemented,” he adds.
The conference will consist of four panels, and 700 participants are expected, including ministers and senior government staff, diplomatic corps, cooperation partners, business representatives from all sectors and regions of the country and academics.
Access to land mechanisms will also be discussed, a topic of particular interest in a country where the whole of the territory belongs to the state, which distributes it through the Land Use Right (DUAT).
“The big issue is that land has no accounting value whatsoever in legal terms, which and makes it difficult for a DUAT holder to participate in an investment partnership,” the CTA says.
Ways for the private sector to participate in major extractive industry projects are also on the programme.