Risk management key to successful business in Mozambique

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Risk management key to successful business in Mozambique

3:54 CAT | 09 Aug 2019

Philipp Buechler, DSV Managing director. [Picture: Supplied]

International companies operating in Mozambique – such as DSV Air & Sea – are positive that steady growth will happen over the next ten years. According to Managing Director of DSV Mozambique, Philipp Buechler, the outlook is positive as long as the Mozambican Government and the Central Bank will stimulate and run the strategy around long term investments. With the recent announcement of Anadarko’s final investment decision (FID) for its liquefied natural gas (LNG) project on 18 June, investors are positive that the exploration of natural resources offers potential for significant economic growth.

According to Buechler, what sets Mozambique apart from certain other countries is its risk portfolio.

“The market in Mozambique can be volatile and unpredictable. When something happens in the microeconomy, you feel the negative or positive impacts instantly, whether they are natural disasters, security threats, corruption, political instability or debts,” he says. Buechler emphasizes that risk management is important in running a business successfully in Mozambique.

DSV is a Danish multinational company which offers services in air, sea and road transport and solutions for warehousing and logistics in more than 80 countries worldwide. Over the last 10 years, DSV has steadily increased its presence in Africa, mainly through acquisitions – the latest of them being UTi Worldwide. Operating in more than 13 countries across Africa, DSV focused its attention to Mining, Renewable Energy, Retail, General Cargo and Oil & Gas, of which the last two sectors are predicted to grow with the imminent gas exploration projects. They are positive that any company which maintains their presence and key structures in Mozambique will benefit from the upcoming LNG projects.

“DSV Mozambique is excited and ready for the upcoming opportunities and challenges connected with the LNG projects in the North and is already preparing for the big storm”, Buechler says. “It is important that companies implement a proper Risk Management strategy. We need to understand the risks of doing business in Mozambique in order to ensure our profitability in the long run. It is also important to prioritise social responsibility to ensure that Local Content and Local Empowerment are on top of the agenda.”

DSV has identified the key risk factors in Mozambique to share their recommendations:

Compliance In-country / Anti-corruption
Not only should companies adhere to their own compliance policies, but also adhere to and respect Mozambican Legislation.
Customs Legislation
Customs is one of the most important aspects which companies need to manage well if they will import or export from Mozambique. They need to understand new Legislation and be aware of changes at all times.
Local Ministries
Businesses need to respect and understand the rules and regulations of local Ministries at all times.
Local Content
DSV advises companies to manage the local content requirements closely and employ Human Resources management systems to ensure the empowerment and training of local staff. This is important to maintain while growing the business. The strategy should include using local suppliers and also including them into your day-to-day training and development programmes.
Infrastructure, Roads and Port Restrictions
Logistics will be one of the key focus areas and biggest challenges in Mozambique, since the upcoming projects’ key volumes will hit on the same inbound points, ports, roads and bridges in-country, especially during peak times. The management of current resources, seizes and infrastructure conditions is currently not up to standard.

For DSV Mozambique, business is not only about profit. DSV Mozambique has six offices, the northernmost in Pemba, and provides employment to more than 70 Mozambicans. “We are proud to work with all Mozambicans to develop this beautiful country together and we certainly want to leave a strong footprint during the next coming years,” Buechler adds. Their corporate social responsibility strategy includes ongoing, on-the-job training for all staff at all times. He explains: “For instance, we provide English lessons to all staff. We also make a point of investing in local suppliers in order to bring them closer to global standards. DSV is committed to implementing systems that will also benefit its future employees. Our goal is to give local Mozambicans the opportunities to truly benefit from the upcoming projects to grow and develop their livelihoods.

About DSV Air & Sea

Copenhagen-based DSV is a supplier of transport and logistics, providing and managing supply chain solutions for thousands of companies. It has more than 47 000 employees working at 1000 offices, terminals and warehouses and is the 5th largest global freight forwarder in the world. DSV was founded in 1976 in Skuldelev, Denmark, and is listed on Nasdaaq Copenhagen. The company is divided into 3 separate divisions, Air& Sea, Road & Solution. Its annual revenue in 2017 was USD 17 Billion.

By Lotta Ehrnrooth