Trade between China and Mozambique grows 45.13% from January to July
Photos: Presidente Filipe Nyusi Facebook
Mozambican President Filipe Nyusi on Monday declared that the government and the Confederation of Business Associations (CTA), which represents the business class must seek solutions to ensure there is a robust private business sector, necessary for the development of the country.
Speaking at the opening of the Annual Private Sector Conference (CASP) in Maputo, Nyusi said that only a strong private sector could ensure continued growth of the national economy.
Although the programme for the event envisaged a formal opening speech from the President, Nyusi said he preferred to put the formalities aside, in order to advance immediately with a serious debate about matters inherent to economic development.
“I came here to interact with the private sector, so I shall dispense with the speech, so that we can gain time, and all of us can participate in the discussion”, he explained.
For his part, the CTA Chairperson, Agostinho Vuma, describing the current economic scenario, listed a range of concerns about financing which were afflicting small and medium enterprises (SMEs).
He said that SMEs were a major source of jobs, and made a major fiscal contribution, but they are now under great pressure and their very survival is in question.
Vuma recognised that the government has taken measures to adjust the state’s accounts to current reality, but he thought it important to reduce the fiscal deficit, and to adopt a medium term plan of fiscal consolidation. He believed this would speed up the reforms needed for strengthening local content in the foreign investment megaprojects, empowering the SMEs as the main players in business linkages.
Vuma insisted that the private sector wants to see a fall in interest rates. The Bank of Mozambique has reduced its benchmark interest rates, but they are still extremely high. The Interbank Money Market Rate (MIMO) is 18 per cent, and most commercial bank interest rates, even for favoured clients, are in excess of this.
“We would like to encourage the Bank of Mozambique to go deeper in the reforms and macro-economic adjustments necessary to alleviate the suffocation that the SMEs are facing”, said Vuma.
He believed that, since the annual inflation rate has fallen to just 3.84 per cent, according to the central bank’s own figures, it must be possible to knock another 14 per cent off the benchmark interest rate.
Vuma was also concerned at the delays by State bodies in paying the bills presented by private companies. This, plus delays in reimbursing Value Added Tax (VAT), worsened the difficulties faced by companies in 2017.
“Today companies face great difficulties that would be lessened if the State paid the VAT refunds in good time”, said Vuma. “We would like to see a plan to deal with this matter, and better communication with the private sector”.
The Minister of Industry and Trade, Ragendra de Sousa, had harsh words for private business. He said he took the concerns mentioned by Vuma into account, but was concerned that most of the country’s business people did not have the mentality for doing business.
He went further and claimed there is no real market economy in Mozambique. Instead, there is “a semi-managed economy among friends”.
“Our great battle right now should be to transform the minds of participants into a march towards development”, said Sousa. “We would like CASP to stop being an institution for whispering, and become an institution where interests converge since, in the end, the three main stakeholders, the government, the private sector and the workers, we all want development and improved living conditions for our people”.
Nonetheless, he added, the government is prepared to listen to all the concern of the private sector, but business people “should take very solid realities into account”.