DIPLOMACY | ECONOMY | FINANCE | ENERGY & MINING | INDUSTRY | TELECOMS, IT & MEDIA |

TRANSPORT | CONSTRUCTION & REAL ESTATE | AGRICULTURE | HEALTH & EDUCATION | TOURISM MOZAMBIQUE
2015

In This Issue
DIPLOMACY
INTERVIEW
RISING TIDE
HE Filipe Nyusi, President
of Mozambique, on the
bright prospects ahead
for the country
16
FINANCE
REVIEW
THE QUEST
FOR INCLUSION
How the banking sector
is widening access as the
economy expands
39
ENERGY & MINING
FOCUS: ROMUVA
LNG PROJECT
OFFSHORE, ONSTREAM
The discovery of vast
offshore gas reserves has
the potential to transform
the economy into one of
Africas largest
64
TOURISM
INFOMAP:
KEY DESTINATIONS
UNFOLDING WONDERS
Coastal cities, safari parks,
and seemingly endless
beaches: the tourism sector
has huge potential
154

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Nurturing true potential
in Mozambique
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to provide you with everything you need to ensure your future growth and success.

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Or visit us at www.deloitte.com
Contents MOZAMBIQUE 2015

8 Year in review

10 Unconquerable soul Timeline

13 DIPLOMACY
13 21st century man Review

16 His Excellency Filipe Jacinto

Nyusi, President of the Republic of
Mozambique Interview

18 Shinzo Abe, Prime Minister of

Japan Guest speaker

19 Eastward glance Focus: Asian

relations

20 HE Pham Binh Minh, Deputy

Prime Minister and Minister of
Foreign Affairs of Vietnam Guest
speaker
21 Tagir Carimo, Mayor of the City of
Pemba Guest speaker
22 Vintage port Focus: Pemba port
logistical base
23 Alex Segura-Ubiergo, Resident
Representative of the International
Monetary Fund (IMF) Interview
24 Mark Lundell, Country Director
of the World Bank for Mozambique,
Madagascar, Mauritius, Comoros,
and Seychelles Interview
25 ECONOMY
34 Jose Parayanken, President of 47 Balancing act Forum: Local
Mozambique Holdings Limited (MHL) banks
Interview
48 The view from the shallows
35 Holding all the cards Vox Review: Capital markets
populi: Holding companies
50 A capital idea Focus: Bonds
36 Going Dutch? Focus: Avoiding
51 The right policy Review:
Dutch disease
Insurance
38 Bantu you know Forum: Why
53 Aldo Tembe, CEO of Moambique
Mozambique?
Previdente Interview
39 FINANCE 54 Rui Oliveira, President of the
Insurance Association Interview
39 The quest for inclusion Review:
55 Lets roll Forum: Expanding the
Banking
41 Pieter van der Merwe,
insurance market

25 There is a light Review Chief Executive Officer, Banco

28 Loureno Sambo, Director
General of the Investment
Promotion Centre (CPI)
Interview
30 Roaring trade B2B: Trade
promotion
31 All for SME? Focus: SMEs
31 Claire Mateus Zimba, General
Director, Instituto para a Promoo
das Pequenas e Mdias Empresas
(IPEME) Column
Oportunidade de Moambique
Column
43 Ernesto Gove, Governor of the In partnership with:
Banco de Moambique Interview Centro de Promoo de
Investimentos
44 Paulo Sousa, CEO of Banco
Comercial e de Investimentos (BCI)
Interview
45 Rui Barros, Administrator for
Barclays Mozambique Interview
46 Fair exchange B2B: Banking
strategies
6 THEBUSINESSYEAR
57 ENERGY
& MINING
57 Resource-full Review: Energy
60 Alcides Paulino Cintura, Country
Manager, Lateorke Column
61 John W. Peffer, President of
Anadarko Interview
63 Simone Volpi, Managing Director
of Orlean Invest Interview
64 Offshore, onstream Focus:
Rovuma LNG project
64 Paulo Mendona, E&P Country
Manager Mozambique, Galp Energia
Column
66 Joo das Neves, General Director
of Autogs Interview
67 Susana Serra, Manager of AMB e
Veritas, Grupo Meridian32
Interview
66 Joo das Neves, General Director
of Autogs Interview
68 Stronger currents Focus: The
electricity deficit
70 Nothings easy Review: Mining
72 Digging a little deeper Vox
populi: Mining companies
MOZAMBIQUE 2015
73 INDUSTRY
73 Heavy metal Review
74 Hamid Rashid Al Zayani,
Managing Director, Midal Cables
Column
76 Daniel Murray, Asset President of
Mozal Interview
77 Zoned out Focus: Special
economic zones
77 Danilo Nala, General Director,
GAZEDA Special Economic Zones
Office Column
78 Raising a glass B2B: Drinks
companies
79 Quite a production Vox populi:
Manufacturing
80 A driving force Focus:
Automotive industry
80 Joo Carlos Barbot,
Administrator, Barbot
Moambique Column
81 TELECOMS,
IT & MEDIA
81 Spinning the web Review:
Telecoms & IT
84 Communication breakout
Forum: Telecoms companies
85 Rogrio Paulo Samo Gudo,
President of Escopil Interview
86 Joaquim Tobias Dai, Executive
Board Director of EXICTOS
(Mozambique Branch) Interview
87 Plug and play Focus: Sector
integration
88 IT services @information
Quotes
89 More messengers Review:
Media
91 Jaime Langa, Director of Notcias
Interview
92 Jos Guerra, President of the
Council Administration of Miramar
Interview
93 TRANSPORT
93 Forward movement Review
94 Antnio Capucho Paulo, Country
Manager, Skynet Column
97 Emanuel Chaves, Chairman and
CEO of Aeroportos de Moambique
Interview
99 Economy on the wing Focus:
Nacla International Airport
99 Thophane Narayanin, Treasurer
of the Chamber of Commerce and
Industry of Reunion and Social
Council of Reunion Column
100 All aboard Vox populi:
Shipping companies
102 The shipping forecast Focus:
Ports
104 Metropolitan glide B2B:
Connecting Maputo
105 Joo Chiboleca, Managing
Director of Globo Distribuidora
Interview
106 A tale of suspense Focus: The
Maputo-Catembe bridge
108 Alexandre Franco, Managing
Director of Transitex Moambique
Interview
109 Jessy Sitoe, Managing Director
of Expresso Carga e Servios (ECS)
Interview
110 Julio Pedro Sitoe, Administrator
of World Despachos Interview
 THEBUSINESSYEAR 7

Managing Editor
Leland Rice
Country Editor
Ana Collazo Acha 111 CONSTRUCTION
Country Managers
Livia Czerovszki, Barbara Santana & REAL ESTATE
Chief Executive Officer 111 Strong foundations Review:
Aye Hazr Valentin
Construction
Commercial Director
Laila Bastati
112 Fernando Freitas, Administrator,
Editorial Director
Christopher Copper-Ind Somague Moambique Column
Senior Editor
Mark A. Szawlowski 115 Pedro Ramos, General Director
Associate Editor of Tovisi Interview
Terry Whitlam
Web Editor 116 Anbal Leite, President of
Peter Howson Mota-Engil frica Moambique, and
Sub-Editors Mozambique Country Manager of
Aidan McMahon, Lewis King,
Lily Leach Mota-Engil Engenharia e Construo
Editorial Assistant frica Interview
Asiye Duman
Contributors 117 Rui Carrito, CEO of Soares da 137 Emerson Zhou, Executive Director, 151 Loureno do Rosrio, Rector of
Peter Speetjens, Costa Interview Beira Agricultural Growth Corridor Universidade Politcnica Interview
Luis Roca Fabra Partnership (BAGCP) Interview
Transcribers 120 Enrico Alicandri, Area Manager 151 Rosnia Pereira da Silva,
Attila Pelit, Nicholai Davis, of CMC frica Austral 138 Pedro Moura, Administrator and Executive Director, Fundao
Deanne de Vries, Claire Livesay,
Heather Conover, Anna Rudycheva, Interview Member of the Board of Portucel Universitria para Desenvolvimento
Pronto Publishing Services Moambique Interview da Educao (FUNDE) Column
Art Director
121 Building support Forum: Local
Berin Cansu Zafer construction 139 Mines a pint! Focus: Beer 152 Linked in Vox populi: Private
Jr Art Director universities
Bahar Kara 122 New town rising Focus: Palma
Graphic Designers park 141 HEALTH & 153 Home and away Focus:
Ceren Bettemir, Srgio Caldeira
Cover Illustrator 124 Concrete growth B2B: Cement EDUCATION International schools
Krat nsal companies 154 Infomap
PR Manager 141 Its happening Review: Health
Shweta Mulani 126 Kevin Pitzer, General Director of
HR Executive Construa Interview
143 Nazira Abdula, Minister of
Health of the Government of
155 TOURISM
Ins Delgado
Operations Manager 127 Opportunities to build on Vox Mozambique Interview 155 King pin Review
Semiha Elkran populi: Engineering
Operations Executive 144 Dial a diagnosis Focus: Mobile 156 Quessanias J. Matsombe,
znur Yldz 128 The real deal Review: Real health technology President, Federaao Moambicana
Operations Assistants estate de Turismo e Hotelaria (FEMOTUR)
Gamze Zorlu, len Cenberolu 145 Healthy profit Vox populi:
Column
Financial Operations Manager 130 Key to success B2B: Market Accessing healthcare
Serpil Yaltaler
development 159 Silva Dunduro, Minister of
Finance Manager 146 Mind the gap Review:
Ana Mari Culture and Tourism of Mozambique
Education
Finance Assistant 132 Ocean views for now Focus: Interview
Janine Escobar Luxury real estate 148 Jorge Ferro, Minister of
Circulation & Marketing Director 162 Hiuane Abacar, General
Education and Human Development
Amy Burtin Director of the Mozambique
Publisher 133 AGRICULTURE Interview
Tourism Authority (INATUR)
Peggy Rosiak 150 Joo Leopoldo da Costa, Rector Interview
133 A fertile plan Review
The Business Year is published by The Busi- of the Instituto Superior de Cincias
163 Potentially big cheese Focus:
ness Year International, Trident Chambers, 134 Stphane Derweduwen, CEO, e Tecnologia de Moambique
P.O. Box 146, Road Town, Tortola, British Virgin MICE tourism
Islands. Printed by Apa Uniprint, Hadmky AVIAM Lda Mozambique Column (ISCTEM) Interview
Mahallesi 434 Street No:6, 34555, Arnavutky, 164 Bem-vindo! Forum: Growth
stanbul, Trkiye. The Business Year is a regis-
tered trademark of The Business Year Inter- strategies
national, Copyright The Business Year Inter-
national Inc. 2015. All rights reserved. No part
of this publication may be reproduced, stored
in a retrievable system, or transmitted in any
165 EXECUTIVE
form or by any means, electronic, mechanical,
photocopied, recorded, or otherwise without GUIDE
prior permission of The Business Year Inter-
national Inc. The Business Year International 165 Opportunities for investors
Inc. has made every effort to ensure that the Review: Doing business
content of this publication is accurate at the
time of printing. The Business Year Interna-
tional Inc. makes no warranty, representation, 170 Joo Machado, Managing
or undertaking, whether expressed or implied, Partner at Deloitte Moambique
nor does it assume any legal liability, direct
or indirect, or responsibility for the accuracy, Interview
completeness, or usefulness of any informa-
tion contained in this publication. 172 Rui Brando, Managing Partner
ISBN 978-1-908180-46-9
of BPartner Interview

www.thebusinessyear.com 173 When in Mozambique...

8 THEBUSINESSYEAR MOZAMBIQUE 2015

It has been an exciting year for Mozambique, with a high GDP growth
rate maintained throughout, despite presidential elections and heavy
spending on infrastructural development.

Year in Review

TANZANIA
DRC

A Mueda

A Lichinga A Pemba
MALAWI

ZAMBIA P Nacala

A Nampula
Lago Cahorra Bassa

A Angoche

A Quelimane
MOZAMBIQUE
ZIMBABWE 784,090 km2

A Chimolo

A P Beira

BOTSWANA MADAGASCAR

MOZAMBIQUE CHANNEL

SOUTH AFRICA A Inhambane

A P Maputo
P Port SWAZILAND

A Airport

ON JANUARY 15th, 2015, the inaugura-
tion of Mozambiques fourth president, Filipe
Nyusi, was celebrated at the Praa da Inde-
pendncia in Maputo. Attendees included the
leaders of South Africa, Portugal, Namibia,
Tanzania, Swaziland, and Lesotho, joining Ny-
usi and other FRELIMO dignitaries to usher in a
new era of rule by the countrys leading political
party. Succeeding Armando Guebuza and his
decade of administration, which was defined
by soaring foreign interest in the southeast Afri-
can nations fortunes, Nyusi will strive to realize
the potential of its massive gas reserves, for the
benefit of its almost 25 million citizens.
A Portuguese colony until 1975, Mozam-
bique emerged into the post-colonial era with
the burden of a politically divided populace
and civil war. However, following a peace
agreement brokered in the early 1990s, the
future began to look brighter, and more than
two decades into the post-war era investors
understand the true potential of the country. It
has an area of over 800,000sqkm and a coast-
line of more than 2,400km, with the Zambeze
and Limpopo deltas and the Namuli mountain
range, among others, defining the landscape of
the interior.
GDP growth was over 8% in 2014, and a sim-
ilar figure is expected for 2015 according to the
IMF. The economy is driven by its extractive
and logistics industries and related megaproj-
ects. Expectations for the country to emerge as
one of the top coal and LNG exporters in the
world are encouraging a sustained influx of
FDI. Major discoveries in Pande, Buzi, and Te-
mane have brought proven gas reserves to a to-
tal of 100 tcf. Palma, in the north of the country,
has been designated as the preferred location
for the City of Gas, comprising a major LNG
plant and auxiliary industries and facilities. The
development is anticipated to transform the
region.
In 2Q2015, the National Petroleum Institutes
(INP) fifth oil and gas licensing round will take
place, attracting companies interested in the
offshore blocks at Rovuma, Zambezi, and An-
goche. The first LNG exports are expected with-
in five years. The government is dedicated to
avoiding the negative effects of such rapid and
all-encompassing development, promulgating
a decree law to define the legal requirements of
companies investing in the sector. State coffers
have received around $1 billion over the past
year from taxes on gas deals alone. Discover-
ies of coal deposits of around 23 billion tons
in Tete province are also encouraging, making
Vale, the Brazilian mining giant, and numerous
other companies get involved in operations in
the region. The mines are being developed in
tandem with an improvement of the transpor-
tation infrastructure between the province and
Beira port, to facilitate exports in future years.
A major coal power station is also being con-
THEBUSINESSYEAR 9
structed in the region by Ncondezi Energy, and With GDP growth
will be operational by 2018. The country is also
home to one of the largest hydroelectric plants
of over 8% in 2014,
on the continent, the Cahora Bassa dam, which and a similar figure
provides the bulk of the nations electricity. expected for 2015
When complete, the several major infra-
structure projects underway will serve as the according to the IMF,
bedrock of future growth. Key among these is the economy is driven
the development of the countrys ports, which by its extractive and
despite already playing an important role in the
economy are insufficiently developed. Maputo logistics industries
port is the largest, followed by Beira, with Naca- and related
la Port coming third in terms of annual ship- megaprojects
ping volume. The latter is being redeveloped as
part of a broader logistics project, encompass-
ing the Nacala Railway, which terminates in the
port and originates in neighboring Malawi. The
national railway network is generally undergo-
ing renovation, with a coal export line and new
port terminal being developed in the central
part of the country, from Moatize to the coast.
Elsewhere, the Maputo Development Corridor
is another significant undertaking, comprising
the restoration of over 350km of roads, and
work on rail, port, and customs infrastructure
to improve connections from Gauteng and
Limpopo, known for diamonds, gold, and pro-
digious agricultural production, among other
areas. The overall effect of these upgrades will
unlock not only the vast mineral wealth of the
country, but will also serve to facilitate its land-
locked neighbors exports.
The Maputo Stock Exchange opened in 1999,
and since 2011 legislation requiring the coun-
trys megaprojects to be listed by between
5-20% at a minimum, the bourse and financial
services are expected to play an increasingly
important role in the economy over the coming
years. This is particularly the case with SMEs,
which are still largely unlisted, despite contrib-
uting substantially, at approximately 70%, to
GDP. Another sector with ample potential for
growth is tourism. Making a 4.4% contribution
to GDP in 2014, it is expected to expand by over
6% annually over the coming decade, as the
Ministry of Tourism more clearly defines its
strategy for sectoral development, and a viable
plan for differentiating the industry from those
of neighboring countries with superior infra-
structure is outlined.
While future economic growth in Mozam-
bique for now depends on the effective ex-
ploitation of its natural resources, government
strategy will determine the extent to which
this wealth is utilized in a sustainable way and
used to improve quality of life for Mozambi-
cans at large. While disasters such as flooding,
most recently in early 2015, and drought pose
an unremitting risk to economic development,
particularly in the agricultural sector, prior ad-
ministrations have managed to persevere. If
President Nyusi can recreate this success, Mo-
zambique may make its fortune in 2015.
10 THEBUSINESSYEAR MOZAMBIQUE 2015

unconquerable SOUL
In spite of a demoralizing domestic conflict following decolonization,
Mozambique remains unbowed, with strong democratic institutions
and a dynamic civil society.

1962-2015

1962 1974 1975 1976 1976

FRELIMO founded, End of right-wing Independence RENAMO is founded Rhodesia attacks
and begins armed Estado Novo regime in won, and the in response to Mozambican territory
struggle against Portugal emboldens exodus of many FRELIMOs shift into in response to
colonial rule two independence white Portuguese the orbit of the USSR, Zimbabwe African
years later movements in Mozambicans and is supported by National Liberation
colonies precipitates economic Rhodesia Army (ZANLA)
collapse activities

1977 1980 1984 1986 1986

Civil war erupts, Support for RENAMO The Nkomati Accord Samora Machel, Joaquim Chissano
pitting the two is carried on by South ends Mozambican leader of the country takes over control of
opposing factions Africa following the support for the since independence, FRELIMO and the
against each other breakdown of the African National dies in a plane crash presidency, and three
and subjecting the Rhodesian state Congress (ANC) and flying back from years later renounces
population to violence South African backing Zambia its Marxist-Leninist
and displacement of RENAMO doctrine

1990 1992 1994 1995 2000

A new, more The Rome General Mozambiques first Mozambique joins Despite economic
inclusive constitution Peace Accords democratic elections neighboring countries development and
is promulgated are held, involving take place, with in the Commonwealth moves to liberalize
following the President Joaquim FRELIMO winning of Nations, despite the market,
commencement of Chissano and with a large majority having never been Mozambique is held
negotiations RENAMO leader subject to British rule back by devastating
Afonso Dhlakama floods

2002 2004 2009 2014 2015

Drought further Chissano resigns Guebuza reelected to Elections take place, President Felipe
hinders the growth of from government second five-year term with FRELIMO once Nyusi is sworn in to
the economy in election, and again receiving the power, becoming the
is succeeded by public mandate fourth Mozambican
FRELIMO politician president in the
Armando Guebuza democratic era
 Year in Review THEBUSINESSYEAR 11

BRIEFING
MOZAMBIQUE

HEAD OF STATE
President Filipe Nyusi

LEGISLATIVE POWER
The government and
the Assembly of the Republic

POLITICAL STRUCTURE LOCAL GOVERNMENT

Presidential Representative STRUCTURE
Democratic Republic 10 Provinces

GDP GROWTH GDP PER CAPITA INFLATION RATE

7.4% 605 USD 4.2%

TOTAL POPULATION LIFE EXPECTANCY(F/M) UNEMPLOYMENT RATE

24.692 million 51/49 8.3%

CURRENCY 1 USD =
New Metical 31.20 MZN
(MZN)

Sources: IMF, World Bank, and Oanda

 THEBUSINESSYEAR 13

16
HE Filipe Nyusi, President of
Mozambique, on the bright
prospects ahead for the country.
18
Shinzo Abe, Prime Minister of
Japan, on the importance of the
growing partnership between the
two countries.
24
Mark Lundell, Country
Director of the World Bank for
Mozambique, on hitting targets
and turning crops into industry.

Diplomacy
REVIEW

Mozambiques democratic institutions proved robust again in

2014, with the dominant FRELIMO party comfortably preserving
its electoral mandate.

21ST CENTURY MAN

I
n October 2014,
millions of Mozam-
bicans exercised
their right to vote
in national elections. Citizens
demonstrated their support of
the FRELIMO party and its de-
cades of rule by voting for the
partys candidate Filipe Nyu-
si. His predecessor, Armando
Guebuza, was restricted from
running for a third term, in
accordance with the constitu-
tion. The countrys new leader
has promised reform of the ag-
ricultural sector and continued
efforts to lift the population out
of poverty, and is set to uphold
the social-democratic policies
and preserve the identity of
a party that has existed since
the foundation of the state. In
spite of a violent campaign of
hostilities perpetrated by the
opposition in 2013, the demo-
cratic process was vindicated
by these elections, with Afon-
so Dhlakamas rival RENAMO
party winning a sizeable mi-
nority of votes following an
August 2014 truce.
Modern Mozambican pol-
itics are shaped by the coun-
trys extended civil war, which
ended in 1992. The descent
into civil conflict began in
1977, as differences among
politicians in the newly inde-
pendent state reached unten-
able levels. In 1975, Portugal
entered a new era with the fall
of Antnio de Oliveira Salazar
and Marcelo Caetanos Estado
Novo regime, and withdrew
from its colonial wars in Africa.
The Mozambique Liberation
Front (Frente de Libertao
de MoambiqueFRELIMO)
emerged as the principal pow-
er in the nation, and instituted
widespread agricultural collec-
tivization in rural areas, alien-
ating some farmers and laying
the foundations for increasing
dissent among the populace.
The regimes of neighboring
Rhodesia (Zimbabwe) and
South Africa poured money
into fomenting open rebellion,
resulting in the formation of
the opposing Mozambican
National Resistance (Resistn-
cia Nacional Moambicana
RENAMO) group. An increas-
ingly authoritarian response
by the FRELIMO government,
Independent since 1975, at the time the only legal par-
ty in the state, exacerbated
the country experienced sustained tensions, and the country be-
periods of instability until the 1990s. came locked into a dynamic
14 THEBUSINESSYEAR MOZAMBIQUE 2015
Peace was achieved of internal conflict and international intrigue
at the Rome General for a further 16 years. Peace was achieved at the
Peace Accords, which Rome General Peace Accords, which resulted in
part from the countrys moves toward economic
resulted in part from liberalization and the decline of South Africas
the countrys moves apartheid regime. Nevertheless, the aftermath of
toward economic the war continues to affect elections and influ-
liberalization and ence public life.
the decline of South
Africas apartheid OUT OF THE DARKNESS
Since the promulgation of its 1990 constitution,
regime. Mozambique has impressed international ob-
servers as a multi-party presidential represen-
tative democratic republic. The 1994 election
brought Joaquim Chissano, already president
since the celebrated Samora Machel died in
1986, to power officially in the nations first dem-
ocratic government. A 129-seat FRELIMO ma-
jority controlled the Assembly of the Republic,
which comprises 250 seats. The lions share of
the remaining seats was held by RENAMO, with
a much smaller number won by the Democratic
Union. This era was defined by the governments
concerted efforts to have the countrys debt for-
given, and by a comprehensive liberalization
program, both developments helping to lay the
groundwork for the improved international rep-
utation that Mozambique enjoys today.
Members of the unicameral Assembly of the
Republic (Assemblia da Repblica de Moam-
bique), based in Maputo, are elected to five-year
terms by means of proportional representation.
The legislature is also formed by the executive
branch of the government, led by the president,
who serves as head of state, government, and
commander of the armed forces. In addition,
the president selects the prime minister and
the Council of Ministers. The country is divided
into 10 internal provinces including Maputo, the
largest being Cabo Delgado and the most pop-
ulous, Nampula, and these are each subdivided
into 52 districts and 894 postos.
RIGHTS ENSHRINED
Chissanos leadership of the country ended after
his second term in 2004, when Armando Gue-
buza was elected to the presidency. His rule,
renewed in 2009, was effective in further raising
the status of the country at an international level.
During this time, significant foreign investment
was drawn to Mozambique as a result of rigor-
ous efforts to reduce corruption and enhance
the business environment. These initiatives
coincided with a broader improvement of ac-
countability and transparency in politics and
for the population at large, enshrined in a new
constitution promulgated at the start of 2005.
This revised document mandated the creation
of a Council of State, consisting of the prime
minister and representatives of opposing views
and social groups, which would serve as an ad-
visory body to the presidency. A Constitutional
Council was also formed to safeguard the para-
mount importance of the constitution, while an
ombudsmans office was established to protect
the rights of citizens.
AND INTO THE LIGHT
The solid foundations of Mozambiques de-
mocracy have withstood the animosity leftover
from the civil war. Despite low turnouts at the
2004 and 2009 elections, of approximately 34%
and 44% respectively, the two major parties
have continued to engage in the electoral pro-
cess. Aside from Afonso Dhlakamas RENAMO,
the Democratic Movement of Mozambique
(MDM), led by Daviz Simango, stands as the
only other significant political party. FRELI-
MO won the majority of seats with 144 out of
the total of 250, followed by RENAMO with 89,
while the MDM acquired 17. Through the two-
round system, Filipe Nyusi was elected as the
new president of the country. However, as with
previous elections, veteran RENAMO leader
Dhlakama declared the groups dissatisfaction
with the process, citing the number of irregu-
larities as unacceptable and ultimately boycot-
ting the swearing in ceremony of January 2015.
However, the opposition had already expressed
similar misgivings about previous general elec-
tions, and their statements remain uncorrob-
orated by international observers, including
the European Union and the Southern African
Development Community (SADC), that have
generally labeled elections as representative
and fair.
AT ELECTION TIME
The Commonwealth is another organization
that has lauded the democratic process in Mo-
zambique. As the bodys only member that was
not a former British colony, the country joined
due to the strong economic bonds its shares
with its neighbors, all of which were already
members. The organization praised the relative-
ly calm and peaceful nature of the proceedings
and respect for the rights of voters and political
parties. Now entering its 20th year as part of the
group, Mozambique retains its membership of
other organizations also, allowing it broad scope
for diplomatic dealings. It is part of the African,
Caribbean, and Pacific Group of States, the Af-
rican Union, the Non-Aligned Movement, the
UN, and the World Trade Organization, among
others. Mozambique maintains strong relations
with China, Russia, and the US, as well as with
Scandinavian nations such as Denmark and
Finland, which has offered support for the na-
tion since its independence in 1975. Naturally,
diplomatic engagement with Portugal remains
significant.
With the election of President Nyusi, Mozam-
bique is moving into a new era. With a new term
and a new leader, the country is in a position to
continue building its democratic structures and
further develop processes for ensuring transpar-
ency and accountability in both politics and civil
society. Any attempts by the new administration
to continue improving relations between the
major political rivals in the country will be in line
with the post-civil war policy of successive FRE-
LIMO governments, a policy that has evidently
been a success.
 Diplomacy THEBUSINESSYEAR 15

The swearing-in
ceremony of
President Filipe
Jacinto Nyusi was
held at the Praa
da Independncia
The new leader of Mozambique
is congratulated by South African
in Maputo in
President Jacob Zuma
January 2015,
following a clear
win in the October
2014 Presidential
elections.

Former President Armando

Guebuza poses for a picture with
his successor
16 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
RISING TIDE
What were your priorities when nominating the
new government?
I have established a government that will meet
the requirements of the country in a hands-on
and pragmatic manner. It is a government with
a structure that is as lean as possible, and one
which focuses on solving the concrete prob-
lems faced by our people. It is a cost effective
government oriented toward the reduction of
unnecessary expenditure, and our public ser-
TBY talks to His vice and justice officials will be selected on the
Excellency Filipe basis of merit and professionalism. I have said
this many times, but I repeat here that my com-
Jacinto Nyusi, mitment is to serving the Mozambican people,
President of and respecting and upholding the constitution
the Republic of and existing laws of Mozambique. We have
Mozambique, demanded more efficiency and better quality
from public institutions, and we want public
on building a officials to abide by the principles of impartiali-
government, the ty, legality, and transparency in order to deliver
recent historic gas better services to our citizens. The measure of
discoveries, and our success in doing this is the satisfaction and
welfare of the people. We are encouraging lead-
supporting the ers who listen to other people even if they hold
traditional sectors of opposing views.
the economy. My Government is guided by the values of
humanity, humility, honesty, integrity, trans-
parency, and tolerance. We shall, without fear
or favor, take action against acts of misconduct,
corruption, favoritism, nepotism, and patron-
age committed by leaders, public servants, and
officials at all echelons. We will not accept the
breach of the social contract that has been as-
sumed with our people. No one is above the
law, and all are equal before it. These are the
basic principles on which we will commit our-
selves so that citizens always respect and trust
the State.
How would you describe the importance of natural
gas dicoveries for the future development of Mo-
zambique?
Mozambique is a country endowed with ample
natural resources, namely arable land, forests,
and mineral and marine resources. The recent
discovery of significant reserves of coal, nat-
ural gas, and heavy mineral sands places Mo-
zambique on the international stage and has
made it an obvious destination for investment.
In my tenure I want to ensure that exploration,
production, distribution, and industrialization
activities are conducted in a responsible and
transparent manner, contributing to the expan-
sion, transformation, and modernization of the
Mozambican economy.
What strategies are you employing to ensure that
international investment in the mineral and oil and
gas industries offers the maximum benefits possi-
ble to Mozambicans?
I shall strive to guarantee that Mozambicans are
indeed the owners of these resources. We will
do this by ensuring the increasing integration of
local content and effective participation of Mo-
zambicans in investment projects, particularly
in the exploitation of natural resources. My gov-
ernment is acting as a strategic partner in build-
ing a broad-based and robust Mozambican en-
terpreneurial community. I want our state, and
Mozambicans at large, to be the true owners of
wealth and potential of our motherland.
Agriculture employs a major share of the Mo-
zambican population. How will your government
support this sector to create a more efficient and
productive industry?
We are fostering enhanced public and private
investment in agriculture, fisheries, and live-
stock. Particular attention is paid to family
smallholders who sustain the majority of the
Mozambican population. We wilI pursue in-
centive policies for small farmers to enable
them to increase agricultural production and
productivity, and to bring them into the main-
stream market. We are focusing on the indus-
trialization of our agricultural sector, and the
results achieved so far are quite encouraging,
with remarkable examples in crops such as cot-
ton, sugar cane, cashew nut, tobacco, and soy
beans. Mozambique possesses all necessary
conditions for becoming an agricultural pow-
erhouse in the region, and all that is needed to
develop a vibrant textile, food, and beverage
industry. We are intensifying production and
access to food by citizens in order to ensure
nutritional security. Decent food should not be
the privilege of a few. It is a basic human right
that should benefit all Mozambicans. Exam-
ples of our activities in this area can be seen in
our successful bolstering of the maize, cassava,
beans, sweet potato, and peanut crops, and we
will ensure surplus in rice, vegetables, Irish po-

tatoes, poultry, and red meats. We will have to
utilize our existing human resources, including
the graduates coming from our universities,
with a view to promoting nutritional education
throughout the nations communities. We can-
not allow chronic malnutrition to prevail along-
side food abundance as is the case in some re-
gions of our country.
What are your strategies to incentivize job creation
and entrepreneurship in the country?
We are building a country that focuses on the
training and development of human capital,
the principle national asset. We shall promote
new job creation for those of higher level, in-
termediate, and basic level qualifications. With
the advent of the exploitation of natural re-
sources, new activities and demands have aris-
en, and we have been following these closely to
respond to the new requirements of the econ-
omy and society. However, we will remain fo-
cused on traditional sectors such as agriculture,
fisheries, agri-business, transport, tourism, and
services, as these have greater potential for the
generation of employment. Together with my
government we will work with determination to
improve the living standards of the Mozambi-
can people, by increasing jobs, productivity and
competitiveness, and by creating wealth, in or-
der to achieve inclusive development. For these
objectives to materialize it is critical that we all
commit ourselves to consolidating the rule of
law, good governance practices, and decentral-
ization. We want Mozambique to remain a ref-
erence for the rest of the world in boasting high
growth rates that are beneficial and positive in
the long term. This growth needs to be main-
tained and valued. We are aware that the wel-
fare of ordinary citizens cannot only be gauged
by macro-economic indicators. For this reason,
despite the results achieved so far, a number
of segments of our people in rural, peri-urban,
and urban areas are still living in poverty.
This issue is a priority which we need to
address, and we believe that the economic
growth we are pursuing should have a direct
impact on the improvement of the living stan-
dards of the people by contributing to the re-
duction of social inequalities and the genera-
tion of new jobs.
Health and education are key to maintaining strong
economic growth throughout the years. What will
be your governments contributions to this field?
We are continuing to build the states financial
Diplomacy THEBUSINESSYEAR 17
base so we can invest further in the improve-
ment of the quality of education. Since edu-
cation is crucial for the development of every
nation, we will spare no effort in the training of
Mozambicans to take up the challenges of na-
tional development. No matter how well-inten-
tioned our international cooperating partners
may be, Mozambicans are the ones that will
have to develop the country. For this reason
there is no doubt about the importance of in-
vesting in education, science, technology, and
innovation. We will continue expanding the
school network to reduce the distance from
home to school, and will make sure that our
schools are properly equipped with furniture,
libraries, and laboratories. We will also improve
working facilities and living standards for teach-
ers. For this new job creation to be sustainable,
my government envisages the strengthening of
technical and vocational training institutions in
its Five Year Programme (2015-2019) and An-
nual Plan for 2015, and is also establishing pub-
lic private partnerships for the promotion of
professional internships and creating links be-
tween major projects and SMEs. Mozambique
still faces challenges in fighting diseases such
as malaria, HIV, and AIDS, and other ailments
that are major causes of mortality, particularly
infant-maternal mortality. We are proceeding
with the construction of more health facilities
that are equipped with adequate technical di-
agnosis and treatment resources. We are also
investing in the training of medical personnel
and other competent and motivated health
practitioners to provide care to our people with
humanity. We have mainly focused our atten-
tion on preventive and health awareness mea-
sures so that the communities adopt the prac-
tices and procedures recommended by health
institutions.
What legacy would you like to leave in Mozam-
bique?
BIO
I was greatly honored and humbled to assume
office as the fourth President of the Republic HE Filipe Jacinto Nyusi was
of Mozambique. I will devote all my energy to born on February 9th, 1959,
defending, promoting, and consolidating the in the District of Mueda,
national unity, human rights, democracy, and Cabo Delgado Province. He
welfare of the Mozambican people. I want to is the fourth President of
leave a better country, with healthier, better Mozambique, and has been
educated, and better-fed citizens, as well as in office since January 2015.
improved domestic and external connections Prior to this, from 2008-14,
and more entrepreneurs. I am confident that he served as Minister of
Defence.
together we will create a brighter future for our
children and grandchildren.
18 THEBUSINESSYEAR MOZAMBIQUE 2015
GUEST SPEAKER
a resourceful
FRIENDSHIP
Shinzo Abe, Prime Minister of Japan, on the
importance of the growing partnership between
the two countries, especially for energy,
construction, and FDI.
Mozambique is a country brimming with dy-
namism that is now working to transform it-
self to rest at the very heart of Japans business
with Africa. Mozambique is home to one of the
largest natural gas fields in the world and one
of the largest coking coal fields in Africa. I am
firmly convinced that cooperation between
Mozambique, blessed with an abundance of
resources, and Japan, with its highly advanced
technological capabilities, will without any
doubt result in greater wealth for both nations.
Bountiful resources and the wealth to be
acquired through their use are Mozambiques
very own treasure. The benefits must be shared
by the Mozambican people and mobilized
to engender sustained growth and improve-
ments in the daily lives of the people. Japans
public and the private sectors can be of assis-
tance in bringing this about. A good example
of this is Mozal aluminum smelter, which
through the participation of the Mitsubishi
Corporation has now become the largest in-
dustry in the country. With technical transfers
to the smelter site, Mozal has generated direct
employment for more than 1,000 people and
indirect employment, including in peripheral
industries, for more than 10,000, and returns
profits to the community through social activ-
ities in the local area. This is what occurs when
Japanese corporations invest.
Mozambique is able to secure technologies
through commercial relations with Japanese
corporations. It promotes the development of
industries through its own efforts, and a large
number of Mozambicans enjoy the benefits
of growth. It is for these reasons that the gov-
ernment of Japan makes use of ODA and other
types of public finance and makes contribu-
tions in cooperation with private companies.
First of all, Japan will contribute to human
resources development. In order for the peo-
ple of Mozambique to develop resources,
foster industries utilizing those resources,
and take environmental countermeasures
through their own efforts, Japan will support
human resources development by assist-
ing over 300 people over the next five years,
through the African Business Education Ini-
tiative for Youth (the ABE Initiative) an-
nounced at the International Conference on
African Development (TICAD V) and the
Development Initiative Based on Natural
Gas and Coal.
It is also important that the development
of resources does not give rise to economic BIO
disparities among local areas, or environmen-
tal issues. Japan will provide comprehensive
assistance of approximately 70 billion Jap- Abe was elected Prime
anese yen ($585 million) over the next five Minister of Japan in 2012,
years, with a view to advancing development marking his second tenure
since the 2005 election.
centered on the Nacala Corridor region. We
Upon graduation from the
will strengthen our support for infrastructure
Department of Political
development, including among other areas
Science at the Seikei
roads, ports, and electricity, as well as for edu- University Faculty of Law,
cation, health, and related areas from the per- he initially worked at Kobe
spective of human security. Steel, Ltd., although his
If we combine Mozambiques efforts, in- distinguished political
cluding further improvements to the invest- career began in 1982
ment environment, with the support of Ja- with his appointment as
pans public and private sectors, we will be Executive Assistant to the
certain to build a relationship as partners that Minister for Foreign Affairs.
contribute to growth in both countries. Other senior positions held
At TICAD V, I made an appeal to the Japanese have included Director of
people, saying, Now is the time to invest in Afri- the Social Affairs Division,
ca. The Japanese economy is now experiencing President of the Liberal
a strong revival. I would like to say to the people Democratic Party (LDP), and
Chief Cabinet Secretary.
of Mozambique and of Africa, Now is the time
to choose Japan as a business partner.

EASTWARD GLANCE
Rich oil discoveries in the Rovuma Basin have primed Mozambiques
growing economy, leaving the nation as a potential suitor for the many
Asian countries that are increasingly demanding LNG.
AN ESTIMATED 170-200 trillion cubic feet
of natural gas has been discovered in Mozam-
bique, which will fuel national exports of 20
million tons a year. The resources, discovered
by Anadarko in 2010, could make Mozambique
the third largest exporter of LNG in the world.
These are expected to spur the economy on:
GDP has just grown at 7.5% YoY, with an aver-
age 8% increase forecast by the World Bank for
between 2015 and 2017.
Asian nations are the worlds largest import-
ers of LNG with Japan, South Korea and China
having the first, second and third largest in-
takes, respectively. Together with India they ac-
count for over 125 million tons of LNG imports
per annum.
After gaining independence from Portugal in
1975, the country survived a 15-year civil war,
and since 1992 the FRELIMO Party has guided
the countrys economic recovery.
Although Standard & Poors credit rating was
a modest B, the IMF noted that the Bank of
Mozambiques careful management of liquidity
helped to achieve a low inflation print of 4.2%
at the end of 2014, and with temporary inter-
vention from the central bank the New Metical
remained stable following an influx of foreign
investment. The economy was bolstered by in-
terest rates dropping to an all-time low of 7.5%
at the beginning of 2015, and they are predicted
to fall even further to 6.5% by the end of the year.
Japan has strived for non-nuclear sources of
energy since the Fukushima disaster, lasting
over 12 months without any nuclear energy
between 2013-14; the latest figures show that
Japan imports 56.6 million tons of LNG per an-
num. Japan has a direct objective of investing
in Africa, with $32bn of aid already pledged to
African nations over the next five years to sup-
port growth that will develop future investment
opportunities.
Spending $2.39bn in October of 2013 alone,
South Korea is the worlds second largest buyer
of LNG, importing 36.77 million metric tons in
2012.
China has the fastest growing import require-
ments, taking 18 million tons of LNG in 2013,
which is expected to rise to 61 million tons in
2020, according to Reuters.
India imported 15.17 million tons of LNG
in 2012, which is expected to rise to 50 million
tons by 2020, although it has plans for 83 mil-
lion tons of LNG capacity by that date.
Diplomacy THEBUSINESSYEAR 19
ASIAN RELATIONS FOCUS
Benefits for the Asian investor include the
shorter shipping distance from Mozambique
when compared to the Arab peninsula. The
new resources will give China and India access
to cheaper oil, which will help China in partic-
ular diversify away from the inflated Australian
market.
Mozambiques two-way trading with China
stands at $3.62 billion, with $1.96 billion being
Chinese exports. Trade with India is predicted
to reach as much as $3 billion by 2016, and In-
dia is already providing $640 million of credit
for projects, training, and scholarships.
However, investment is not without risk; in
October 2013 there was low-level insurgency
from the opposition, although a peace deal was
ultimately signed in September 2014 whereup-
on RENAMO agreed to desist from boycotting
parliament. In 2014 Rio Tinto sold its Benga
mine assets for $50 million, bought for $3.76
billion three years earlier, citing the logistical
challenges of transporting coal from Tete to the
coastline around 600km away.
Rail upgrades to both the Beira and Nacala
ports, due to be complete in 2015, will stream-
line business and give importers access to the
coal in Tete and the metals in Chibuto.
Significant investments from other coun-
tries in Mozambique include $436 million in
infrastructure by Vietnamese backed Vittel, the
company that set up the countrys first mobile
telecoms network, a sign that the oil wealth is
spurring a burgeoning consumer economy.
Economic policy from the socialist-led gov-
ernment, who have held power since the 1994
democratic elections, is focused on inclusive
growth and encouraging foreign investment
under license.
The currently underdeveloped infrastructure
means there is considerable opportunity for
continued investment. The timing of Mozam-
biques extraction program is crucial as it looks
set to hit maximum capacity by 2020 to meet
the rising forecast demand of the Asian nations.
Already in 2013 tax receipts from Rovuma were
$400 million, or 2.1% GDP.
LNG
20 THEBUSINESSYEAR MOZAMBIQUE 2015
GUEST SPEAKER
How would you describe the
evolution of economic ties be-
tween Vietnam and Mozam-
bique?
On 26 May 2015, Vietnam and
Mozambique celebrate the
40th anniversary of diplomat-
ic relations. We will also share
the joy of commemorating the
40th anniversary of Mozam-
biques Independence and 40
years of Vietnams national
reunification. Looking back
at our journey over the past
40 years, we have witnessed
rapid developments in our bi-
lateral relations in almost all
areas, from trade, investment,
and agriculture to culture, ed-
ucation, science, and technol-
ogy. The two countries have
established a sustainable co-
operation framework through
the signing and implementa-
tion of various agreements.
In its cooperation with Mozam-
bique, agriculture plays a signif-
icant role. What programs will
you be supporting in this sector?
Agricultural cooperation proj-
ects at a governmental level,
between provinces and fol-
lowing the 2+1 model, have
brought about tangible ben-
efits and transformed lives
in many Mozambican rural
areas. In agriculture, Vietnam
is keen to cooperate and share
experience with Mozambique
in the latters Food Securi-
ty Strategy. In recent years,
Vietnam has sent hundreds of
agricultural experts to many
Mozambican provinces. We
have also hosted Mozambican
agricultural experts, techni-
cians, and students in Viet-
nam for visits or study tours.
FERTILE
relations
TBY talks to HE Pham Binh Minh, Deputy
Prime Minister and Minister of Foreign Affairs
of Vietnam on the broad strategic cooperation
enjoyed by the two countries, and the scope for
further investment.
In the years to come, the two
countries will continue to im-
plement the Cooperation of
Research and Development of
Food and Foodstuff Crops in
Mozambique project signed
in 2013 and aimed at improv-
ing capacity in R&D regarding
food and crops, developing
production models for sus-
tainable and high-productivi-
ty rice and crops in some areas
of Mozambique, and training
human resources.
In the field of telecommunica-
tions, Movitel is a successful
Vietnamese joint venture in
Mozambique. What is the signif-
icance of this investment for the
socioeconomic development of
Mozambique?
This joint venture between Vi-
ettel and the SPI Mozambique
is a bright light in bilateral
investment relations. With
4 million subscribers, Movi-
tel, the second largest mo-
bile network in Mozambique
has already covered 85% of
the population, making sig-
nificant contributions to the
development of IT infrastruc-
ture. It has narrowed the gap
between rural and urban
areas and promoted the so-
cioeconomic development of
Mozambique. By upholding
a development philosophy
of associating business with
social responsibility, Movitel
has made active contributions
to Mozambiques education
by providing free internet for
2,500 schools. Movitel is also
involved in e-government
projects to enhance citizen
access to public administra-
tive services.
In 2014, Mozambique and
Vietnam renewed the Protocol
on education. What are its key
points?
Education is a traditional area
of cooperation between Viet-
nam and Mozambique. From
1980 to 1990, together with
medical and agricultural ex-
perts, Vietnam sent hundreds
of educational professionals to
Mozambique, and they were
well received. After many years
living and working in Mozam-
bique, many today consider it
to be their second home. Be-
sides, the two sides have paid
due attention to tertiary edu-
cation. During the visit to Viet-
nam by the Minister of Educa-
tion of Mozambique Augusto
Jone Lus, the two countries
signed a new Protocol on co-
operation in education (June
2014). Accordingly, since 2014,
Vietnam and Mozambique
have increased scholarships
for students of both countries.
How would you describe the
business climate in Mozam-
bique for Vietnamese investors?
Over the past 10 years, Mo-
zambique has been successful
in reforming its economy. As
a result, it has become one of
the fastest growing economies
in Africa. Ongoing govern-
ment commitments such as
improving the legal framework
for investment and taxes and
applying information technol-
ogies in customs and adminis-
trative procedures have turned
Mozambique into an attrac-
tive destination for foreign in-
vestors, including those from
Vietnam. Meanwhile, Mozam-
biques seaport system is a
gateway for trading companies
to penetrate major land-locked
markets in the region such as
Zambia and Zimbabwe.
Besides telecommunications,
agriculture, and education,
which economic sectors hold
the greatest potential for com-
mercial relations between Mo-
zambique and Vietnam?
In addition to telecommu-
nications, healthcare, agri-
culture, and education, both
countries have huge poten-
tial, and we need to increase
cooperation in trade, invest-
ment, sea shipping, construc-
tion, science, and technology.
These are the areas on which
ministries and agencies from
both sides agreed for the co-
operation roadmap at the 3rd
Meeting of the Inter-govern-
mental Committee in Hanoi
last June. Besides bilateral
trade, both countries should
strive to become a gateway for
the other to access and pene-
trate different markets in the
South African Development
Community (SADC) and ASE-
AN. Our bilateral relations are
built on solidarity and mutual
support. I am convinced that
the friendship and multifacet-
ed cooperation between Viet-
nam and Mozambique will
continue to blossom, bringing
more tangible benefits to and
meeting the expectations of
the two peoples.
BIO
Pham Binh Minh was
appointed Deputy Prime
Minister and Minister of
Foreign Affairs at the 6th
session of the 13th National
Assembly in November
2013. Among the numerous
positions held over the
course of his prestigious
ministerial and diplomatic
career he has held the office
of Minister and Deputy Chief
of Mission at the Embassy
of Vietnam in the US. He
has a Masters degree in
International Law and
Diplomacy.

BIO
Tagir Carimo studied Civil
Engineering at Maputo
Industrial Institute Eduardo
Mondlane and Tourism
Management at Catholic
University of Mozambique.
He became Mayor of Pemba
in 2011. Previously he had
worked as public servant for
the Ministry of Public Works
in Pemba.
high HOPES
TBY talks to Tagir Carimo, Mayor of the City
of Pemba, on the Cabo Delgado LNG project,
twinning with Sines, and the potential for
hydroelectric energy.
Pemba will play a strategic role
in the development of the LNG
project in Cabo Delgado. How
will the city change to support
this industry?
Pemba is developing faster
than ever, so we need to im-
prove our infrastructure in
order to address the result-
ing pressures. Investment in
Pemba is needed for roads,
hospitals, and other infra-
structure. We are finishing
our development plan for
Pemba, and are excited about
the changes that will occur
over the coming decade. We
know that the oil and gas
industry will bring about
some unexpected challenges,
which is why we are trying to
be as prepared as possible.
Around $200 million is being
invested in the port, and we
are still in discussions about
the new airport.
What will be the impact of the
Port of Pemba once finished
for the city and the country at
large?
Ports represent a good op-
portunity for us, and for all
investors, supporting smaller
industries, and helping to de-
velop the construction indus-
try too. With all of the indirect
effects the construction of
the port will have, I believe
the project will transform the
city and the region. We have
been working to attract more
investors to build hotels and
supermarkets, and we have a
South African group that will
start to build a huge mall here
in April.
Diplomacy
GUEST SPEAKER
What is your strategy for attract-
ing such investors to Pemba?
We are finishing our develop-
ment plan and are trying to
promote the city, while also
helping investors to acquire
land. We are working to pro-
vide better incentives because
investors must be given solid
reasons for investing in an
area, and we are looking into
reducing taxes, among other
strategies.
Last year Pemba was twinned
with the Portuguese city of
Sines. What can the two cities
learn from each other?
Sines was originally a small vil-
lage, but expanded rapidly as a
result of the oil boom. Pemba
will be the same, as while it re-
mains small, we can see how it
will grow in the future. We can
learn many things from Sines
to avoid making mistakes that
they may have been made in
the past, and we are fostering
close dialogue between the
two municipalities.
Besides the oil and gas indus-
try, what would you say are the
sectors set to grow the most
in Pemba over the coming de-
cade?
The tourism sector is an area
to watch. I also believe that a
network of SMEs from differ-
ent sectors will be created to
support the larger firms, and
foresee much growth in in-
dustry in the region.
With tourism representing an
important part of the economy,
how will you ensure that proj-
THEBUSINESSYEAR 21
IN NUMBERS
Pemba
Approximately
200
million USD being
invested in the port
ects do not negatively impact
the environment?
We are acutely aware of the
challenges presented by such
rapid growth. Tourism is a key
part of Pembas development,
which is why there are local
and regional regulations to
avoid environmental damage.
We are encouraging investors
to build eco-friendly projects
and to minimize adverse effects
on the natural environment.
What are some of the larger
projects you will undertake in
Pemba over the next five years?
We want to provide transport
infrastructure such as roads,
but also to increase the level
of water and electricity supply.
There will be considerable de-
velopment of these utilities in
the near future. In addition,
we are planning to construct a
new dam. We are finishing the
initial design drafts, and hope
to have these complete by July.
The dam is to be constructed
on the Megaruma and Lrio
rivers, and will supply both
water and hydroelectric power
to the area.
22 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS PEMBA PORT LOGISTICAL BASE
VINTAGE PORT
The location of IN 1904, the Niassa Company established a
Pemba, next to small port on the astonishingly beautiful coast
of Cabo Delgado, taking advantage of the op-
Rovuma Basin and portunity of what is one of the largest natural
in relative proximity harbors in the world. As Pemba steadily grew
to the expanding around its port, it became a top tourist destina-
Asian market, will tion, thanks to its glorious beaches, coral reefs
and proximity to the Quirimbas National Park,
play a key role in one of the most prominent natural attractions
the development of in southern Africa. Today, more than 100 years
Mozambiques future after its creation, Pemba is transforming itself
into one of the most important hubs on the Af-
ventures. rican coast, and the first port to be built in Mo-
zambique that is entirely dedicated to interna-
tional oil and gas trading.
Mozambiques recent natural gas discover-
ies by Anadarko and ENI in the Rovuma Basin
area have completely changed the perspectives
of Mozambiques economy. The reserves are
believed to be above 190 trillion cubic feet. It
now aspires to be the worlds third largest LNG
exporter, according to Anadarko Petroleums
studies. The Texas-based giant calculates that
there are enough resources to support the de-
velopment of 50 MMTPA in future years, which
would represent approximately the 20% of the
current global demand.
The government is facing this opportunity by
constructing the Pemba Port Logistical Base.
The mission of this enormous project is to offer
logistic and integrated port services to the com-
panies operating in Rovuma Basin, Anadarko
and ENI, and its suppliers.
The first phase of the base, which is to be
completed by the second half of 2016 will cost
around $200 million and it will build 300 meters
of quay, capable of receiving ships with a maxi-
mum draught of 12 meters, and it will have a va-
riety of other facilities on a 36-hectare plot. The
Image: F Mira
entire project will consist of four phases, which
will sum a total of $1 billion, and it will con-
struct 5km of quay. There are also future plans
of building more infrastructure as a shipyard,
used to repair the vessels, and an LNG termi-
nal. The next three phases will start depending
on the necessities of the operators. The project
has been sub-leased by ENHILS, a partnership
between the National Hydrocarbon Company
of Mozambique and Orlean Invest, the leading
logistics partner for the oil and gas industry in
Nigeria, Mozambique, and Angola.
The construction has been conceded to Por-
tos de Cabo Delgado, a company set up by the
Government of Mozambique, through ENH
and Mozambique Ports and Railways (CFM).
PCD will give support to the onshore and off-
shore logistic needs of the gas and oil industry
in the area.
The initial phase of the project is expected
to create a large amount of direct jobs. As the
Mayor of Pemba, Tagir Carimo, explained in an
interview with TBY, the new infrastructure will
expand the development of the region by cre-
ating small industry and helping the housing
industry. The city government has worked to
attract more investors to the city, such as hotels
and supermarkets. The South African group At-
terbury started to build a huge mall in April. It is
actively working in the infrastructure develop-
ment of the region, such as roads and hospitals,
and is also planning to build a new airport that
will help to enhance the communications. They
also intend to increase the level of water and hy-
droelectric supply by building a new dam across
the Megaruma and Lurio rivers.
The government has acknowledged the great
opportunity they are facing and are keeping up
with the many challenges that this opportunity
will create. There is no doubt that the develop-
ment of the port will transform Pemba into one
of the core hubs, not only in northern Mozam-
bique, but in all of sub-Saharan Africa.

As Christine Lagarde pointed
out at the Africa Rising confer-
ence in Maputo in 2014, Mozam-
biques growth needs to become
more sustainable and inclusive.
What are the IMFs recommen-
dations for achieving this?
Mozambique has been record-
ing impressive growth, reach-
ing an average of 7.5% to 8%
over the past 20 years. While
this is impressive, to achieve
structural transformation, the
country will need to sustain
these levels over a period of
SAGE
50 years, as two decades is not
sufficient to achieve solid de-
velopment. Growth will also
have to be more inclusive. First
advice of all, eighty percent of jobs in
Mozambique are generated in
the agricultural sector. Hence,
it is difficult to foster inclusive
TBY talks to growth without improvements
Alex Segura- in that sectors productivity.
Secondly, despite the fact that
Ubiergo, Resident Mozambique has done much
Representative of to improve the domestic busi-
the International ness environment, there is still
excessive red tape to contend
Monetary Fund (IMF),
with, and it remains costly to
on sustainable growth, set up a business. Efforts to
avoiding the Dutch improve the business environ-
disease, and public- ment must include better en-
forceability of contracts, and
private partnerships. more simplified and transpar-
ent administrative systems.
Another pillar of inclusive de-
velopment is financial inclu-
sion. The fact is that 75% of the
population still lacks access to
any form of credit. It is difficult
for citizens and entrepreneurs
to implement their ideas if
they lack access to financing.
Finally, as there will always be
citizens who are unemployed,
or else underprivileged or
handicapped, social policy
must protect those that can-
not sustain themselves in the
market system.
The natural resources boom
can be a source of growth, but
also has the potential to jeopar-
dize the economy. What are your
recommendations for avoiding
Dutch disease?
There are two critical issues.
The first is the importance
of gradualism. If the country
starts spending resources too
quickly, this will generate dis-
tortions in the economy. There
Diplomacy
International
Monetary Fund
(IMF)
Megaprojects
have contributed
50% to exports
Average
economic growth
of between 7.5%
and 8% for the
past 20 years
will be inflation, the exchange
rate will appreciate, and those
resources will generate unin-
tended negative consequenc-
es. The second issue is that the
country needs to be careful
to strengthen the institutions
that will provide and prepare
investment projects. Projects
financed with resource reve-
nues should help transform
wealth on the ground into oth-
er assets such as infrastructure
or human capital. The other
critical idea is to introduce
a fiscal rule to help smooth
out volatility. This means that
the country could establish a
sovereign wealth fund or sov-
ereign development fund, in
which to save a percentage of
revenues to stabilize the bud-
get in the event of a major drop
in oil or gas prices in the future,
as we are observing now.
How can public-private partner-
ships meet increasing demand
for access to electricity in Mo-
zambique?
Electricity is an area in which
Mozambique can make a
major contribution with its
significant hydropower po-
tential, and also through the
use of natural gas. Public-pri-
vate partnerships are crucial
instruments for increasing
infrastructure investment
in Mozambique. The energy
sector is a prime example of
where cooperation between
the public and private sectors
THEBUSINESSYEAR 23
INTERVIEW
is important, but public-pri-
vate partnerships are also
based on complex contracts
and can become a source of
fiscal risk. Mozambique will
have to increase its capacity
to deal with PPPs, including
by hiring a new group of qual-
ified experts in this area and
more frequent use of interna-
tional consultants.
What is your ten-year outlook
for Mozambique?
Mozambique is one of the
few countries in Africa that is
booming. It has tremendous
potential thanks to its geo-
graphic position, resources,
and a history of prudent mac-
roeconomic policy manage-
ment over the past decade.
There are also some consid-
erable challenges. For exam-
ple, up to 43% of the coun-
trys population suffers from
chronic malnutrition, and
infrastructure gaps are enor-
mous, and so it needs to step
up efforts to deal with some of
these weaknesses. A focus on
growth, financial inclusion,
infrastructure investment, ef-
fective natural resource man-
agement, and social develop-
ment can make a difference.
While it is not easy to find
practical ideas to overcome
these challenges, I remain op-
timistic that Mozambique can
succeed.
BIO
Alex Segura-Ubiergo was
born in Barcelona, Spain,
and studied economics
and political science at
the Universitat Autnoma
de Barcelona before
completing a PhD in political
economy at Columbia
University in the US. He
joined the IMF in 2001, and
has held several positions
within the organization since
then, including Head of
Mission to Ecuador, Senior
Economist in Brazil, and
Deputy Division chief in the
Fiscal Affairs Department.
He has served in his current
position for 18 months.
24 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
scoring goals
How would you describe Mo-
zambiques progress in achiev-
ing the Millennium Develop-
ment Goals (MDG)?
Mozambiques progress has
been steady, but uneven. In
some areas, such as educa-
tion, gender equality and to
some degree health, progress
has been substantial. For ex-
ample, enrolment rates in
primary education have ris-
en steadily over the past 15
years. Completion rates could
use improvement, but gender
parity in education has also in-
creased to almost 50%. There
is always room for expansion
and improvement, specifically
in enrolment rates, and there
are still efforts being made to
open more schools in remote
areas. We have seen child
mortality MDGs being met in
the health sector, and though
maternal mortality rates have
been decreasing steadily,
from 650 to 100,000 down to
400, Mozambique probably
will not reach the MDG goal of
close to 200. In general, prog-
ress has been slow in the area
of communicable diseases;
malaria still remains a serious
problem. Between 1995 and
2006, there were substantial
strides made in the reduction
of absolute poverty, but over
the past 10 years progress
has slowed. In 2000 the rate
of poverty was close to 60%,
and 15 years later it has been
reduced to around 50%.
TBY talks to Mark
Lundell,
Country Director
of the World Bank
for Mozambique,
Madagascar,
Mauritius, Comoros,
and Seychelles on
hitting benchmark
targets and turning
crops into an industry.
Agricultural
growth 4-5% per
year for the past
10 years
Poverty rate
reduced by 10%
since 2005
More than three quarters of the
population are involved in agri-
culture, but this sector contrib-
utes only about one quarter to
GDP. How can the government
transform this sector from
subsistence farming to a more
efficient and productive agro-in-
dustry?
Agriculture has actually been
growing reasonably well at
4-5% per year over the past
10 years, but it needs to grow
faster. The challenge is to
bring in more commercially
oriented small farmers. To
some degree, the government
needs to provide knowledge-
able services to the farmers,
and locate market opportuni-
ties. While private enterprise
is the best estimator of sus-
tainable economic activity as
opposed to government esti-
mates of where comparative
advantages exist, there needs
to be a matching of private
sector investment with ancil-
lary service support from the
government. Mozambique
relies on intermediary smaller
farmers, which is a model we
see working worldwide. The
best model is one in which
farmers can form associations
with training and govern-
mental support such that in
negotiations and partnership
forming with large enterpris-
es they maintain equal status.
To increase access to markets,
farmers need more tertiary ru-
ral roads and perhaps the es-
tablishment of more rural ag-
ricultural credit institutions.
Lastly, the government plays
a role in extending the degree
to which Mozambican farms,
small and large use irrigation
in their production.
Unsatisfied energy demands
and access to electricity re-
mains a concern in Mozambique
for individuals, companies and
potential investors. What role
can public private partnerships
play within this sector?
The main role of the private
sector will be primarily in gen-
eration and, to some degree,
transmission. The generation
of natural gas will be the prime
focus for the private sector,
especially as the natural gas
in Palma becomes available.
Consortiums are also pur-
suing an energy generation
installation on the Zambezi
River. Rather than extend-
ing the grid, many countries
have been finding off-grid
solutions, with solar energy in
particular. The public sector
can assist with grants to es-
tablish localized solar gener-
ation. In many schools for ex-
ample, programs of this type
have been developed. Once
consumers realize the value
of power, private companies
can usually find customers to
provide cost effective main-
tenance service on an annual
basis. Public private partner-
ships can establish public in-
stallations with private sector
maintenance service.
How would you describe the
role that foreign financed me-
ga-projects play in Mozam-
biques economic growth?
We have seen significant
growth in some of the natural
resource sectors, such as alu-
minium, coal, and minerals,
which has helped to drastical-
ly improve the level of produc-
tion, added value and exports.
There is direct employment
associated with this, in mining
and construction in particu-
lar, though I think the employ-
ment impact of mega enter-
prise investment has been less
than expected. Large-scale in-
vestors recognize this, which
has been evident in changing
approaches to stimulating
groups of SMEs to be more fo-
cused on meeting the needs of
the megaprojects.
BIO
Mark Lundell is the World
Bank Country Director for
Mozambique, Madagascar,
Mauritius, Comoros and
Seychelles. An American
national, his experience
includes previous positions
in China, Brazil, and
Europe and Central Asia.
Mark Lundell was Sector
Manager for Sustainable
Development for China and
Mongolia in the East Asia
and Pacific region from
2012-14. Prior to that post,
he was the Sector Leader
for Brazil for Sustainable
Development (2006-12).
He worked in the Europe
and Central Asia Region
of the Bank between
1993 and 2006 as a Lead
Agricultural Economist
and Sector Coordinator. He
holds a PhD in Agricultural
and Resource Economics
from the University of
California Berkeley, and
a BSc in Economics from
Georgetown University.
 THEBUSINESSYEAR 25

28
Loureno Sambo, Director
General of the Investment
Promotion Centre, on creating
services for foreign companies.
34
Jose Parayanken, President of
Mozambique Holdings Limited
(MHL), on initiatives to fund
infrastructure.
38
International conglomerates see
an opportunity for considerable
growth, given the markets
relative immaturity.

Economy
REVIEW

Mozambique is edging closer to the realization of its potential in the

coal and gas industries, with immense reserves, both onshore and
offshore, ready for exploitation.

THERE IS A LIGHT
M
ozambiques eco-
nomic growth
continues un-
abated, reaching
8% in 2014 and consequently
continuing a trend of over 7%
growth since 2010, bringing
the figure to over $16 billion.
According to the IMFs World
Economic Outlook from Oc-
tober 2014, projected growth
for 2015 stands at 8.2%. This
strong growth has been driv-
en by heavy investment in the
coal and gas industries, with
the discovery of extensive
unexploited reserves con-
tinuing to attract capital from
diverse international sources.
In preparation, massive infra-
structure projects have been
undertaken over the past
decade to improve the trans-
portation and logistics capa-
bilities of the country, and
policies have been enacted
to ensure that long-term and
inclusive economic growth
will come as a result of this
resource boom.
UNFORESEEN
FACTORS
In 2012, inflation had de-
clined to 2.1% from a much
higher 10.4% in 2011, a pos-
itive development attributed
to lower food prices. Howev-
er, the inflation rate for 2014
was 4.2%, the figure climb-
ing since 2013, according
to World Bank data. In both
years the country was affect-
ed by devastating floods in
the south of the country and
along its major rivers. This
unfortunate turn of events
was repeated again in 1Q2015,
an ominous pattern that will
continue to somewhat hin-
der the key economic sector
of agriculture. However, in-
flation has broadly remained
below the governments pre-
dicted rate of between 5-6%,
in part because of lower glob-
Despite flooding prompting a minor al commodity prices in 2014.
acceleration in inflation, a history of The consumer price index for
Maputo, Beira, and Nampula
prudent macroeconomic management was 1.93% for the year, with
bodes well for the short term. the metical staying stable
26 THEBUSINESSYEAR MOZAMBIQUE 2015
ALFREDO
FILIPE SITOE
Director, National
Institute for
Standardization
and Quality
(INNOQ)
INNOQ has to be
sufficiently prepared to
overcome existing and
imminent challenges by
ensuring that products
and services are of
adequate quality. We also
want to help Mozambique
become a country that
can compete with others
in Africa and beyond.
To do this we need to
train people, because
for all organizations,
their most important
resource is manpower.
To this end, we have
started negotiations with
the Eduardo Mondlane
University to introduce a
Masters degree in quality in increased debt. Public spending as a share
engineering from 2015.
on the domestic exchange market and Bank
of Mozambique policies remaining focused
on sustaining liquidity. The metical devalued
against the dollar by over 5% in 2014, but has
been performing better against the rand in
South Africa, its primary trading partner. De-
spite warnings from the Central Bank that the
recent floods could accelerate inflation due
to reduced mobility and trade, the consistent
policies followed by the economic regulators
in recent years suggest that macroeconom-
ic targets for 2015 will be met. The monetary
base expanded by over 20% in 2014.
SPENDING TRENDS
The economys elevated rate of growth, based
as it is on its vast proven gas and coal depos-
its, attracts high levels of foreign direct invest-
ment. The various megaprojects being devel-
oped in these sectors are capital-intensive,
requiring funding for the purchase of techni-
cal equipment, electronics, and supplies such
as refined petrol. For this reason, Mozambique
has the highest current account deficit in the
world, standing at 46% in 2014, according to
the World Bank. However, the fact that the
bulk of this deficit has been paid for by invest-
ment from abroad does not suggest the defi-
cit will undermine broader macroeconomic
growth once resource exports begin in earnest.
The deficit will widen as imports of these
crucial materials continue to support the con-
struction of LNG facilities and the nations
coal export infrastructure. However, a current
account surplus has been predicted over the
coming decade as the countrys ambitions
become reality. Additional costs that are exac-
erbating the deficit include a raised wage bill,
and investment in maritime security following
a 2013 bond issue for tuna fishing and private
patrol services on the Mozambique Channel.
Maritime security in the region is also being
advanced by economies such as India and
China, whose investment in the countrys gas
reserves necessitate guaranteed access to its
ports. Costs related to the general elections
have also increased public spending, resulting
of GDP stood at over 40% in 2014.
IMPORT-EXPORT
Non-crude petroleum products represent
around a fifth of imports, coming in at ap-
proximately $1.12 billion in 2012, indisput-
ably the principal imported commodity. The
remainder of the countrys diverse import mix
comprises much smaller volumes of prod-
ucts, ranging from vehicles to refined metal
and construction materials, fertilizers and
advanced chemicals to medicines and rice,
wheat, and meslin. On the sales side, alumi-
num has dominated the countrys export bas-
ket for over a decade, as output from the Mozal
smelter, established in 2000, laid the founda-
tions for other major foreign investment proj-
ects. The company contributes substantially
to GDP, at approximately 7%, and annually
produces over 550,000 tons of aluminum ingot
for export via Europe to other markets such
as Asia. Midal, a leading international alumi-
num cable manufacturer, set up operations
close to the MOZAL facility in 2013. This was
a pioneering development in a sector that had
previously been geared exclusively toward ex-
ports. Though majority-operated by BHP Bil-
liton, Mitsubishi, IDC, and the government of
Mozambique are all shareholders in the com-
pany. Aluminum represented around 24% of
total exports in 2014, but is expected to drop
to 21% in 2015 as coal emerges as a more im-
portant element of the export mix. The coun-
try is projected to have joined the top-ten coal
exporting nations in the world by 2017, as its
untapped coal reserves, estimated at around
20 billion tons, are exploited.
Vale, the Brazilian mining firm, has invested
in a new coal terminal valued at over $6 billion,
as well as a 900km railway to augment their
extractive industry. Over the course of 2015,
coal is projected to replace aluminum as the
leading export item for Mozambique, rising
from a 17% share of the total in 2014 to an esti-
mated 27% share, and will likely maintain this
position until the countrys LNG capacities are
realized later in the decade. Coal exports are
expected to reach over 40 million tons with-
in three years, with the sector to be valued at
well over $700 million. Investment continues
to flow in from diverse sources, including In-
dian and Japanese groups, both public and
private, aiming to secure future supplies for
their electricity generation networks. In gener-
al, the sector is showing a lot of promise, with
Mozambique reaching compliance status on
the Extractive Industry Transparency Initia-
tive (EITI), confirming its reputation for the re-
sponsible exploitation of its natural resources.
HIGH VOLTAGE
Mozambiques government is fortunate to not
have such worries. Since the completion of
the colonial era Cahora Bassa hydroelectric-
ity project on the Zambezi river, the country
has had a considerable electricity surplus.
Sources of electricity generation will become
increasingly diverse over coming years also, as
Ncondezi, the prominent power development
company working out of coal-rich Tete prov-

ince completes work on its coal-fired power
plant. The facility will be set up in phases of
300MW, with the first stage set to be complete
by 2017. Ultimately, capacity will reach as high
as 1,800MW. Vale is also working to construct
a coal power station of a similar capacity, and
a gas-fired plant is set to come online in Mapu-
to later in the decade also.
IN A DAYS WORK
Agriculture remains the principal economic
sector, with swathes of arable land across the
country yet to be effectively cultivated. For a
country of such vast area, Mozambique is rela-
tively sparsely populated. Approximately 80%
of the workforce is employed in agriculture,
and the sector contributes almost a quarter
of GDP. There are 3.8 million farms across
the country, with the vast majority of these
being subsistence farms. Difficulties related
to the transport and export of goods due to
insufficient infrastructure have held back the
development of large-scale farming. However,
prospects for the resolution of this issue lie in
the construction of transportation solutions
for the extractive sectors, which could also
be used to facilitate the export of agricultural
produce. Tobacco is one of the main and most
profitable crops. Sugar cane and fishing are
other key segments.
While the majority of the working popula-
tion is employed in agriculture, many more
jobs could be created as a result of the emerg-
ing gas and energy projects, but traditionally
these segments have not provided much em-
ployment. The export of aluminum and activ-
Economy THEBUSINESSYEAR 27
The various megaprojects being Economic Structure as
developed in these sectors are % of GDP
capital-intensive, requiring funding for Source: NKC Research
the purchase of technical equipment,
electronics, and supplies such as
refined petrol.
ities in extractive industries typically provide
fewer, more specialized positions. Informal
Agriculture 31.5
employment is estimated to account for over
90% of the labor market, which numbers 11.6 Industry 22.4
million individuals. Unemployment stands at Services 46.1
around 8%, with a higher proportion of the
300,000 young people that enter the labor mar-
ket each year going without jobs. The growth GDP per Capita (USD)
of the economy and any accompanying in- Source: World Bank
creases in employment options have not had
the desired effect on reducing poverty, how- 700
ever. The countrys per capita income stood
600
at just one-third of the average for the Sub-Sa-
haran region in 2013. Despite these consider- 500
able challenges, the fortunes of the populace 400
could change when the megaprojects that are
still being developed finally come online. The 300
support services and auxiliary industries that 200
will spring up around the expanding coal and
100
gas sectors will offer a broader distribution of
opportunities, fostering more sustainable eco- 0
nomic growth than that of the past decade. 2007 2008 2009 2010 2011 2012 2013
28 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
What are the most innovative
services that you have created
to support new companies en-
tering Mozambique?
First of all we had to establish
ourselves in each of the coun-
trys 11 provinces to widen
the scope of our institutional
assistance to investors, and
secondly we had to equip our
institution with appropriate
human and technical re-
sources. These were the most
important steps that we have
successfully taken. Thirdly,
we had to improve our rela-
tions with other institutions
involved in the process of at-
tracting investment, as well
as with relevant government
ministries who have a strong
say in the process of invest-
ment approval, such as the
Ministries of Agriculture, In-
terior, Labor, Environment,
Finance, and Mineral Re-
sources. The government
also recently approved a new
investment promotion strat-
egy to be implemented over
the next three years, which
is expected to substantially
increase the investment flow
into the country.
What are the most common
concerns of and challenges
faced by international compa-
nies upon entering the market?
I would identify the rather
limited development of basic
infrastructure in rural areas,
as well as a low level of scien-
tific literacy and professional
training, inadequate electrical
power distribution, and sus-
ceptibility of certain produc-
tive processes to international
price fluctuations.
PILLAR
of strength
TBY talks to Loureno Sambo, Director General
of the Investment Promotion Centre (CPI), on
creating services for foreign companies, key
projects under development across the nation,
and the ever-improving business environment.
IN NUMBERS
Investment
Promotion Centre
ects will have a major impact
Mozambique sees
annual growth of
7.5%
What would you say are the
most significant large-scale
projects set to take place in the
country in the near future, and
how will they impact the broad-
er economy?
One of the largest forthcom-
ing investment projects is the
LNG plant set to cost some
$30 billion. This project is to
be developed in the Rovuma
basin, in northern Mozam-
bique, with the first exports
due to start in 2018. There are
other large-scale projects as-
sociated with gas exploration
in the Rovuma basin, such as
setting up a container termi-
nal, a pipe-coating plant, a
shipyard, bunkering, an LNG
receiving terminal, a fertilizer
plant, and gas to liquid (GTL),
and dimethyl ether (DME)
facilities. In addition, CPI re-
cently approved investment
projects worth more than $7
billion, mainly in hydro, coal,
and gas power plants. The in-
vestment will also cover the
development of the northern
ports of Pemba and Palma,
where a giant logistics base
and LNG production plants
are planned, which will use
gas produced from offshore
fields in the Rovuma Basin be-
ing developed by US oil major
Anadarko Petroleum Corp
and Italys ENI. These proj-
on the entire economy direct-
ly or indirectly through their
contribution to GDP, and the
creation of employment, es-
pecially in Pemba and Palma.
Moreover, Mozambique will
enjoy much higher interna-
tional visibility as one of the
most important producers
and exporters of natural gas.
Mozambique's economy is
already growing at 7.5% an-
nually. In the medium term,
as a result of the LNG plant
and other megaprojects in the
mining sector, the economy is
expected to see acceleration
of 9%, or even 10%.
What sectors and regions have
you identified as having the
greatest potential for growth?
Each of the three main regions
of the countrythe south,
center, and northare prime
investment destinations. The
sectors with the greatest po-
tential include agriculture and
agro-industry, construction
and public works, mineral re-
sources and energy, services,
transport and communica-
tions, and tourism.
How would you describe the
current business environment
in the country?
It is healthy, as we remain one
of the most stable countries in
the region, both socially and
politically. Dialogue in our so-
ciety is the order of the day. All
institutions mandated to as-
sist investors are functioning
properly and in concordance
with laws in force in the Re-
public of Mozambique, and in
a well-coordinated manner.
Legal instruments have un-
dergone major reforms. These
include business licensing,
fiscal, investment, and labor
laws. And meanwhile, infra-
structure such as ports and
railways, energy and water
supply, roads and bridges,
telecommunications, and air-
ports are being upgraded.
BIO
With an academic
background in Economics
and Agricultural Business
Management, Loureno
Sambo has been the
Director General of CPI
since 2010. He was
previously the Economic
Adviser to the Minister of
Planning and Development,
and also taught math-
ematics at Maxaquene
Secondary School, as well
as politics, economics,
mathematics, and statistics
at the Maputo Commercial
School from 1979 to 1984,
and public finance at the
School of the National
Planning Commission. In
1996, he was the Financial
Manager of the Maputo
Development Corridor, a
World Bank-funded project
for the restructuring of the
CFM-Mozambique Railway
Company.
30 THEBUSINESSYEAR MOZAMBIQUE 2015
B2B TRADE PROMOTION
JOO JOS ROGRIO MANUEL
MACARINGUE President, Confederao
President, Mozambique das Associaes
Econmicas de
Institute of Export
Promotion (IPEX) Moambique (CTA)
ROARING
TRADE
Agencies tasked with improving awareness of
Mozambiques trade potential internationally are
playing a key role in supporting the economy.
What have been your compa-
nies main achievements?
JOO JOS MACARINGUE
IPEX is a government institu-
tion with the objective of as-
sisting SMEs seeking interna-
tional markets. Many of these
SMEs are producing, but have
no idea how or where to sell,
or into which markets they can
channel their products. We as-
sist them throughout the whole
process in order to create the
skills to produce and fulfill the
needs of the international mar-
ket.
ROGRIO MANUEL The main
achievement of our 18 years in
business has been the institu-
tionalization of a private-pub-
lic dialogue and consolidation
of a partnership with the gov-
ernment. This has helped to
pursue reform initiatives. CTA
has grown as an organization,
putting us in a position to meet
the demand for reforms in Mo-
zambique.
How would you describe the
current level of Mozambique's
international trade?
che district, operated by the
JJM Although international in-
terest has increased, the current
account is booming because of
the countrys natural resources.
Nevertheless, we recognize that
the importance of a sustainable
economy depends on agricul-
ture because the country is
agriculture-based. That is why
we think that to be sustainable
in the long term, we have to
become involved in agro-pro-
cessing by adding value to our
products. We are no longer in-
terested in selling raw materi-
als, which is why we are in the
process of talking to investors
and inviting them to come and
set up processing plants. We
are still not satisfied with the
volume we are seeing, although
we are exporting to Europe and
even to the US.
What are some of the major
SME operations in Mozam-
bique, and what are the main
challenges they face?
RM The lack of a reliable na-
tional database of companies
makes it difficult for analysts
and policymakers to get a clear
perspective of businesses op-
erating in different sectors and
provinces. However, several
studies reveal that access to
credit, technology, and land
remain major challenges for
SMEs. Operating in Tete and
Moatize, there are nine coal
mining companies including
Vale Mozambique, Rito Tin-
to Mines of Benga, Mine of
Moatize, JSPL, Mines of Re-
vubu, Mid West 1151, Rio Tin-
to Coal Zambezi and Nkondeze;
this group of companies invest-
ed $8.5 billion in 2012, which
represented approximately 60-
70% of GDP. In Nampula the
main mining operations are the
heavy sands Moma, Kenmare,
and more recently the heavy
sands of Sangage in the Ango-
Chinese company Haiyu Mo-
zambique Mining Company.
What are your objectives for the
next few years?
JJM We want to develop, and
increase the countrys potential
to become a global player, start-
ing first with the region. We are
confident that the enthusiasm
and commitment arising from
the recent elections, and the
clarity and vision of the incom-
ing president, will contribute
tangibly to development. Our
target is SMEs, which if sup-
ported are likely to improve not
only the welfare of those work-
ing in them, but of the country
as a whole. That underlines the
key role of IPEX, which requires
resources that are often scarce.
Yet I think that government in-
vestment within the institute is
widely recognized as a facilita-
tor of socioeconomic develop-
ment.
RM In terms of the CTAs role
as the leader of Public-Private
Dialogue (DPP) to improve the
business environment, the pri-
ority is to reform the current
DPP model, and the CTA is al-
ready working on a blueprint
to this end. Another critical
consideration is Mozambiques
need for a policy on local con-
tent and an aligned industrial
policy, to ensure that the ben-
efits of natural resource ex-
ploitation are also extended to
Mozambicans, and to set up
bases for industrial develop-
ment and structural transfor-
mation.

ALL FOR
SME?
The International Growth Center
(ICG) in 2012 concluded that the
domestic construction sector,
which predominantly consists of
SMEs, had been unable to break
into the formal market dominated
by foreign players. Nevertheless,
the overall situation has improved
in recent years.
THE AFRICAN Development Bank Group
(AfDB) on November 14th, 2014, signed a $9
million loan agreement with Moza Banco to
promote and support Small and Medium En-
terprises (SMEs) in Mozambique. The deal is
part of the AFDBs $125-million Africa SME
Program. Moza Banco is one of Mozambiques
fastest-growing financial institutions with a
strong focus on small businesses.
SMEs are the heart and soul of the Mozam-
bican economy. They comprise no less than
98.7% of the market, a report by the Institute
for the Promotion of Small and Medium En-
terprises (IPEME) concluded, yet they only
contribute 28% to GDP. Mozambiques recent
economic growth has largely been driven by
megaprojects, which are capital-intensive,
export-oriented, and mostly in the hands of
foreign firms.
In the World Banks 2014 Doing Business
Report, Mozambique climbed seven places,
partly as a result of the countrys SMEs gain-
ing market opportunities. A key role is played
by IPEME. Founded in 1998, the government
agency is charged with improving the overall
Economy
business climate for small businesses by doing
research, providing information, and offering
corporate assistance.
IPEME also found that, when compared to a
few years back, Mozambiques SMEs are bet-
ter prepared today to face future challenges.
This is largely due to their greater maturity,
as well as their improved ability to plan ahead
and promote their work. However, many con-
straints remain, including: the lack of skilled
labor, poor access to financing, trade barriers,
lack of infrastructure, complex bureaucratic
procedures, and corruption.
Many of these complaints are echoed by the
World Banks International Finance Corpora-
tion (IFC), which lists nine barriers as the main
obstacles for SMEs operating in Mozambique.
In addition to the lack of a proper database in
which clients can find potential partners, the
IFC denounces the high cost of electricity, the
high tax rates, and the amount of time and ef-
fort it takes for SMEs to obtain permits.
In addition, it is extremely hard for SMEs to
obtain loans. Due to high interest costs, access
to the credit and limited capital market, the Mo-
zambican businessman carries the investment
using [his] own funds and loans from friends or
relatives, or cease to invest, the IFC conclud-
ed. Another problem preventing SME access to
bank credit, are the demands of guarantees or
collateral. Especially, young and newly-created
firms are unable to meet such demands.
The IPEME does more than research and
provide information. Since 2008, we have
created four business development centers
in Maputo, Tete, Manica, and in Cabo Delga-
do, said IPEME General Director Claire Ma-
teus Zimba. IPEME also signed an MoU with
Anadarko in 2014. The goal is to ensure that
Mozambican SMEs can be linked with and
benefit from the activities of Anadarko.
Anadarko is the giant American energy firm
that is set to invest billions of dollars to tap into
the offshore Rovuma Basin with a projected
volume of 150 tcf of gas. Anadarko is working
with Pyxera Global to ensure that information
related to local companies is easily available
to international engineering and construc-
tion contractors. Pyxera also works on offer-
ing technical assistance and capacity building
services to ensure the local firms are capable
of working according to international quality,
health, and safety standards.
While Mozambiques SMEs should first
try to capture a greater share of the domestic
market, they at some point should focus on
export as well. Many of SMEs are producing,
but have no idea how or where to sell, or into
which markets they can channel their prod-
ucts, said Joo Jos Macaringue, President
of Mozambique Institute of Export Promotion
(IPEX). We assist them throughout the whole
process to create the skills needed to operate
on the international market.
THEBUSINESSYEAR 31
SMEs FOCUS
CLAIRE MATEUS
ZIMBA
General Director,
Instituto para a
Promoo das
Pequenas e Mdias
Empresas (IPEME)
What does the IPEME do to
support SMEs?
IPEME was created in 2008
by the government with a
mandate to undertake three
core activities. The first was to
develop, propose, and imple-
ment policies that support
SMEs in Mozambique. The
second was to provide services
to support SMEs, and the third
to implement and establish
SME platforms, such as our
business development centers
and incubators. Since 2008,
we have created four business
development centers, in Maputo,
Tete, Manica, and Cabo Delgado.
We are receiving EU and United
Nations Industrial Development
Organization (UNIDO) support
for our business incubation pilot
program, which will focus on
the carpentry and woodworking
sector.
What incentives should be
provided for SMEs to move into
the formal market?
A recent report found that
SMEs in Mozambique comprise
98.7% of the market, but only
contribute 28% to GDP. The gov-
ernment is currently reviewing
the second phase of its business
development strategy, which is
focused on taxation. Most SMEs
remain informal in order to avoid
taxation, as the system fails to
distinguish between micro or
small enterprises.
34 THEBUSINESSYEAR
INTERVIEW
TBY talks to Jose
Parayanken,
President of
Mozambique
Holdings Limited
(MHL), on initiatives
to fund infrastructure,
and ensuring that key
sectors best feed the
broader economy.
What is MHLs role in the im-
provement of Mozambiques
transport and logistics infra-
structure through the opera-
tions of Anfrena?
MHL, through Anfrena, has
been collecting road tax from
foreign-registered vehicles
entering Mozambique at all
border posts, on behalf of
the National Road Authority
(ANE) and Fundos de Estra-
das. The funds are utilized by
ANE for the maintenance of
national highways. Anfrena
promoted the idea of road
maintenance being paid for
by road users, rather than
out of the national budget,
and hence the conversion of
arterial roads into toll roads
with maintenance realized
through toll road conces-
sions. Thus, limited govern-
ment resources can be better
channeled to new road infra-
structure, rather than main-
tenance.
BIO
Jose Parayanken was born
in Kerala, India, and studied
Biochemistry at Delhi
University before acquiring
his MBA. His career began
at Exim Bank of India where
he was in charge of African
operations from 1984 to
1989. He later founded MHL
in 1990, which currently
has a capital base of $100
million and a staff of 1,500.
MOZAMBIQUE 2015
Working with
Anfrena to collect
road tax to fund
national highway
maintenance
What are your strategies to in-
crease the penetration of water
systems throughout the country
with Afrodrill?
Providing adequate drinking
water infrastructure was es-
sential for the implementation
of the governments post-civil
war rural socio-economic de-
velopment plan. More than
scarcity of resources, suc-
cessful implementation of
the project in rural areas was
a challenge since relevant
companies were ill-equipped
for rural areas. We saw an
opportunity to establish our
presence in those areas and
integrate into the rural ser-
vices supply chain. Afrodrill
was created to cater to such
requirements with perma-
nent self-reliant base camps
in key centers. Today Afrodrill
is an essential element of the
National Rural Water Devel-
opment Program in planning
and implementation, and
accounts for over 50% of the
program.
How would you describe your
rubber cultivation project and
similar MHL ventures in agri-
culture?
Since we have a strong rural
presence through Afrodrill, ex-
road to
PROGRESS
panding into agriculture was
a naturally synergistic diver-
sification. We acquired 10,000
acres of land in Lugela, Zam-
bezia, and involved the Rub-
ber Board of India to pioneer
rubber cultivation in Mozam-
bique. We have cleared and
prepared an area of 1,000 acres
and put in place an irrigation
system and developed a nurs-
ery for 100,000 plants annually
with the help of Jain irrigation
of India. To balance cash flows,
we are also experimenting
with commercial cultivation
of black pepper, turmeric, and
ginger, and are developing a
nursery based on tissue culture
even though these crops are
new to Mozambique, hence
considered high risk. We are
optimistic that it will open up
new avenues for Mozambi-
can farmers with high yielding
crops and we can provide the
technology and infrastructure.
Which industries present the
greatest potential for company
growth and what are your strat-
egies to achieve this?
We perceive considerable
potential in the engineering
sector. Mozambique is mov-
ing fast into resources de-
velopment, and port, road,
and real-estate infrastructure
has to keep pace. There are
few Mozambique-based EPC
contractors engaged in port
terminal construction and
petroleum downstream dis-
tribution infrastructure. We
have created knowhow and
skill levels and our team has
already rehabilitated and ex-
panded the handling capacity
of the Matola Fuel Terminal
from 1 million tons annual-
ly to 8 million tons. We have
introduced LPG and bitumen
terminals to Maputo and
Beira Ports for the first time,
to import LPG and bitumen
via sea rather than through
trucking from South Africa.
We constructed pipelines and
fuel storage tanks for Petro-
moc in Beira, the fuel terminal
and storage tanks for Vale in
Moatize, as well as LPG and
bitumen storage tanks and
heated pipeline in Maputo
and Beira. Overall, we foresee
a bright future for our engi-
neering and EPC contracting
operations in Mozambiques
port and petroleum down-
stream infrastructure sector.
How is the business climate,
and what of foreign interest?
The government of Mozam-
bique, through the Center for
Promotion of Investments
has streamlined the compli-
ance formalities for investors
and government systems,
which are by and large inves-
tor friendly. Since the country
has vast resources in agricul-
ture, fisheries, mining, tour-
ism, and the services sector
yet to be exploited, business
opportunities exist in re-
sources development for cor-
porate and individual inves-
tors. Investors from Portugal,
Brazil, and Asia are already
taking this opportunity.
What is your 10-year outlook for
Mozambique?
The coming decade will be
critical for the development
of Mozambique, since it is im-
perative for increased revenue
from accelerated domestic
output to reduce dependence
on external contribution to its
expenditure budget. Hence,
the national plan for resource
development and bringing
more of the population into
formal economic activity, as
well as domestic production,
has to be on track with ade-
quate investment and human
resources to ensure its suc-
cess. Systems and people are
in place to ensure success.
 Economy THEBUSINESSYEAR 35

HOLDING COMPANIES VOX POPULI

HOLDING ALL
O THE CARDS
ur first priority lies
in infrastructure. We
want to improve our
railway capacity, either through
construction or maintenance of The largest companies in Mozambique have a wealth of information
the existing infrastructure. Our
about the economy at large, maintaining activities across multiple and
intention is to widen the diver-
sity of our cable TV products diverse sectors.
in TVCABO, offering optimum
solutions and moving forward

by paying close attention to
market trends. We ensure that
we are always able to offer the
latest communications technol-
ogies available. Our main cen-
ters for real estate operations
are in Maputo, Nampula, and
Beira. We are engaged in both
business and housing, and are
in partnership with the Bank
of Mozambique and Emose.
This means that we manage the
housing owned by both and, of
course, we also try to introduce
new land to the market. When it
comes to tourism, we want ho-
tels to attain higher standards
in the key touristic areas of the
country, and to improve our
operations in Gorongosa. There
is enormous potential for Mo-
zambique to produce a diversity
of goods in the textile industry
for example, as well as in the
furniture industry, although it
is so important that the right
technology and skills are avail-
able. For that reason it is neces-
sary for people to be adequately
trained in this type of work.
ANTNIO
JORGE COSTA
President, Visabeira
Group
E
verything is available nation in broader terms. Intelec
here for investors, Holdings focus is on creating
from infrastructure to and exploring local opportu-
fast-paced education and bet- nities. Agriculture was not our
ter roads. We also have man- main focus at the outset, but we
power available to work, so if recognized that the country has
a company brings technology fertile land and plentiful water
and training they can maximize supply, as well as the required
their use of Mozambican work- non-skilled manpower.
ers. We also have fertile lands
and water, as well as a strategic
location on the western shore of
the Indian Ocean. Mozambique
has been growing for the past 15
years at a rate of 7% or 8% per
annum, which clearly demon-
strates a stable economy. Mean-
while, our strong democratic in-
stitutions are also an incentive
to long term investors. Mozam-
bique will succeed in develop-
ing a more diversified economy.
The oil and gas segment should
add value to the diversifica-
tion processes of our economy,
and will offer Intelec Holdings
strong opportunities for sus- SALIMO ABDULA
tained growth, in turn creating
President and
a sustainable corporation that
able to contribute to employ- Chairman, Intelec
ment, while adding value to the Holdings

JOO J. FERREIRA DOS SANTOS

Administrator, JFS Holding

T
he company was cre-
ated by my great-great
grandfather 117 years
ago, and remains a 100% fami-
ly-owned enterprise, with a 50%
stake each held by my brother
and I. We forecast 40% to 50%
more revenue in 2015 given the
numerous large-scale projects
on our books, especially those
in real estate. We are currently
working on 20,000sqm of offices
and a shopping center in central
Maputo, which will be complet-
ed by the end of 2016. In the res-
idential area in Maputo we start-
ed a 10-floor building featuring
11 luxury apartments. In the
energy sector, we have a partner-
ship with Petromoc wherein we
sell petrol. We have three stations
and we are building a fourth here
in Maputo. And in the commu-
nications sector we are present
through the newspaper Noticias,
in which we are shareholders.
We have a presence in the auto-
motive business in nine of the 10
provinces, importing Mitsubishi
and Fuso trucks, and Alfa Romeo
and Fiat automobiles, as well as
specialized vehicles for mining
and other industries. In addition,
our agricultural operations make
us the largest taxpayer in the
Niassa province. Mozambique
is an extremely difficult market
that does not promise rapid re-
turns on investment. In order to
enjoy these, a business must be
prepared to invest in the country
for at least five years.
36 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS AVOIDING DUTCH DISEASE
GOING DUTCH?
Mozambiques long-term prosperity is contingent on broad-based
development to avoid overdependence on external investment.
WITH VAST NATURAL DEPOSITS,
Mozambique is uniquely placed for a sus-
tained economic boom, and the LNG sector
is strategic in this regard. According to the
countrys IMF report, there are potentially re-
serves of over 100 tcf from recent discoveries
in Anadarko and Eni, which could make Mo-
zambique the third largest exporter globally.
As a result of this, the government is pre-
sented a unique opportunity to raise living
standards, as the country currently ranks 178
of 187 nations of the Human Development
Index; however it also comes with potential
costs. In a phenomenon widely known as
Dutch Disease, Mozambique faces a potential
decrease in long-term competiveness derived
from the negative economic impact of a rapid
increase of foreign capital inflows. According
to Alex Segura, Resident Representative of the
IMF in Mozambique, the rapid development
of natural resources can create undesirable
distortions in the economy, and these need
to be managed through stronger fiscal rule
and the introduction of measures that smooth
out volatility. This dynamic poses econom-
ic, social, and financial challenges, which the
government must manage in order to achieve
sustainable long-term growth.
One of the most difficult hurdles that the
government faces is mitigating volatility in the
medium and long term. According to several
growth scenarios posed by the IMF, resource
revenues could potentially make up 40-50% of
total revenues, which in turn sharply increases
the countrys exposure to swings in the global
economic cycle. This would not only have a sig-
nificant impact on domestic economic activi-
ty, but also on government revenue. In terms
of fiscal policy, the governments ability to tax
the non-resource sector would be sharply di-
minished, including industries such as trans-
portation, agriculture, and tourism; the shift
towards LNG development would create a tax
policy gap that the government must quickly
fill to attain the right kind of mix that rebal-
ances revenues. In terms of energy framework,
the government should adopt comprehensive
policies on royalties and windfall revenues, as
well as on strengthening its regulatory legisla-
tion. This requires appropriate fiscal policies
that enhance transparency and accountabili-
ty to best maximize the allocation of revenue
derived from expansion of the countrys LNG
sector.
In the short term, volatility could also come
in terms of rapid upswings and downswings
in foreign capital. Given the sustained growth
of the local gas industry and expected rise in
global demand for this resource over the com-
ing decades, Mozambique faces currency dis-
tortions. This in turn could decrease compe-
tiveness across other sectors in the economy.
One of the key measures to counteract this
phenomenon is the creation of a sovereign
wealth/development fund. This fund would
act as a balancing tool that diversifies Mozam-
biques money through investment in non-re-
source related areas.
Another key issue that the country faces
through the rapid development of extractive
According to several growth
scenarios posed by the IMF, resource
revenues could potentially make up
40-50% of total revenues, which in
turn sharply increases the countrys
exposure to swings in the global
economic cycle.
projects is the creation of infrastructure that
also supports growth across other spheres.
Besides the vulnerability to global commodi-
ty markets that comes with relying on the ex-
tractive sector, recently exemplified by the fall
of oil prices, there is an opportunity cost in-
curred from not developing supportive indus-
tries. Key to tackling this issue is the establish-
ment of a well-designed public policy strategy
that maximizes the allocation of resources in
order to achieve broad-based growth. An in-
strumental area is investing in supportive in-
frastructure that aims to improve the national
transportation and the energy grid. In the case
of Mozambique, successful projects such as
Cahora Bassa demonstrate the positive eco-
nomic benefits derived from direct employ-
ment, as well as associated economic activity
as an indigenous industry flourishes.
Mozambique has been presented with a
path to achieving sustainable long-term eco-
nomic growth, which could lift millions of
citizens out of poverty and expand its middle
class. However, in this process the government
must develop a comprehensive set of policies
that have a long-term outlook to maximize the
benefits from developing vast gas reserves,
while avoiding the pitfalls of sudden shifts in
investment flows and the temptations of short
term economic gains.
Sociedade do Notcias, SA
Direco Comercial

ASSINATURAS
38 THEBUSINESSYEAR MOZAMBIQUE 2015
FORUM WHY MOZAMBIQUE?
Leading international conglomerates see an
opportunity in Mozambique for considerable
growth, given the markets relative immaturity.
SIMON EVEREST
Country Manager,
Coca-Cola Sabco
W O
e are part of Coca-Co-
la, which is a franchise
bottler, and we have
seven franchises across Africa.
In Mozambique we have the
franchise for the entire country.
In terms of volume, it is on par
with our business in Tanzania,
Kenya, and Uganda, and the re-
turns enable us to invest in the
market and develop infrastruc-
ture. Per capita consumption
across the country is at 25 liters
per capita, but as the country
becomes richer, higher dispos-
able incomes will lead to greater
consumption of beverages. In
2014, we launched our water,
Bonaqua, and have plans to
launch into other beverage seg-
ments. We will continue to drive
our range as well as continuing
to innovate in terms of flavors
and packs. Certainly, with the
capacity that we are set to have
in Maputo, the capacity we in-
troduced in 2013 in Chimoio,
and our plans for Nampula, we
are excited about the huge po-
tential of this market.
CRISPIN ACHOLA
General Director,
British American
Tobacco (BAT)
n a global basis we
have operations in
180+ countries. What
makes Mozambique unique to
British American Tobacco (BAT)
is its classification as a high
growth potential market. This is
driven by several environmen-
tal factors within the country.
The first is that Mozambique
has a population base of over
24 million people, and when we
look at ongoing developments
in the country, we see the eco-
nomic circumstances of citizens
are improving rapidly. As con-
sumers disposable income im-
proves, there is an improvement
not just in total sales volumes,
but also in the brand mix that
consumers decide to purchase,
with notable growth envisaged
for the premium offers. The sec-
ond unique area within Mozam-
bique is that there is a signifi-
cant population below the age
of 18, which means well have
a significant number of con-
sumers coming of age, while the
consumer business is envisaged
to increase as people start hav-
ing better livelihoods. Last year
we contributed in excess of $35
million to the government as a
combination of all taxes.
BANTU
YOU KNOW
SHANTANU
CHAKRABARTY
Executive Director,
Tata de Moambique
Limitada
W O
ith our operations
starting in Zambia and
eventually moving on
to the headquarters in South
Africa, Mozambique was con-
sidered a gateway for growth in
Africa for Tata. We started with
the representation of Tata Mo-
tors Limited (TML) and also sell
vehicles manufactured by TML
in Mozambique. As a strategy
it was a sound decision to start
off with the vehicles, although
now we represent other com-
panies of the Tata group. Given
the challenges inherent to the
Mozambican market, we opted
for an incremental growth strat-
egy where the first step was to
build brand visibility. What we
want to do from now on is se-
cure a larger presence through
representation of other group
companies and to take the Tata
brand forward in Mozambique.
Having said that, we have now
diversified into other busi-
nesses in Mozambique such as
pharmaceuticals, steel trading,
consumer durables, and chem-
icals. We have also developed a
relationship with Vale through
group company Voltas Engi-
neering Services, which has
contracts to maintain and ser-
vice mining equipment owned
by the company.
RUI MARQUES
Branch Manager,
Siemens
ur footprint in Mo-
zambique dates back
more than 60 years.
Since 1951, it has included ma-
jor reference projects such as
Africa's first operational control
center for the railway connec-
tion between the capital Mapu-
to and Ressano Garcia. This is
why we believe there is a legacy
that binds us together and cre-
ates an environment favorable
to do business in Mozambique,
while we keep supporting the
country development has done
so far. In the past, we have part-
nered work on the prominent
Cahora Bassa project. And as
in the past we are ready to work
on new projects and challenges
in the energy sector and keep
writing a page in the countrys
history. The production of gas
discovered off the coast of Mo-
zambique will emerge as an
important area for innovation.
Siemens possesses the know-
how, products, solutions, and
services necessary to help its
customers to extract these re-
sources safely and efficiently.
Our gas turbines are the most
efficient in the world.
 THEBUSINESSYEAR 39

43
Ernesto Gove, Governor of the
Banco de Moambique, on fin-
ancial inclusion, and cooperation
with international banks.
45
Rui Barros, Administrator for
Barclays Mozambique, on the
scope of regional banking, and
what attracts foreign banks.
53
Aldo Tembe, CEO of
Moambique Previdente, on
new financial regulations and
capital market developments.

Finance
REVIEW BANKING

While massive industrial and energy projects are the hallmark of

Mozambiques economy, the vast majority of its citizens and small
businesses remain beyond the reach of financial services, calling for
alternative remedies from various quarters.

THE QUEST
FOR INCLUSION
A
2012 study by Ro-
land Berger Strat-
egy Consultants
earmarked seven
industries set to ensure sus-
tainable African growth mo-
mentum. These are energy,
ICT, transportation, manu-
facturing, consumer goods
and retail, public services, and
plugged into all of the above,
financial services. Indeed,
over the past decade, African
banks, including those of Mo-
zambique, have experienced
historic growth. On average
balance sheets have risen by
42% annually, with net in-
come appreciation of over
54% per annum according to
financial portal Proshare. The
true potential of the financial
sector is clear from the fact
that roughly 400 million Afri-
cans today are unbanked.
THE APPEAL OF THE
SECTOR
As Rui Barros, the Adminis-
trator of Barclays Mozam-
bique explained to TBY,
International interest [in
Mozambique] has been driv-
en not only by the prospect
of resources, but also by the
extraordinary opportunity
presented by Africas flour-
ishing consumer base. And
with Africa being the worlds
second-fastest growing region
after East Asia, the continent
is taking the next step in deep-
ening its financial markets as
investors increasingly turn
their attention towards it. The
opportunity for the financial
sector to contribute adap-
tive solutions in and across
African countries is immea-
surable. Yet on a localand
retail bankinglevel the Mo-
zambican financial sector has
fundamental realities to con-
tend with that are all too com-
mon on the continent.
CHICKEN & EGG
The World Bank report En-
hancing Financial Capability
and Inclusion in Mozambique
A Demand-Side Assessment
(2014) considers the local
prospects for a sector where
low inclusion is clearly relat-
ed to poor financial capabil-
itydecision-making that
As Africa has grown, so too benefits an individualeven
among the banked. The re-
has the financial sector, the facilitator of port confirms that while Mo-
development across all sectors. zambiques financial system
40 THEBUSINESSYEAR MOZAMBIQUE 2015
is predominantly defined by the banks, 48%
of adults have yet to use their products. Mean-
while, the alternative channels of moneylender
and microfinance institutions have respective-
ly been used by 41% and 37% of adults. More
pressing yet, World Bank research indicates
that bank users, in a learning by doing scenar-
io are more likely to rely on alternative financial
sources than non-bank users, underlining the
plight of the financially excluded.
Mozambiques financial sector overall lacks
depth, but is growing nonetheless on extractive
momentum and the gradual rise of the middle
class. Many financial institutions, banks and
others, have in response sought to provide fi-
nancial intermediation to more isolated rural
areas. The paradox is though, that while the
bulk of commerce, and hence banking, takes
place in key urban centers, many banks have
not provided what they consider unprofitable
coverage of remote or rural areas. In light of
Bank Credit by Sector, 2013 this, the government has accepted that finan-
(Million USD) cial inclusion underpins the stable growth of
Source: TCRA the financial industry.
The system as of 2014 hosted 20 commercial
banks, regulated by the Bank of Mozambique
which doubles as the central bank. The sector
has also ridden the broader national growth
wave where in one of Africas best performanc-
es over the decade up to 2013 average annual
growth of 6-8% was registered.
Mozambiques central bank favors the cre-
ation of a Sovereign Wealth Fund to oversee re-
source-derived revenuesaccumulated reve-
nues over time would also reduce the nations
reliance on international institutions. Yet the
country still lack basic infrastructure and has
one of the worlds poorest populations and
an economy ostensibly informal. The banking
sector is essentially in the hands of three enti-
ties with close ties to the Portuguese banking
Total sector. These banks hold around 90% of total
3980 sector assets, and largely pursue commercial
Agriculture imperatives through strict lending. Yet in a
147 country where 80% of the population is agrar-
ian (agriculture accounts for 33% of GDP), of
Industry
539 which a large percentage are smallholdings,
close to 80% remains unbanked, curbing retail
Construction segment growth. And with interest rates on
410
bank loans ranging between 17% and 22% per
Industry & Tourism annum only 3% of the population has access
70
to credit.
Domestic Trade
600 SETTING THE TONE
Transport
In 2013 the Council of Ministers approved the
& Communication Mozambique Financial Sector Development
220
Strategy (MFSDS) for 2013-22. Its purpose was
to promote the development of a sustainable,
diverse, competitive, and moreover inclusive
financial sector relevant to citizen and corpo-
ration alike. And regarding the financial inclu-
sion, the government stressed financial literacy
and consumer protection to boost awareness
and confidence among those as yet unbanked.
Other Credits
A subsequent diagnostic review of the institu-
1980 tional, legal, and regulatory framework required
Financial Inclusion Index for Selected
African Nations (0-100 scale)
Source: KASE
Seychelles
South Africa
Algeria
Botswana
Swaziland
Lesotho
Mozambique
Uganda
Sierra Leone
Comoros
Madagascar
Angola
0 10 20 30 40 50 60 70
to ensure consumer protection and financial lit-
eracy followed in 2013. Meanwhile, the Central
Bank has championed a solid legal framework
to instill banking sector credibility through
supervision. Accordingly, it has adopted Inter-
national Financial Reporting Standards (IFRS)
and promoted an environment of risk-based
supervision. Back in 2009, legislation pertaining
to intermediation costs targeted greater sector
transparency, standardizing commissions, and
fees. Meanwhile, the startup costs for SMEs
also saw some reduction. Incidentally, Central
Bank Governor, Ernesto Gove, was awarded as
the 2015 Best Governor of the Central Banks of
Africa, by The Banker Magazine, a publication
owned by the Financial Times.
IM ON THE PHONE
According to Proshare, Africa today boasts
over 600 million mobile phone users, exceed-
ing both the US and Europe. And with mobile
internet taking off, more citizens, notably the
unbanked, can attain financial inclusion and
the services it avails. In fact, the IMFs 2014
report "Mozambique Rising: Building a New
Tomorrow" considers alternative avenues to
conventional banks, notably mobile banking.
Mozambiques two mobile banking operators
mKesh and m-Pesa were licensed in 2010 and
2013, respectively. To date they have signed up
over 150,000 customers, many in remote areas.
The report highlights how this delivery chan-
nel is raising financial literacy and confidence
in the formal sector, gradually, substitut-
ing traditional alternatives for both savings
and remittances. In 2014 South African bank
FNB launched a service enabling customers to
make instant money transfers to Mozambique
by mobile phone and online banking. South
African bank FNB offers a new service that al-
lows customers to send money instantly to Mo-
zambique by mobile phone, or through online
banking.

The service notably targets the relatives of the
estimated close to 500,000 Mozambicans work-
ing in South Africa, who annually send roughly
around $109 million to relatives.
SME LENDING & MICROFINANCE
According to the IMF, 75% of micro, small, and
medium-sized enterprises (MSMEs) remain
financially excluded and therefore unable to
reach their growth potential. Critics of tradi-
tional banking argue therefore, that banks
insistence on collateral has curbed Mozam-
biques entrepreneurial potential. That said, all
branches of the financial sector, as well as the
government itself, acknowledges that credit-
worthiness is predicated on the commercial
knowledge of would be borrowers. Many en-
terprises and individuals remain wary of dis-
closing commercial details to the authorities,
while others simply lack the acumen to prepare
a business plan on the basis of which to obtain
credit. Commercial entities have therefore pro-
vided micro-credit to plug these macro-gaps in
financial accessibility, assuming the role once
played by the World Bank.
Reasons for Not Having a Formal Account in Rural and Urban Areas
Source: World Bank (2014)
35%
30%
25%
20%
15%
10%
5%
0%
Too Not Enough
Expensive Money
Bank Account (%)
Source: World Bank (2014)
50%
40%
30%
20%
10%
0%
Rural Urban
All Areas Areas
Finance THEBUSINESSYEAR 41
In March 2014 the European Investment
Bank (EIB) signed an agreement with Mo-
zambican bank Moza Banco in support of the
investments of small and medium-sized en-
terprises (SMEs). The EIB initiative allocated
5 million to be matched by Moza Banco, as
part of a wider $40 million program geared at
encouraging private sector investment in Mo-
zambique. And in May BCI Bank launched a
117 million credit line aimed at SMEs, with a
particular emphasis on women entrepreneurs
and agricultural enterprises. Banco Oportuni-
dade Moambique (BOM), initially a Christian
initiative created to sustainably reverse chron-
ic African poverty, has six mobile banks across
seven of Mozambiques 10 provinces. Of the
client base, 60%, again, are women engaged in
micro-businesses, whom the bank encourages
to save as well as invest in growth.
PIETER VAN
OTHER SELECTED PLAYERS DER MERWE
Leading the field in Mozambique with a 35%
market share is Millennium bim. Mrio da Chief Executive
Graa Machungo, bank President, in a TBY in- Officer, Banco
terview said that the institution would become, Oportunidade de
Moambique
What are the key strategies
of Banco Oportunidade de
Moambique for 2015?
In 2015, the bank hopes to be-
come self-sustainable and start
utilizing its own revenues. The
bank and its loans have grown
quite well: we have grown our
loan book to $240 million, and
hope to reach $250 million by
the end of the year. The deposit
side has grown tremendously as
well. Our deposit ledger closed
out last year at $199 million
and is currently at $247 million.
For the first time in the banks
history, deposits have exceeded
loans. In June, we launched our
SME lending product without
advertising it, but by directing it
to existing clients. Our long-term
Too Far Did Not No Trust No Required Other
Away Know How To Doccuments clients are now benefiting from
Urban areas Rural Areas it. We offer it at just one branch
currently, although the product
has grown tremendously10
Credit (%) Mortgage (%) new accounts in a matter of
Source: World Bank (2014) Source: World Bank (2014) four months. We will roll it out
to three other municipalities:
20% 5% Chimoio, Beira, and Nampula. In
January, we will take the SME
4%
15% product to four more locations.
3% Lastly, we became an agent
10% for Western Union. Most of the
2% transfers have been between
5% South Africa, Zimbabwe, Malawi,
1%
and Mozambique, and we are
0% 0% hoping to expand this service
Rural Urban Rural Urban
All Areas Areas All Areas Areas throughout 2015.
42 THEBUSINESSYEAR MOZAMBIQUE 2015

Mozambicans by Number of
Financial Institutions Used
Source: WB Financial Capability Survey, 2013
Used 1 Fin. Institution 24%
Used 2 Fin. Institution 21%
Used 3 Fin. Institution 19%
Used 4 Fin. Institution 36%
the Bank of reference for the FDI and oper-
ational support for the megaprojects, staying
close to the gas and mineral industries and the
surrounding SMEs. With 160 branches, it is the
only Mozambican bank ranked among the 100
biggest African banks (62nd). Millennium bim
is leader in all market dimensions. With approx-
imately 1.3 million customers throughout the
country, about 50% of total banked population,
it has the largest commercial network together
with the highest capillarity shown by the 161
branches located nationwide in all provinces
and 54 districts, he concluded. In 2014 Glob-
al Finance magazine awarded it "Best Bank in
Mozambique" for the 5th consecutive year.
With close to 600,000 customers in 2012 Ban-
co Comercial e de Investimentos (BCI) is the
second key commercial player in the domestic
sector with around a 30% market share. BCI,
too, serves the rural unbanked through mobile
banking.
FOREIGN CURRENCY & NEW EN-
TRANT
Mozambiques banking sector hosts two ma-
jor international names in Standard Bank and
Barclays Bank. The former, present in Mo-
zambique for over 120 years, is the third larg-
est player by both assets and market share the
local market. The major player on the African
continent, Standard Bank addresses the retail
segment, but is active in project financing for
Mozambiques massive infrastructure projects,
having signed a deal with state mining com-
pany Empresa Moambicana de Exploraao
Mineira (EME) in 2013.
Meanwhile, Absa Group, the South African
registered subsidiary of Barclays Bank PLC,
owns a 98.1% stake in Barclays Bank Mozam-
biques operations following the 2002 purchase
of Banco Austral. Panafrican Group Ecobank
and ProCredit Holding concluded negotiations
for the acquisition of a 96% stake in Banco Pro-
Credit Mozambique, commencing business as
Ecobank Mozambique as of 20 May 2014.
OUTSIDE LOOKING IN
Eighty percent of Mozambiques
population is agrarian (33% of
GDP), while close to 80% remains
unbanked, curbing retail segment
growth. Moreover, as interest rates
on bank loans range between 17%
and 22% per annum, a meager 3% of
the population has access to credit.
Mozambiques financial sector
overall lacks depth, and moreover,
while commerce, and hence banking,
is done in urban centers few banks
provide unprofitable rural coverage.
In light of this, the government has
accepted that financial inclusion
underpins the stable growth of the
financial industry.
The World Bank report Enhancing
Financial Capability and Inclusion
in Mozambique: A Demand-Side
Assessment (2014) examines the
impact of low inclusion on financial
capabilitydecision-making that
benefits an individualeven among
the banked, and why the unbanked
have remained so.
In 2013 the Council of Ministers
approved the Mozambique Finan-
cial Sector Development Strategy
(MFSDS) for 2013-22. The strategy
is geared at promulgating awareness
of financial services and regulating
a sustainable, diverse, and compet-
itive financial sector. And regarding
financial inclusion, the government
stressed the promotion of financial
literacy and consumer protection
to boost awareness and confidence
among those as yet unbanked.

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The Banco de
Moambique
1.1% inflation in
2014
Net international
reserves $2.882
million in
December 2014
Standing
Lending Facility
(FPC) interest
rate of 7.5%
What role does Banco de
Moambique play to meet the
demands of a resource rich
economy?
Macroeconomic manage-
ment is a challenge in a coun-
try rich in natural resources.
We propose better options
regarding the use of assets
derived from natural resource
exploration and monitoring
of external debt. We promote
the balanced use of monetary
and foreign exchange market
instruments to ensure ab-
sorption of liquidity deriving
from external resources in-
flows. We want to see an in-
crease in the participation of
key enterprise sectors in the
stock exchange, so we foster
actions aimed at revitalizing
the capital market. Addi-
tionally, through subsidized
loans, the Banco de Moam-
bique facilitates increased
productivity in sectors with
it is DECREED
TBY talks to Ernesto Gove, Governor of the
Banco de Moambique, on macroeconomic
management, financial inclusion, and
cooperation with other international banks.
high wealth and employment
potential as well as support-
ing diversity in the economy
by backing micro, small, and
medium enterprises. We want
to deepen risk-based super-
vision and Basel II principles
and contribute to the creation
of a private credit manage-
ment information center.
What is your assessment of the
evolution of macroeconomic
and financial indicators in Mo-
zambique?
Inflation has been low and
under control. Though it in-
creased to 2.95% in 2013 from
2.18% in 2012, it dropped to
1.1% in 2014. The Banco de
Moambique has been imple-
menting an aggressive mon-
etary policy, which maintains
positive real reference interest
rates contributing to a stable
exchange rate and the con-
stitution of international re-
serves. Last year the metical
depreciated against the dollar
by 5.5%, after 1.5% deprecia-
tion in 2013. Net international
reserves are on the rise, in-
creasing from $2.605 million in
December 2012 to $2.882 mil-
lion in December 2014, which
represents four months of im-
ports of goods and non-factor
services. The GDP is not being
subdued and has been growing
at average rates greater than
7% over the past five years.
From your recent visit to Beijing,
how would you describe the pos-
sibilities for cooperation with the
Peoples Bank of China?
There is great potential to ex-
pand our cooperation with the
Peoples Bank of China. Both
banks signed a Memorandum
of Understanding to promote
mutual efforts in various do-
mains, including banking and
financial supervision, research
Finance
in areas of mutual interest, and
capacity building of staff in
the banking sector. During the
visit, our delegation held meet-
ings with entrepreneurs from
many business fields in China,
who expressed their interest in
cooperation between the two
countries.
What are Banco de Moam-
biques strategies for improving
accessibility to banking services
in rural areas?
The Mozambican Govern-
ment and the Banco de
Moambique have taken a
number of measures to in-
crease access to financial ser-
vices and products. We have
updated the Law of Financial
Institutions to work towards
increasing the total number
of financial institutions and
to improve the classification
system, especially for mi-
cro-bank and micro-finance
operations. Since 2007 we
have initiated various incen-
tives to support the opening
of institutions in districts de-
prived of bank representation,
for example a lowering of the
minimum capital. The Banco
de Moambique has become
a member of the Alliance for
Financial Inclusion. In a study
on costs of financial interme-
diation, we found them to be
high compared to countries in
the region. To reverse the sit-
uation Banco de Moambique
adopted a notice in June 2009,
which establishes a common
nomenclature on commis-
sions and bank charges and
encourages better definition
of policies and makes trans-
parent costs and conditions
underlying financial products
and services, as well as a defi-
nition of a set of minimum free
services. Since the beginning
of the financial sector deep-
THEBUSINESSYEAR 43
INTERVIEW
ening program, the impact of
these measures appears to be
significant. From a group of
12 banks, 274 bank agencies,
83 micro-credit operators and
territorial coverage of 34 dis-
tricts in 2007, there were 18
banks, 572 bank agencies, 285
micro-credit operators and 69
districts covered by banking
services in December 2014.
Financial education is a key
factor in the strategy for the de-
velopment of Financial Sector
2013-22. How is the Banco de
Moambique acting to promote
dissemination of knowledge and
protect consumers?
To respond to an increasing
need in Mozambique for con-
sumer protection population
and for financial services and
products in general, in Oc-
tober 2014 we launched the
Banco de Moambique Fi-
nancial Education Program
(PEFBM). The program will be
implemented in two phases,
2014-16 and 2017-22. It will
involve a number of strategic
actions involving government
entities, media partners, com-
mercial banks and financial
institutions, in general, as well
as the national and interna-
tional partners committed to
this cause.
BIO
Ernesto Gove first joined
Banco de Moambique in
1976 and has held various
positions in the Foreign
Department, the Currency
Issuing and Treasury
Department, the Credit
Department, and the Center
of Documentation. In 1991
he was appointed Executive
Director and Member of
the Board. He graduated in
Economics from Eduardo
Mondlane University and
has a Masters degree in
Finance Economics from
the University of London. He
was appointed Governor of
the Banco de Moambique
by Presidential Decree on
July 25, 2006.
44 THEBUSINESSYEAR
INTERVIEW
in the
BANK
TBY talks to Paulo
Sousa, CEO of Banco
Comercial e de
Investimentos (BCI),
on strategy, expanding
to rural areas, and
forging partnerships.
BIO
Paulo Sousa, currently the
CEO of BCI, was formerly
Central Director of the
Financing and Real Estate
Business Division of Caixa
Geral de Depsitos Group
(CGD). He also taught
and lectured for many
years at several schools,
higher education institutes,
and universities in the
mathematics, financial
marketing, management,
and real estate fields.
He holds a degree in
management from Lisbon
Technical University and
postgraduate qualifications
in export strategies and
international marketing
from the same institution.
MOZAMBIQUE 2015
What are the key strategies of
BCI in Mozambique for the next
few years?
One of our main goals for the
next couple of years is to be-
come one of the preferred
banks in Mozambique. We
are present in all market seg-
ments: corporate, private, and
retail banking. We also aim to
become a leading bank in the
broader development of Mo-
zambique, and not only as a
commercial institution, but
also as a bank with a key role
in the bankarization process
of rural areas, a bank that truly
understands the needs of its
Mozambican clients. Anoth-
er key strategic objective is to
grow and gain a competitive
position within the market.
Our last strategic plan was
designed to run from 2007 to
2015, and has just been re-
newed. In 2014 we grew by
around 33%, and reached
more than 1 million clients.
How would you assess your cur-
rent penetration of rural areas?
BCI has been closely in-
volved in the bankarization
process, for which the year
of 2014 was quite significant.
Since the middle of the year,
we entered many unbanked
districts around the country.
There are still 60 such dis-
tricts across the country. In
general we tend to enter with
a regular branch. A second
initiative was the launching
of mobile units, and now we
have two of these operating
in the provinces of Nampula
and Tete. We have also ex-
panded through the use of re-
mote ATMs that can provide
access to banking and liquid-
ity in those areas. We are also
developing mobile agents
with the support of the cen-
tral bank that will deliver ser-
vices in other areas not being
covered. We are therefore de-
signing alternative means of
creating solutions for clients
in locations where we cannot,
at least for now, open a tradi-
tional branch. We combine
the use of mobile services
that allow transactions to be
done by phone, with an agent
network.
BCI has recently signed an
agreement with CGD Group and
Medical Doctors Professional
Association. What is your as-
sessment of these partnerships?
We have launched an agree-
ment with CGD Group to
develop a network between
Mozambique, Angola, and
South Africa. This will become
increasingly important in the
near future. The main purpose
behind it is to develop relation-
ships between those countries
and for us to be present with
matching objectives as a group
that can support all needs.
With Ordem dos Mdicos de
Moambique (OrMM) we have
developed special conditions
for medical doctors. We are
already doing this with other
sectors.
How is BCI capitalizing on the
construction and real estate
boom?
We are mainly supplying the
need for offices for new com-
panies coming in and the
needs of a very small part of
society. One of the main areas
that will develop in the near
future is the real estate busi-
ness. We have created a desk
dedicated to real estate and
infrastructure, a highly specific
business.
How will the entry of new play-
ers in the financial market affect
your operations?
There are new banks and in-
surance companies entering
the market, which is a normal
development, and we are well
placed to address the compe-
tition. The financial market is
highly concentrated in Mo-
zambique, and such entrants
are a natural part of its devel-
opment. We are aiming for
growth of 7-8% in 2015 and
there is sufficient business to
be had by all players. We are
also the only bank present in
the south and north, in what
may be termed the extremes
of the country. We opened 11
branches in December and
in 2014 we opened 34 new
branches.
What is main factor behind your
success?
Hard work is the key factor,
as we are utterly committed
to our objectives and fulfilling
our clients needs. We are also
innovative and dynamic, and
will not rest on our laurels, but
continue to cater to the bank-
ing needs of this enormous
country. The people, compa-
nies, and institutions of Mo-
zambique can count on BCI for
the coming years in this devel-
opment process.
BCI
Customers rose
33% in 2014
Expected
growth 26% in
2015

What strategic priorities have
you set for Barclays Mozam-
bique for the next five years?
Barclays Mozambique is posi-
tioning itself to take advantage
of the countrys exponential
growth potential, by gearing
the bank up to support the
opportunities presented to
Mozambique over the next
five years. Barclays recently
embarked on a recapitaliza-
tion process with an injec-
tion of an equivalent of $125
million in September 2014
with the express purpose of
repositioning itself for growth,
to take a lead role in Corpo-
rate Banking, Debt Capital
Markets (DCM) and advisory
mandates in key growth sec-
tors, while growing its Retail
franchise in Prestige and Pre-
mier Segments. Our goal is to
become Mozambiques go-to
bank. We aim to be a trusted
partner in the economic de-
velopment of the country and
its people. On this journey, we
intend to become the employ-
er of choice in the banking
sector and build a sustainable
and profitable operation.
What is the importance of the
Mozambican market for Bar-
clays overall strategy in Africa
and worldwide?
Africa is one of the four pillars
of Barclays strategy, as out-
lined by our Chief Executive
Antony Jenkins in May 2014.
Barclays Africa Group Limited
(BAGL) is the legal entity list-
ed in the Johannesburg Stock
Exchange that consolidates
the business of Barclays in the
continent. At 30 June 2014, we
had a market capitalization
of $136.9 billion. We operate
in 12 countries and have 12
million customers, and total
assets of $977.8 billion, 10,749
automated teller machines,
1,287 branches and more than
42,000 permanent employees.
Barclays Africa has majority
stakes in banks in Botswa-
na, Ghana, Kenya, Mauritius,
Mozambique, Seychelles,
South Africa, Tanzania (Bar-
clays Bank Tanzania and Na-
tional Bank of Commerce),
Uganda, and Zambia. It also
has representative offices in
Namibia and Nigeria as well
as bancassurance operations
in Botswana, Mozambique,
South Africa, and Zambia.
The creation of Barclays Africa
BIO
Rui Barros currently serves
as CEO and Executive Board
Member of Barclays Bank
Moambique; previously
Rui held executive positions
as Risk Head at Standard
Bank in Mozambique and
Atlantico Europa, the
Lisbon-based operation of
the Angolan banking group.
Rui served as Director
of Structured Finance
for Lehman Brothers
and as credit analyst at
Fitch Ratings. He worked
in capital markets and
lectured in financial markets
at several Portuguese
universities. Rui graduated
in Economics at UTAD,
in Portugal, and holds a
Masters of Science degree
in Finance from the Catholic
University of Portugal. He
also studied and engaged
in academic research at
Arizona State University,
and recently completed the
Advanced Management
Programme at INSEAD in
Singapore.
Finance THEBUSINESSYEAR 45
INTERVIEW
BIG FISH,
growing pond
TBY talks to Rui Barros, Administrator for
Barclays Mozambique, on the scope of
regional banking, capitalizing on economic
development, and what attracts foreign banks to
the country.
Group gives us a strong com- is also making life easier for
petitive advantage. We offer investors. Those coming from
our clients deep local knowl- abroad appreciate the fact
edge and presence and the ex- that well-known brands like
pertise and support of a global Barclays are present in Mo-
bank. As such, we have the zambique. The political and
ability to play a key role in em- regulatory environment has
powering Africa by reducing been stable for several years
the costs of doing business, by now and despite some uncer-
providing and enhancing ac- tainty that always surrounds
cess to the continent, and by the electoral periods, we be-
being the bridge between lo- lieve that Mozambique offers
cal and global markets. Within a unique opportunity for in-
the continent, Mozambique vestment.
is one of the key markets for
Barclays. It is amongst the
countries in which the Group IN NUMBERS
has invested the most in re- Barclays
cent years and equally where
Mozambique
it expects stronger growth. We
believe that in the mid-term
Barclays Mozambique can be
12
among the largest businesses
of Barclays Africa.
How would you describe the
business environment in the
million customers in
country for foreign investors?
12 countries
Mozambique is quickly im-
proving in terms of its busi-
ness environment and foreign
investors have very clear regu-
lations in place and a relatively Recapitalization of
straightforward process to be-
125
come established in the coun-
try. Mozambiques proximity
to South Africa is an import-
ant feature when it comes to million USD in
sourcing inputs and hopefully September 2014
in the future also as a market
for export. The major ports of
Mozambique are another im-
portant factor, with Maputo,
Over
Beira, Nacala, and Pemba be-
42k
ing strategically located. The
development of services to
support your business (bank-
permanent employees
ing, legal firms, consulting,
accounting and auditing, etc.)
46 THEBUSINESSYEAR MOZAMBIQUE 2015
B2B BANKING STRATEGIES
MRIO DA GRAA ANTNIO bank, we have been closely
MACHUNGO COUTINHO
Chairman of Managing Director of
Millennium bim Standard Bank operation in Mozambique that
FAIR
exchange
Capitalizing on the How do you plan to take advan-
countrys growth tage of current growth levels
moving forward?
requires foresight,
and close attention to MRIO DA GRAA MACHUN-
customer demands. GO Over the forthcoming
years, and as part of our ongo-
ing commitment to the social
and economic development of
Mozambique, Millennium bim
plans to continue funding both
individual and SME/corporate
loans and advances, while also
maintaining its leadership in
customer deposits. Once more,
the banks approach to innova-
tion in new products, services,
and functionalities will be a key
driver for our business, aiming
for further penetration of ser-
vices and customer enrollment
to different banking business
lines. Furthermore, Millennium
bim will remain focused on its
branch expansion efforts, in-
cluding rural areas, therefore
contributing to a greater and
better accessibility of financial
services in Mozambique, as a
way to promote the financial
inclusion of the population, as
we have done, historically, since
the banks inception.
ANTNIO COUTINHO As a
tation. Concerning the corpo-
involved in the infrastructure
sector. Its absolutely funda-
mental for the success of any
the infrastructure actually func-
tions. Proper infrastructure is
required to meet the needs of
the investment being done. For
example, we have been involved
in financing the railway line that
transports coal, the ports, and
Nacala Airport, as well as the
road from Maputo and South
Africa. Infrastructure for us is,
and will remain, absolutely key.
When you talk about resources,
you are not just talking about
assisting businesses in Mozam-
bique, but also need to consider
the stakeholders around them
and ensure that the project goes
ahead as smoothly as possible.
How does your bank cater to
market conditions, and how does
this affect your customer base?
MDGM Millennium bim is
leader in all market dimen-
sions. With approximately 1.3
million customers throughout
the country, about 50% of the
total banked population, Mil-
lennium bim has the largest
commercial network togeth-
er with the highest capillarity
shown by the 161 branches
located all around the coun-
try on all provinces and in 54
districts. We are a universal
bank; therefore we cater to the
mass market, the affluent, and
corporate customers. In each
of these segments, we address
our customers needs with a
specially designed value prop-
osition, in accordance with
their main profile and expec-
rate segment, the high level
of customer sophistication is
addressed with our capaci-
ty to tailor our products and
services. We have a dedicated
Relationship Manager who is
responsible for the customi-
zation of the banks offers to
specific customers needs.
AC The key is to target the real
sectors, and the companies of
which span everyone involved
in the sector. By that I mean that
if you are going to focus on coal,
you need to focus on the main
players in coal, but not just the
big corporate interests in the
middle, as there are many oth-
er stakeholders involved in the
chain, such as SMEs, and huge
numbers of people working for
those corporates. As a bank,
you look for a value proposition
that really takes the interests
of all suppliers and workers at
the various corporations into
account, as well as that of gov-
ernment stakeholders. Standard
Bank generates the second high-
est profits in the Mozambique
banking system. As a business,
we look at what we can contrib-
ute to the country. We want to
be an African player, and for us,
the real value of this footprint is
how we can link customers to
other countries around the re-
gion. Linking is what Standard
Bank is particularly good at. As
a business, we have seen dra-
matic growth over the past few
years, which is a mirror of what
has happened in the economy.
We are a key contributor to the
Standard Bank Group, and a sol-
id investment.

BALANCING ACT
Local banks are not only riding the success of booming sectors of the economy
such as real estate, construction, and SMEs, but also their services are ensuring
that these trends play out in the long-term.
IBRAIMO IBRAIMO
President of the
Executive Board and
CEO of Moza Banco
W T
e have two products specifically
directed at the construction and
real estate sector. One is aimed at
construction activities where risk is charac-
teristically high. When firms decide to build
in Mozambique using the banks money,
the cost of the apartments or the building
itself rises, making it difficult to compete
in the market. They are more cost efficient
when they utilizing their own money, so
we try to assist them in the short term by
supporting their financial base and, at the
same time, making them more efficient.
The other product we offer relates to mort-
gages. Our operations are also linked to
the national growth of SMEs. We signed
an agreement with the African Guarantee
Fund, the African Development Bank, US-
AID and IFC, and are sharing our clients
risk with these multilateral entities. In do-
ing so, we reduce our lending rates offered
to clients, the ultimate beneficiaries of
these credit lines.
JOO FIGUEIREDO
Chairman and CEO of
Banco nico
he construction and real estate
sector is among the many sectors
we support. We have a full package
designed with property developers, whom
we support right from the construction
phase up until sale to the end-buyer. The
country is vast, and you cannot compare
the real estate market in Maputo with that
in the north of the country or the midlands.
I would say there are three basic markets
in terms of real estate in Mozambique. You
have Maputo, which is the main city and
also a mature market. Then you have what I
call the second segment, comprising emerg-
ing cities including Beira, Nacala, Nampula,
Tete, and Pemba. Those five cities are today
under pressure to grow, which presents a
huge opportunity for investors. Then there
is the third segment, namely the remaining
cities, which is not yet a particularly excit-
ing prospect. As a result, diverse packages
need to be designed to support activity in
these segments. At the retail banking level,
we forecast GDP growth of around 8% over
the coming years, which promise much op-
portunity for the financial system. Less than
18% of the population is banked, so we have
to find ways to bring that population into the
system, and to service them. We also need to
devise means of assisting domestic SMEs to
grow, and to make sure that the populated
rural areas are covered.
Finance THEBUSINESSYEAR 47
LOCAL BANKS FORUM
HLDER
CHAMBISSE
Managing Director of
BancABC Moambique
M
ozambique is not only seeing in-
vestment in residential property,
but also commercial and infra-
structure as a whole to include roads, bridg-
es, schools, and hospitals. This is positive,
and banks have a role to play in terms of
financing the construction itself, or else in
the purchase of residential properties. Ban-
cABC is quite active in this, and in dealing
with numerous construction companies in
mortgage financing. We recently launched
a mortgage product for retail customers,
which was innovative in that it could po-
tentially provide more people access to
housing. Competition among the banks
is forcing us to innovate new products to
find fresh avenues for income and custom-
er service. We definitely need new players,
and a diversification of the financial sector,
with insurance and pension funds being a
good example.
48 THEBUSINESSYEAR MOZAMBIQUE 2015
Mozambique, like other African nations blessed with the minerals
required for growth, is seeking ways to add depth to its financial markets.
Review C A P I TA L M A R K E T S
THE VIEW
FROM THE
SHALLOWS
Close to 90% of Mozambiques citizens may be
unbanked, but the southern African nation is
quietly confident in the future of its financial
markets. Indeed, according to Maputo Stock
Exchange, or Bolsa de Valores de Mozambique
(BVM) data, financial services rank among
those sectors of consequence to the broad-
er economy of Africa, for which double-digit
growth is forecast for the 2013-15 period (13%).
Mining headed that particular list on 26% an-
ticipated growth. The extractive sector has
underpinned economic advancement in the
post-civil war era since the 1992 peace deal was
penned, contributing 33% of growth. In short,
the economy has augmented to the extent that
within just five years extractive and energy re-
lated revenues are predicted to exceed donor
assistance. Naturally enough, then, the gov-
ernment is keen to shore up the financial sec-
tor both as a vehicle for burgeoning commerce
and to attract domestic and foreign invest-
ment. It also sought to foster a culture of saving
and investment by presenting citizen and cor-
poration alike with a wider range of financial
instruments.
ENTER THE CAPITAL MARKETS
BVM rang its first bell in October of 1999, op-
erating under the auspices of the Ministry of
Finance. It was assisted in its launch by the
Lisbon Stock Exchange and World Bank. The
bourse is regulated by the Capital Markets Au-
thority, an entity created by the Central Bank
of Mozambique. The more notable signposts
since thenhot on each others heelswere
the 1999 listing of government bonds followed
a year later by their corporate counterparts.
The first equity listing came in 2001 following
the IPO of CDM Brewing Company. The 2006
creation of the bourses Central Depository of
Securities was followed in 2009 by new secu-
rities market regulation and the launch of the
SME market.
Entities wishing to trade on the BVM re-
quire a market capitalization (MCap) in ex-
cess of roughly $900,000. And meanwhile,
foreign investment activity is incentivized
through the availability of repatriation of up
to $500,000.
IN THE NUMBERS
There are 32 marketable securities listed on
the BVM, 20 of which are bonds (11 corporate
and nine treasury), while of the remaining se-
curities, eight are commercial papers and three
are stocks. In 2012 the BVM had another telling
moment when MCap broke the psychologi-
cal 1 billion mark; the year had seen the list-
ing of construction firm CETA - Construo e
Servios. The BVM reportedly anticipates see
a further five new listings by 2018 in the form
of gas exploration companies raising project
funding.

For 2013 total value registered at
$8,424,064.1, with total volume traded of
$766,275. Official data indicates that MCap
by June 2014 had scaled to around $1.106 bil-
lion in an upward trajectory virtually unbro-
ken since inception. BVM also reveals that in
2013, sub-Sahara Africa accounted for 6% of
overall emerging market MCap, the smallest
contributor, and foil to the 50% claimed by
Asia. In turn, the EMs accounted for 215 of
global MCap. Mozambiques MCap as a per-
centage of GDP in 2013 stood at just 8%; this
may be contrasted with the US figure of 327%
and global average of 207%. Yet in light of the
major industrial schemes being realized and
the governments fiscal policyin 2002 infla-
tion troughed to a historic low of 2.2%Mo-
zambiques low score speaks of considerable
potential for the capital markets as broader in-
ternational interest in the stable nation man-
ifests. BVM investor breakdown data for that
year reveals a 33-67% foreign/domestic split.
In 2011 the PPP Law provided the BVM with
a shot in the arm by stipulating that Mozam-
biques megaprojects be listed on the bourse
to a minimum of between 5% and 20%. The
law also stated that their shares would be re-
served for local investors, once again, to stim-
ulate a spirit of investment and financial par-
ticipation. Mozambique had anticipated the
listing of Brazilian mining giant Vale Moam-
bique by the end of 2014. Yet dampened de-
mand from Asia has dulled any excitement
that might have arisen. This being said, Vale
revealed plans in mid-August 2014 to double
minerals exports to China over the next five
years, which will pique interest as intentions
convert to sales.
SMEs
Mozambiques SMEs contribute around 70%
of GDP and therefore have huge potential for
future local listing once the commercial world
warms to IPOs. Most businesses today are
hungry for capital in order to expand, but with
bank loans not always an optionhefty inter-
est rates on bank loans range between 17%
and 22% per annum. SMEs did receive positive
attention in 2010 when the bourse launched
its dedicated SME market. To date there have
been no takers, but these are early days for
Mozambique in terms of financial inclusion,
much less alternative sourcing of capital.
BOND, DEBUT BOND
In September of 2013, Mozambique stepped
into the international bond markets when
EMATUM fisheries agency issued notes
Finance THEBUSINESSYEAR 49
BVM Prudoct Market Share The government is keen to shore
(As of Mid-June, 2014) up the financial sector both as a
Source: BVM
vehicle for burgeoning commerce
and to attract domestic and foreign
investment. It also sought to foster
a culture of saving and investment
by presenting citizen and corporation
alike with a wider range of financial
instruments.
Corporate Bonds 39%
Government Bonds 12%
Commercial Paper 4%
Equity 45% against a seven-year, $500 million loan.
Oversubscribed, it subsequently rose to
an $850 million offering an average inter-
Market Capitalization 2010 est rate of 8.5%. For 2013 total value trad-
June 10, 2014 (USD Bn) ed stood at $65,164,155.34, down YoY from
Source: BVM $74,450,571.55. Value traded on government
bonds was at $58,702,266.07 for the year, while
1.2 business transacted on corporate bonds print-
1 ed at $6,461,889.28.
0.8
THE ASSOCIATES
0.6
The BVM is among the 17 members nations of
0.4
the African Securities Exchanges Association
0.2 (ASEA). Among the Associations goals is the
0 lobbying on behalf of member bourses in the
2010 2011 2012 2013 2014 international financial markets. At the 17th
ASEA Annual Conference early in 2014 ASEA
President Sunil Benimadhu called for African
2013 Emerging Markets Exchanges to become an, integral part of Afri-
Share of MCap (%) cas transformation in terms of the four Ss;
Source: BVM Synergies, Support, Scope, and Substance.
BIG BLIP ON THE RADAR SCREEN
According to an article of December 30, 2014
appearing on African Capital Markets News,
for several key reasons Africa was identified as
the second most-attractive investment behind
the US. According to the World Bank the seven
countries of Mozambique, Ethiopia, Tanzania,
Rwanda, Chad, South Sudan, and Sierra Leone
have forecast growth rates of above 7% per
annum for the 2014-16 period. These coun-
tries, of course, have vast natural resources,
and moreover, many economies not only rank
Sub-Saharan Africa 6%
among the fastest growing in the world, but
Middle East & North Africa 8%
also have better debt to GDP ratios than most
East Europe 12% developed countries. In light of these truths,
Latin America 23% the BVM will see interesting years ahead, a ba-
Asia 51% rometer of wider socioeconomic advances.
50 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS BONDS
a capital IDEA
The Mozambique The Mozambique Stock Exchange (BVM)
Stock Exchange has has performed well over the years, with the
biggest evolution registered in the five-year
expanded rapidly period of 2009 to 2014, where the number
since its inception, of listed securities rose by 138% from 18 to
reflecting the 43 securities; the volume of transactions
rose by 1,910.9% to reach MZN 4,607.0 mil-
expansion of the
lion ($145.1 million) on December 31, 2014,
middle classes, and and the number of securities traded climbed
increasing capital for 1,904.8%, having registered the trading of
business. 47,258,623 securities by December 31, 2014.
The market capitalization of the BVM has
experienced significant growth over the past
five years, rising from $321.3 million in 2009
to $1,329.2 million in 2014, on a tremendous
increase of 377.6%, and has come to repre-
sent 6% of GDP.
Given the importance placed on
Financial Literacy by the BVM, a
financial education program has been
implemented at the national level,
In Mozambique, the BVM has become a
key source of funding for the economy, worth
a total of about $1,250 million, and has seen
the listing of a total of 84 securities since the
start of its activities in 1999. Furthermore, it
should also be noted that the Mozambican
State has been actively involved in the capi-
tal markets and stock exchange, through the
issuance of Public Debt29 Government
Bond issues, of which 26 were listedin the
amount of $740.7 million, and the alienation
of state shares in the amount of $23.7 million,
representing an overall amount of $764.4
million.
Companies have used the BVM as a financ-
ing vehicle through the issuance of bonds
(30 issues in the amount of 7,415 million MT
corresponding to $231,7 million) and the is-
suance of commercial paper (21 issues in the
amount of MZN 6,379 million corresponding
to $199.3 million). Moreover, companies have
also used the BVM for the issuance or sale of
shares in the total amount of $48.7 million.
Given the importance placed on Financial
Literacy by the BVM, a financial education
program has been implemented at the na-
tional level, to promote the capital markets
and maximize the visibility of the BVM, in
order to invite more companies make use of
it through listing. The program also offers the
general public an alternative savings mecha-
nism and investment options.
Finally, it is important to highlight the
establishment of the Central Securities De-
pository (CSD) on November 5, 2014, which
among other objectives, will allow the cen-
tralized registration of all securities issued
and traded in Mozambique, increasing the
confidence of all stakeholders in the Mozam-
bican capital markets.

Insurance remains largely beyond the means or radar screen of
Mozambicans, yet the middle class is on the rise, planning for what
tomorrow may bring.
Review INSURANCE
the
RIGHT
POLICY
AFRICA BOUND
The World Bank estimates that as wages rise,
up to 80 million jobs may leave China and re-
locate to Africa. This would impact the local
economy, and also the financial services, not
least insurance as the industrial matrix expands.
Meanwhile, a survey by the International Labor
Organization (ILO) reveals a disparity between
insurance coverage North Africa and sub-Sa-
haran Africa. In countries in the former territo-
ries such as Libya, Egypt, Tunisia, and Morocco
around 80% of the labor force has pension cov-
erage, in stark contrast to the latter, where in
most nations between 3% and 10% is insured.
Having pointed out that only an estimated 7%
of the continents citizens have a pension plan,
attention turned to positive demographics, set
to shape the destiny of the insurance business.
Birth rates today are on the decline, reflecting
greater prosperity, and the study predicts that by
2050, the 55+ demographic will have doubled,
opening up a whole range of opportunities
for the financial and healthcare sectors, but sig-
naling the end of the demographic dividend.
Meanwhile, PROSHARE cites a recent study
by Bain&Company Consultants forecasting a
doubling of consumer spending in Africa 2020
to $2 trillion as more Africans enter the ranks of
the middle class and make provisions for their
future. Africas middle class doubled between
1981 and 2010 and continues its ascent.
Finance THEBUSINESSYEAR 51
THE SCENE IN MOZAMBIQUE
Post civil war economic restructuring and sub-
Post-civil war
economic
sequent market liberalization, ending the state restructuring and the
monopoly, saw the re-emergence of private
subsequent market
sector insurance companies, subject to Min-
istry of Finance regulation. In 1999, the gov- liberalization ending
the state monopoly
ernment legislated the establishment of the
insurance regulatory body Inspeco Geral de enabled the re-
Seguros (IGS), subsequently ceded greater au- emergence of private
tonomy and renamed Instituto de Superviso sector insurance
de Seguros de Moambique (ISSM). Todays
Mozambican insurance sector is overwhelm-
companies, subject
ingly dominated by corporate and industrial to Ministry of Finance
policies related to energy-related infrastruc- regulation.
ture. Henri Mittermayer, Managing Director
of Hollard Moambique told TBY that among
the insurance companies in Mozambique,
the three largest entities represent 80% of the
insurance market.
Premium generation has expanded by rough-
ly 18% per annum in recent years according to
KPMG research. The merits of insurance as se-
curity, much less investment, are irrelevant to
most Mozambicans. Total premiums account
for less than 1% of GDP. The need for a vibrant
private sector and middle class versed in the
merits of saving and investment is some way
from being realized.
Mozambiques insurance intermediary sec-
tor hosts around 40 brokers and insurance
agencies. The law stipulates two types of man-
datory coverage, the first being third-party mo-
tor liability for local and foreign registration.
Secondly, business entities are obliged to car-
ry workers compensation insurance to cover
work-related accidents.
MICRO-INSURANCE
Micro-insurance, like other micro components
of the financial industry, is intended to cover
those otherwise prone to financial exclusion
and promote sustainable welfare. The benefits
of financial security in a developing economy
52 THEBUSINESSYEAR MOZAMBIQUE 2015
are substantial, too, in providing a safety net
again catastrophic loss, and in fostering cal-
culated risk taking conducive to entrepreneur-
ship. A paradox lies in the fact that citizen aside,
the micro insurance vendor, too, must be con-
vinced of the viability of the transaction. Early
entrants face higher operational costs, and in a
competitive environment, premiums drop.
ENERGY CONCESSIONS
The local insurance sector as yet has limited
technical and financial underwriting capacity
and relies heavily on reinsurance capacity. Yet
SwissRe indicates that in 2011 the continents
reinsurance market accounted for a minus-
cule 0.8% of the global total in direct premiums
(valued at a total of $6.4 billion). By compari-
son, Latin Americas print was 2.8% and that of
emerging markets 10.7% respectively $21.9 bil-
lion and $83.7 billion). Given this dependence
on reinsurance, Henri Mittermayer observes
that, you will note that there is a very low level
of risk retention of less than 5% of values at risk
on corporate risks and megaprojects.
In the industrial arena, the exploitation of
Mozambiques vast natural gas resources has
seen certain recent concessions to foreign gi-
ants. Mozambican law generally requires insur-
ance to be taken out with local insurers, and yet
the limited scope of the local insurance market
and vast scale of Offshore Areas 1 and 4, has
seen additional flexibility is granted to related
Concessionaires and SPVs. These are free to
take out insurance with foreign insurers where it
proves impossible to insure with local insurance
companies at a cost that is not more than 10% of
the cost of insuring with foreign insurers.
IN THE EVENT THAT
At roughly 0.69% of GDP, the Mozambican non-
life insurance market falls short of the 1.11%
African average, and well below South Africas
2.9%. One pressing reality is the need for ca-
tastrophe insurance against the endemic risk
of flood, droughts, earthquake, and pestilence.
The World Bank Disaster Risk Financing and In-
surance (DRFI) Program encourages the uptake
of disaster insurance in vulnerable nations. A
2012 report on Mozambique, which ranks high
among those most exposed to natural disas-
ter. Data confirms that Mozambique has faced
an average of 1.2 major events per year over
the 1957 to 2008 period [where] drought has
impacted the largest number of people, with
over 17 million affected since 1956. Moreover,
roughly 50% of the population is vulnerable to
the extremes of drought or flood. It is estimated
WHY AFRICAN that virtually 100% of agricultural production is
susceptible to drought. Official data estimates
CONSUMERS LACK that each decade losses of roughly 20% can be
INSURANCE expected. Yet despite the sectors contribution
Source: Fino to the economy (approximately 30% of GDP),
and aforementioned risk profile, an estimated
75% of rural adults are oblivious to insurance,
COST compared to the urban figure of 50%. Catastro-
phe risk insurance penetration remains a tiny
part of the property insurance market, itself
comprising roughly 10% of non-life coverage.
Disaster micro-insurance is not yet an option
to the vulnerable either.
NOT GETTING THROUGH
Typical insurance
The World Banks Making Finance Work for Af-
premiums represent 6-8% rica report indicates low insurance penetration
of the average income across Africa, besides South Africa, of rough-
ly 1%, and just seven having a rate of over 2%.
The industry predominantly prints non-life
TRUST business, with life insurance, given disposable
income and longevity severely underdevel-
oped. Small wonder, then, that South Africa ac-
counts for 93% of overall life business and over
50% of non-life business in sub-Saharan Africa.
Potential is identified in health insurance, mi-
cro-insurance, agricultural insurance, and oth-
Lack of confidence er products geared toward relieving systemic
poverty, or that allow SMEs to grow.
in insurers, product
complexity, and concern BY ASSOCIATION
over payouts Rui Oliveira is the President of the Insurance
Associationsector player membership op-
tionalestablished in 2003. Today, 10 out of
ACCESS the 16 companies in the sector are members.
In a TBY interview he highlighted certain short-
comings of the local scene among which were
the fact that, the government does not create
funds for compulsory insurance for areas such
Not enough insurance as workers compensation or motor insur-
agents for nationwide ancewhich is taken out from private sector
companies, and we are not an endless supply of
coverage, or to address
capital able to guarantee limitless liability. In
poorer citizens this light, the Association, sees its chief role as,
aligning the expectations of the law with the
needs of the private sector. He goes on to com-
KNOWLEDGE ment that, People forget that insurance is a key
element of a growing economy, especially if as-
sets, investments, and capital, too, are growing,
and with them, the inherent risk of loss.
For Mozambique, then, industrial and infra-
structure-related projects will continue gener-
ating premiumsgovernment concessions to
foreign companies asidewhile a wider uptake
Generally low level of
among citizens will require economic develop-
financial literacy, and ment of a broader nature than energy conces-
terms and condtitions sions alone can provide.

What was the motivation be-
hind creating Mozambique
Previdente?
Mozambique Previdente was
created in 2012, and started
operations in 2013. The ba-
sic idea was to provide bet-
ter pensions to the public in
general. We have our national
social security schemes that
provide just the basics. The
idea was to create a private
pension fund for those able
to save and start investing
in their own private pension
fund schemes. We started the
company with a shared cap-
ital of $800,000 in cash, and
our total investment rose to
around $1.5 million.
BIO
Aldo Tembe studied law
at Universidade Eduardo
Mondlane and Pension
Funds Management
at University of South
Africa (UNISA). Prior to
Moambique Previdente, he
worked for four years for
British American Tobacco in
corporate, regulatory affairs,
and legal departments.
He has also been legal
consultant and corporate
advisor for Nadhari, Lda.,
Mila Investments, and
Managing Director for NBC
Mozambique.
WIDE
horizons
TBY talks to Aldo Tembe, CEO of Moambique
Previdente, on new financial regulations, capital
market developments, and starting out in
countrys financial sector.
How would you assess your first
year of operations?
We started strongly and in
our first year we started man-
aging three funds and have
three more in the pipeline. We
started managing assets on
a base of almost $1.5 million
and ended the year on asset
growth of almost $1 million to
$2.5 million. In 2014 we want-
ed to grow not only in asset
terms, but in terms of client
base, which we expanded by
50%. We are also now branch-
ing out in terms of companies,
and today have private and
semi-private companies. We
expect to grow by at least 20%
in 2015 in terms of client base.
And in terms of assets, we
want to start investing more in
properties and infrastructure
in the country.
What is the profile of Previden-
tes main clients?
Due to our shareholder struc-
ture we work more with state-
owned enterprises. But one
of the recent clients that we
signed is a private sector enti-
ty. Our strategy is to first tackle
the state-owned enterpris-
es and then reach out to the
general public. Emose is not
only a shareholder but also
our main partner. We provide
all clients with a full range
of pension fund schemes, in
terms of defined benefit, de-
fined contribution funds, and
hybrid funds. We want to pro-
vide a complete range of ben-
Finance
As a young company, how
The situation has been im-
efits coupled with the pension
funds, including medical, life
insurance and funeral benefits.
The law also allows us to put in
home loans for the members
of pension funds. We expect in
2015 to provide a more com-
prehensive range of products.
What will be the impact of Previ-
dente on the local capital markets?
We expect to rank among the
top ten players in the market.
The law that allows the cre-
ation of pension funds also
provides for investment max-
imum limitations, where for
example, we can invest in gov-
ernment bonds up to 100%.
This shows the direction that
the government wants to take
us in. We are now investing
more in the money markets,
but we expect to start invest-
ing in property very soon,
once our asset value grows.
And unlike other players, we
bear limited risk and have
greater cash flow, and can
look at a broad range of proj-
ects. The region hosts the Re-
tirement Funds Africa, which
is an entity that tries to regu-
late and instill best practices
across the region. At one of
the conference we attended,
it was discussed that we as
Pension Funds need to look a
bit more into new companies
(entrepreneurs, SMEs, etc.)
and invest in them. This will
boost the job creation and fur-
ther promote the country de-
velopment with new jobs.
THEBUSINESSYEAR 53
INTERVIEW
would you describe the en-
vironment for startups in the
country?
proving year by year, but
there are still challenges to
overcome regarding legisla-
tion, as fiscal and financial
regulation is demanding. Yet
once the government appre-
ciates the new business op-
portunities arising and new
businesses being created,
it may amend legislation to
ease up the playing field. I
expect the new government
to encourage foreign invest-
ment, but also to put local
content in place and have lo-
cals working hand in hand to
develop these new resources.
We need to have well-estab-
lished platforms for transfer
of knowledge from foreign
companies to locals.
IN NUMBERS
Moambique
Previdente
Total investment of
1.5
million USD
Growing at rates of
20 to
50%
54 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
What is the background of the
Insurance Association in Mo-
zambique?
The Insurance Association
was established in 2003. At
the time, there were only five
companies associated in the
market, and few issues to dis-
cuss. Yet over the past three
or four years, we have grown
to 16 companies, around 10
of which are now members
of the Association. We try to
present a unified voice for
the industry, and yet to date
membership is not compul-
sory although we are working
to see that becomes the case
in 2015.
What are Associations principle
industry concerns?
First of all, we would ideally
like to see a representative of
each company in the market.
Secondly, the government is
making important revisions to
the national insurance legisla-
tion. The Associations main
area of concern is the final
shape of this legislation. From
an international point of view,
ours has only been a free mar-
ket for the past 20 years, with
legislation left dormant. Insur-
ance legislation has seen two
incarnations since 2000, and
areas such as worker compen-
sation and the market have
regrettably taken separate
paths. The Insurance Asso-
ciation has played a vital role
in advising the government in
aligning the legislation with
the reality of the market. One
of the issues in Mozambique
is that the government does
not create funds for compul-
sory insurance for areas such
as workers compensation or
motor insurance. Legislation
does stipulate certain types of
mandatory insurance cover-
age, which is taken out from
private sector companies, and
we are not an endless supply
of capital able to guarantee
limitless liability. This is pre-
cisely where the Insurance As-
sociation comes into its own
in terms of aligning the ex-
pectations of the law with the
needs of the private sector. It
is also a problem of fiscaliza-
tion, as there is no reliable
data on, say, the percentage of
vehicles insured, despite this
branch being mandatory.
What are the Associations con-
cerns regarding the major ener-
gy projects in the north?
A document has been drafted
by the supervisory institution
in its capacity as consultant
to the government, according
BIO
Rui Oliverira graduated with
a degree in Civil Engineering
from the Instituto Superior
Tcnico. He worked in
Lisbon for Teixeira Duarte
from 1987 to 1996, later
joining Ocidental Seguros
where he worked for four
years. In 2000 he was
appointed Operations
and Claims Manager
at Imprio Comrcio
e Indstria. Currently
he is Board Director at
Seguradora Internacional
de Moambique and
President of the Insurance
Association.
the
ADVOCATE
TBY talks to Rui Oliveira, President of the
Insurance Association, on synchronizing
regulation with market realities, promoting
indigenous insurance companies, and raising
penetration rates.
10 members of
the 16 insurance
companies
operating at
the moment in
Mozambique
to the findings of which the
government is negotiating
with major investors. Gen-
erally speaking, the major
oil and gas investors want to
retain the right to insurance
coverage that circumvents
the Mozambican system. The
government has approached
the Ministry of Finance as well
as the Insurance Association.
In our opinion, it is not only
a question of the impact on
our industry, but also about
protecting our national inter-
eststhis is a matter of assets
set to be built in this country,
but insured elsewhere. It is
a contentious issue, and the
government needs to arrive at
a legal solution. New gas regu-
lations feature a two-point ar-
ticle on insurance where point
A almost aligns with our out-
look, while point B is a com-
plete contradiction of that
position. By accommodating
both views neither becomes
clearly stated.
How do you expect insurance
penetration to evolve in the com-
ing years?
Market penetration is at
around 2%. We know that we
may not yet be strong enough
to retain the big risks of the
big projects taking place in the
country, but we have to start.
With time, we can increase
our potential. Meanwhile, al-
though Mozambiques GDP
is expected to grow by around
6-8%, the bulk of that derives
from the major projects be-
ing rolled out. Naturally, if we
are not involved, our average
growth will be negatively im-
pacted.
What steps are necessary to
raise national awareness of in-
surance?
It is quite difficult to make
people understand the neces-
sity of insurance, and despite
many years of work on this,
our society lacks a culture of
insurance. People forget that
insurance is a key element of a
growing economy, especially if
assets, investments, and capi-
talare growing, and with them,
the inherent risk of loss. Inter-
nationally, insurance compa-
nies work with reinsurers of
sufficient financial weight to
be able to mitigate risk. Pem-
ba, for example, is a vital area
for Mozambique, where proj-
ects seek out the coverage of
strong companies.
 Finance THEBUSINESSYEAR 55

EXPANDING THE INSURANCE MARKET FORUM

With only 2% penetration, the insurance

LETS ROLL
industry has no shortage of room for growth,
and economic developments indicate that this
is a safe bet.

CURRATILAINE LOUIS KAHTS LUCAS CHACHINE HENRI

REMANE Managing Director of President of MITTERMAYER
Executive Director Global Alliance Moambique Managing Director of
of Seguradora Companhia de Seguros Hollard Moambique
Internacional de
Moambique (IMPAR)

T I
he main insurance ve been in insur-
companies in the mar- ance for 20 years,
ket are in process of and about 12 or 13 of
evaluating the new legal frame- those years were in South Af-
work recently approved known rica. What makes insurance in
as Special Regime of insurance Mozambique so complicated is
and reinsurance for the Rovuma that although it is a country that
Basin, which appears to us at is growing quickly, we are still
first glance, that isnt very clear struggling to keep up with what
and somehow contradictory. We has happened in the past in
as a whole consider important other countries. Looking at the
that the competent authorities occupational diseases act and
must clarify of what in fact wants injuries at work, over here it is
to be achieved with this specific still underwritten by insurers in
legislation recently approved the form of workers compensa-
and seem to us that a strong tion insurance. It is definitely a
message should be passed to the different approach to insurance
international investors about than what we have in South Af-
the importance for the country rica. Mozambique is an excep-
to have local insurers effectively tionally large country to live and
involved in all insurances of the work in, and to get something
big projects particularly in the from the North to the South with
Rovuma Basin. the road networks not as good as
they should be takes a massive
amount of time. We do not have
set offices, and that is definitely
something different. We do not
have a network of repairers, tow
vehicles, and spare parts distrib-
utors. I think the absence of a
settled service provider network
is the key issue. You need to be
able to source our things and get
them to the client whenever they
are needed.
T S
he government has
a regulatory and su-
pervisory role. It has a
new and dynamic approach and
is bringing in a vision as to how
companies must develop this
industry. It is more aware of the
insurance industry now. In the
past, the government was much
more concerned about the
banking sector than the insur-
ance sector. However, while the
government authority is more
active than before, there is still a
long way to go. Along with the in-
surance companies, brokers and
other players in the sector, the
government should ensure that
it promotes the industry. Most
people know very little about
insurance products, besides
motor insurance and workers
compensation. We have numer-
ous large-scale projects where
huge international companies
are coming to Mozambique un-
der specific agreements with the
government, and insurance is a
part of that. We have the capaci-
ty and a good insurance offering
in the country. It is essential that
our insurance regulator and the
association lobby such that the
majority of the business stays in
Mozambique.
ometimes in these en-
vironments it is up to
the government to ne-
gotiate and attract big investors
and the results will depend on
the concessions they give. The
jury is still out in terms of what
is going to happen in the north
with regards to the emerging
oil and gas industry. We as the
insurance industry received an
urgent letter from the Ministry
of Finance through the insur-
ance association requesting
our comments on the possible
concession that the govern-
ment was considering for the
exploration area of oil and gas
in the Rovuma basin. There was
a proposal for these operators
to be exempted from having to
comply with local insurance leg-
islation like all other companies
that are locally based. Naturally,
the insurance association was
concerned about this trend and
what it could trigger in other
economic sectors. Furthermore,
such a policy would be in con-
tradiction to the official policy
of the government of support-
ing local retention, in alignment
with policies of other countries
with major extractive industries.
 THEBUSINESSYEAR 57

61
John W. Peffer, President of
Anadarko, on gas finds that are
set to impact the economy, and
socioeconomic consequences.
63
Simone Volpi, Managing Director
of Orlean Invest, on development
plans for Mozambique and
working with ENH.
64
The discovery of vast amounts of
fuel reserves in Mozambique is a
potential game changer for the
countrys current itinerary.

Energy & Mining

REVIEW ENERGY

Already holding the third-largest LNG reserves in Africa, the country is set
to become one of the worlds top producers in the coming years.

RESOURCE-FULL
M
ozambiques rap-
idly developing
natural gas re-
serves, driven by
growing FDI into the energy
and natural resource sectors,
has in large part contributed to
its post-war progress; parallel
to the governments identi-
fication of the energy sector
as a main area for investment
in its national plan to com-
bat poverty. Characteristic
of resource-rich, import-de-
pendent, growing economies,
the country faces complex
challenges across socio-eco-
nomic indicators, and the key
to effectively maximize their
wealth lies in their ability to in-
vest natural resource revenues
in physical and human capital.
Despite Mozambiques abun-
dant energy resources, only
just over a quarter of the popu-
lation is connected to the grid,
while also exporting electricity
to South Africa. To combat this
disparity, development of do-
mestic infrastructure within
and across regions, increasing
affordability of energy access
across the country, promotion
and participation of the private
sector in the energy sector, and
reduction of environmental
impact of nonrenewable re-
sources has been recommend
by international organizations.
The OECD in particular has
recommended introducing
policies to strengthen invest-
ment framework and better
facilitation of land access for
investors, in addition to imple-
menting a coherent strategy
for energy sub-sector develop-
ment and increase competi-
tion in the power sector.
Instituto de Estudos Sociais
E Economicos (IESE) informs
that by 2030, the urban pop-
ulation is expected to dou-
ble, GDP per capita to triple,
GDP to be multiplied by four,
though 18 million people could
still be reliant on biomass for
their energy needs with poten-
tially five times more cars as
today in the streets, all despite
Mozambiques potential to be
among the top-five exporters
of Coal and LNG globally. The
skewed relationship between
The energy sector has been named growth and investment trends
a top priority for investment by the has largely resulted from the
government, to bring electricity to country historically having
depended on megaprojects
the wider population and develop the in the extractive industries
economy as a whole. for foreign exchange and rev-
58 THEBUSINESSYEAR MOZAMBIQUE 2015
enue, though the share of FDI into non-mega
projects has gradually risen to 45% over the past
five years. In addition, the new petroleum law
states that oil and gas companies must be listed
on the Mozambique Stock Exchange, in a move
to further ensure that Mozambican citizens can
benefit from megaprojects. New legislation also
includes a special regime option for LNG proj-
ects in the Rovuma Basin, to respond to the
specific features of the Rovuma Project and to
create the necessary conditions for its final ap-
proval, development, and operation throughout
the concession period in conditions of economic
viability and profitability, informs Paulo Men-
dona, E&P Country Manager Mozambique
Galp Energia.
WELL RESERVED
The countrys large sedimentary basins of natu-
ral gas hold immense potential for the economy,
with three onshore gas reserve discoveries in
Pande, Temane, and Buzi. As of January 2014,
Mozambiques total proven natural gas re-
serves rose to 100 tcf, placing the country as the
third-largest proved natural gas reserve holder
in Africa after Nigeria and Algeria, compared
to modest natural gas production of 154 bcf in
2012. The majority of natural gas produced in
Mozambique was exported (127 bcf) to South
Africa via the 860-km Sasol Petroleum Interna-
tional Gas Pipeline, and the remainder was do-
mestically consumed (27 bcf), according to the
Oil and Gas Journal. Another main target for fu-
ture LNG exports are in the Pacific Basin, where
US Anadarko Petroleum has made 8 million
tons per annum (mtpa) in off-take agreements,
which is expected to propel Mozambique to vie
with global leaders Qatar, Australia, and North
America in the medium to long term, to meet ris-
ing global demand from the Chinese and Indian
energy markets.
The countrys fifth oil and gas bid round, ini-
tially scheduled to accept bids until January 20th
2015, was extended by over three months until
April 30th because of high levels of investor in-
terest and requests from operators for more
time. The licensing round unveiled 15 new on-
shore blocks for oil and gas explorations and
production, which include three new areas of
the northern Rovuma Basim where multi-billion
development projects are already underway by
Anadarko and Italian Eni. According to Reuters,
initial investments in the countrys natural gas
sector are expected to exceed $30 billion; to in-
crease production capacity to 20 mtpa of LNG,
with firsts exports planned to start in 2018.
Anadarko is leading the Rovuma Basin ex-
ploration in Area 1, where significant natural
gas discoveries have been made, amounting
to approximately 50-70tcf of recoverable gas
reserves; Enis discoveries at the Rovuma Block
are estimated to amount to more than 80tcf of
recoverable gas resources in Area 4. In 2014,
Anadarko had one active rig in Area 1, drill-
ing the already discovered natural gas fields,
while continuing exploration in their acreage.
Anadarkos President John W. Peffer told TBY
Electricity Net Generation
(Billion KWh)
Source: US Energy Information Administration
18
16
14
12
10
8
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Electricity Net Consumption
(Billion KWh)
Source: US Energy Information Administration
12
10
8
6
4
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
TRESHAM
that there is potential to drill more new wells in
2015 within their defined discovery areas, while MATTHEWS
the government recently approved Anadarkos Country
environmental impact assessment for the on- Manager, Brunel
shore and offshore portions of Area 1s devel-
opment. Mozambiques ability to compete with
Mozambique Lda
Qatar, Australia, and North American is a result The gas discoveries
of the confluence of several factors, informs
Peffer; high deliverability of the wells means in the Rovuma Basin
fewer wells are required to produce a signifi- are promising and
cant volume of natural gas, while gas fields are most engineering and
as close as 20-40km to shore, eliminating the construction companies
need for long pipelines; high quality gas allows form a regular client base
the countrys operators to use simpler pipe-
for us in other parts of
lines and production facilities, needing less
pre-preparation, which all reduces costs; this the world. Clearly there
combined with the sheer scale of the project are certain challenges
ensures the countrys competitive edge. in working locally,
Because of the discoveries in Areas 1 and 4, one being to ensure
LNG development of at least 50 mtpa is being compliance with local
considered. Eni and Anadarko aim to jointly
plan and construct shared onshore LNG lique-
rules and regulations.
faction facilities in the Cabo Delgado Province That is why we entered
of Northern Mozambique, and the engineering into a partnership to
design for the offshore projects and liquefaction secure the advantage of
facilities is nearing completion. local expertise. Brunel
In addition to its gas reserves, major depos- Mozambique Lda is a
its of coal were recently discovered in the Tete
province, with an estimated size of about 23 bil- Joint Venture between
lion tons, which have attracted substantial for- Brunel Energy and a local
eign direct investment. Minas Moatize is also company called PacMoz.
working with the government and stakehold- Through PacMozs local
ers to improve railway logistic efficiency to in- expertise and Brunels
crease competitiveness and improve economic
global experience in
results of the countrys coal industry. After the
expansion of the project is complete, use of coal this market, we feel
in the domestic energy market is expected to in- like we can make a real
crease. contribution to this sector.
 Pemba Oil & Gas Service Center
Cabo Delgado, Mozambique
A public and private sector cooperation
Palma Rovuma creating a logistics solution
Basin Blocks
for the Mozambican Oil & Gas Industry
Pemba
Supply Base
Cabo
Delgabo

Construction and Fabrication Yard

Container and General Cargo Terminal - Export
Residential and Commercial Facilities
Mozambique
LNG receiving terminal

Contact us for further information

www.enhils.co.mz - enhils@enhils.co.mz

ENH Integrated Logistics Service, S.A.

Avenida Marginal, n 4088
Bairro dos Inos, Cidade de Pemba,
Republica de Mozambique

Tel: +258 21 42 94 56 / 67 - Fax: +258 21 32 48 08

60 THEBUSINESSYEAR MOZAMBIQUE 2015
ANDR VELEDA
Country Manager,
Mecwide Moambique
Pemba will be the logistic
platform for the LNG
project and we want to be
there in 2015, and in Palma
probably in 2016. The
strategy is to start working
in Maputo for both projects
and develop the brand. At
the same time we expect
the project in Palma to
be ready. When the LNG
project starts, the company
will already be working in
Mozambique. We want to
be part of the local content,
and we have a solid
portfolio and expertise
in oil and gas since we
started six years ago.
SOLAR AND HYDROELECTRICITY
In order to meet the growing energy demand,
Mozambique is also keen to develop their re-
newable energy resources. Solar energy in-
vestors are looking to fill a gap in the countrys
rising energy demands, with solar energy usage
already taking off in rural parts of the country
due to projects by companies like Self Energy
Mozambique. According to Mozambiques Min-
ister of Energy Salvador Namburete, household
solar systems have already provided electricity
to 3.7 million Mozambicans, helping to lift the
countrys electrification rate from 7% in 2004 to
40% in 2014. In order the reach the remaining
60% of the population, Namburete has said that
investments of a further $2.4 billion is required.
The country is also expanding implementa-
tion of its great hydroelectricity potential, turn-
ing to the international community for long-
term investments to construct hydroelectric
power plants. The countrys energy sector re-
ceived the largest amount of investment in 2014
in projects through the Mozambique Investment
Promotion Centre, attracting over $3.23 billion
for just five projects, two of which were hydro-
electric plants. The Lupata hydroelectric dam
on the Zambezi River accounted for the largest
single investment at $1.07 billion from Mauritas,
who also invested in the Zambezi River Boroma
hydroelectric plant at $572.5 million.
The Cahora Bassa dam hydroelectric plant
(HCB) is among the largest hydropower instal-
lations in Africa, with a capacity to generate
2,015MW of electricity. After the first phase of re-
covery of the Songo substation was completed,
energy production of HCB increased by 6.35%
in 2014 to 15,892GWh. Construction of the dam
began in 1969 when the contract was awarded
to Zamco consortium, and Hidroelctrica de
Cahora Bassa, SARL was founded in 1975. The
state took over the project in 2007 holding 85%
of its shares, and as of 2014 now owns 100%. An-
ALCIDES PAULINO CINTURA
Country Manager, Lateorke
How would you assess Mozambiques higher
education programs in oil and gas?
There is a spirit of innovation at the universities,
resulting from the establishment of partnerships
with international educational institutions and
the oil companies. The main challenge will lie in
sufficiently training engineers and technicians for
the various areas of the oil industry, and having a
teaching staff with the autonomy and know-how to
ensure education and the development of research
and technological development projects.
How would you characterize the development of
the oil and gas industry in Mozambique?
Over the past decade, about 50% of new oil discov-
other hydro dam, the Mphanda Nkuwa, is being
planned to increase power availability in the
country, to have annual generation of 8,600MW.
Ncondezi Energy plans to bring online Mozam-
bique's first coal-fired power station (300MW)
next to its coal mine in the Tete Province, aiming
to commission the the power plant in 2H2017
and initiate commercial operations in 1H2018.
The plan is to eventually expand the station to
1,800MW. Ncondezi Energy will use existing
transmission capacity to send power to northern
Mozambique.
ELECTRIFICATION
The countrys domestic electricity challenges
are marked by a growing gap between do-
mestic demand and existing supply, exacer-
bated by the rapid growth in the upstream
and extractive sectors. Coinciding with the
establishment of Mozal and Mozall II alu-
minium smelters, energy consumption has
skyrocketed since the late 1990Mozal alone
consumes 900MW of electricity, equivalent to
an over 70% of HCBs total power output, ac-
cording to OECD. Transmission structure is
also in need of development, as 80 to 90% of
power from HCB reaches southern Mozam-
bique by way of South African transmission
lines. However, according to Standard Bank,
LNG will add $39 billion to the Mozambican
economy over the next 20 years, boosting
GDP per capita from approximately $650 in
2013, to $4,500 by 2035, and further develop-
ment of electrification is sure to follow. The
government has already invested over $530
million in rural electrification over the past
five years, and electrification rates are grow-
ing10.2 million Mozambicans now have ac-
cess to electricity compares to 1.3 million in
2004, ranking the country as having the third
highest electrification rate in the Southern Af-
rican Development Community region.
eries were made in countries where Portuguese
was the official language. We need to streamline the
qualification of new managers and technicians for
the oil industry in this country. Brazil is a case study
in terms of the oil industry for Mozambique. Petro-
bras was established in 1953. Initially, chemical,
mechanical, and civil engineers became specialized
in the oil sector. This knowledge was eventually
transferred in a structured manner to universities.
And since 2003, Brazil has offered a degree in Petro-
leum and Natural Gas Engineering, duly licensed by
the Ministry of Education. This approach has also
had a major impact on the development of industrial
enterprises, incorporating local content manufac-
tured in Brazil for the oil and gas industry.

Anadarko
began offshore
exploration in
2007
Plant employs
150 people
BIO
John W. Peffer holds
Bachelors and Masters and have the right to continue appraising and
degrees in Petroleum
Engineering from the
University of Texas and has
27 years of oil and natural
gas industry experience,
all with Anadarko and
its affiliates. Prior to his
current position as General
Manager of Anadarko in
Mozambique, he spent three
years working as Middle
East Business Development
Manager in London.
LIFES
A GAS
TBY talks to John W. Peffer, President of
Anadarko, on managing gas finds that are set to
notably impact Mozambiques economy, with
positive socioeconomic consequences.
What is the status of the drilling and exploration
activities in Area 1?
We continued to have one rig active during
2014, both exploring our acreage in the Off-
shore Area 1 and delineating the incredible
natural gas fields already discovered. Our ex-
ploration contract with the government of
Mozambique began on February 1st, 2007,
and when it expires on January 31st, 2015, we
will have met all of the objectives we set out
to achieve. Since the first drillship arrived in
November 2009, we have been drilling con-
tinuously and have discovered an estimated
5070tcf of recoverable natural gas in the Off-
shore Area 1, which is extraordinary for deep-
water exploration anywhere in the world. We
continue to advance these world-class discov-
eries we have made here and are transitioning
toward the development phase of this exciting
LNG project. As we move ahead in 2015, we
may drill some additional wells, although we
wont need another contract for thatwe have
defined discovery areas inside Offshore Area 1,
developing those areas beyond the exploration
period once we have an approved development
plan. Just prior to the end of 2014, a Decree Law
took an important step toward establishing a
project-wide legal and contractual framework
that is expected to deliver a level of stability
enabling continued equity investments by the
partnership and potential access to significant,
limited recourse to project finance capital. We
also have an approved environmental impact
assessment for the onshore and offshore por-
tions of the development, having completed
the resettlement action plan for the Afungi site,
which was submitted to the government prior
Energy & Mining THEBUSINESSYEAR 61
INTERVIEW
to the end of 2014. Once approved, we will re-
ceive the environmental license for the project.
The engineering design for both the offshore
project and the onshore liquefaction facilities
is nearing completion and we expect to be in
a position to award those projects in the near
future. Marketing is making good progress as
we have more than 8 million tons per annum of
non-binding LNG off-take agreements in place
with customers in premium markets in the Pa-
cific Basin, and we are working on financing
packages to that end.
How would you describe the Palma Park invest-
ment?
We secured the land and have done some site
improvements. Its mainly been a matter of ge-
otechnical work to design the plant, including
the offshore and near-shore approach of the
pipeline routing and the marine facilities that
we need to construct there, as well as a liquefac-
tion facility. We have a fairly large camp today
operated by about 150 people. We have approv-
al to start building an airstrip and have focused
on the resettlement activities and working with
local communities and the government con-
cerning the location of the resettlement sites
and issues such as housing design. Our stake-
holder engagement efforts in the region have
progressed well as our team meets regularly
with local villages and leaders to ensure we are
openly communicating with the communities,
listening to concerns and working to address
any issues. We have also established training
programs to ensure local communities share in
the work opportunities and have the skills nec-
essary to play a role in the development of this
project.
62 THEBUSINESSYEAR MOZAMBIQUE 2015
IN NUMBERS What will the production capacity be in the early
years?
Anadarko
Currently, the initial phase is for 10 million tons
per annum of LNG production from two trains.
That requires roughly 14tcf of gas to open the
75+
20-year production life of the project. We can
replicate that 3-4 times in size at least given the
tremendous scale of resources discovered in
Offshore Area 1.
Tcf of recoverable LNG
What export markets are you targeting?
We are continuing to secure non-binding
agreements in premium markets in the Far
Eastthere is huge demand and growth po-
15k
tential. The substantial projected long-term
growth in global demand will probably be fo-
cused on China and India in the near future.
As mentioned previously, we have non-bind-
direct jobs ing HOAs for more than 8 million tons. They
will be buying energy security for their nations
for decades to come; the resources here are
such that they can continue signing repeat
contracts involving Mozambican LNG. The big
39k
billion USD to
players today are Qatar, Australia, and North
Americamainly the USand meanwhile, this
project alone is expected to elevate Mozam-
bique to the status of a major global player of
Mozambican notable potential.
Economy
How can Mozambique compete efficiently with
those markets?
One of the first important steps was the new
Decree Lawsecondly come the related costs.
We think that we have a cost-competitive proj-
ect here, that competes well with any LNG proj-
ect in the world. The Decree Law is expected to
help with this. Looking at offshore, Anadarko is
one of the top two or three most experienced
deepwater developers in the world. The qual-
ity and production capacity, or deliverability,
of the wells is such that a minimal number of
wells will produce a significant volume of nat-
ural gas for the LNG facilities. The natural gas
fields are close to shore, at around a 20-40 ki-
lometers distance, whereby long pipelines are
not necessary. The natural gas is high-quality,
or sweet, meaning that is contains no H2S, and
just minor traces of CO2, whereby the metallur-
gy is not exotic. This means that the design of
the pipelines of the onshore facilities is simpler.
Less pre-preparation of gas is required before it
goes to the liquefaction plant, reducing costs.
We consider the project cost-competitive and a
premium asset, which we will send to premium
markets, maintaining our cost-competitive-
ness. This differentiates us from our compet-
itors. And, then there is the sheer scale of the
project to consider.
What role can Anadarko play in the socioeconomic
development of Mozambique?
Standard Banks socioeconomic study of our
project reveals that it will bring tremendous
benefits to the country in terms of GDP, job
growth, foreign investment and education,
among others. The study found that we directly
employ around 15,000 people, as construction
requires a large workforce. In contrast, the op-
eration of any oil and natural gas facility is not
manpower-driven. It takes a high skill-level,
but not many people. The EPC contractors will
bring in 10,000 or so people, but the real ben-
efits come in indirect and induced labor. The
government has plans for power generation
and other industrial projects that are directly
tied to job growth and so on. The government
is committed to maximizing project revenue
for the benefit of the Mozambican state. We
can help by developing this project and sell-
ing to premium marketsmainly in the Far
Eastpaying our taxes to the Government and
training Mozambicans to a high skill-level to
work on these projects and in the industry as
a whole. Our facility in Pemba has resulted in
an incredible amount of new economic activ-
ity. The port set to be built there will bring in
additional investment, and we will manage our
drilling activities from there.
When will the first cargo be ready for export?
We are well advanced in marketing and have
started on the financing, having encountered
significant interest. Our project team is ready
to move forward. The pace of development
will largely be dependent upon continued
alignment with the Government of Mozam-
bique, and the speed at which the Govern-
ment provides remaining permits and approv-
als. We are confident that the progress made
to date will provide momentum to continue
moving this important project forward. The
view in the marketplace is that it would gen-
uinely increase the international credibility of
Mozambique.

What are your main investment
and development plans for your
operations in Mozambique?
In Nigeria we are the leader in
providing logistics services to
the oil and gas industry. We
manage three ports in Nigeria
on behalf of the government,
namely Onne, Warri, and Cal-
abar ports. In Mozambique,
we will be doing the same by
operating a logistics base in
Pemba in the Cabo Delgado
province for the oil and gas
industry. We will be support-
HERE
ing the developments which
are taking place in Palma to
prepare for the development
of an LNG plant and for the
TO natural gas to be loaded on
vessels for export. In Palma,
a 12-train plant will be con-
STAY
structed as part of a multi-bil-
lion dollar project. Because
of the previous huge discov-
eries by Anadarko and ENI,
the world is now looking at
TBY talks to Simone Mozambiques round of bids.
Volpi, Managing The prospects are promising,
Director of Orlean thereby atracting foreign in-
vestors. Consequently, we will
Invest, on development offer residential facilities in
plans for Mozambique Palma as well as logistics ser-
and working with ENH vices. The concept in Pemba,
250km south of Palma, will
to recreate the success
be similar to the one we have
the company achieved developed in Onne in Nigeria.
in Nigeria. It may take a couple of years
before we reach the same
size, but we have already re-
ceived a concession of 12km
by 60km, which is the entire
bay of Pemba. Additionally we
have acquired an island in the
Quirimbas for the people that
we will be based in Mozam-
bique, to make life easier. It
is important that the govern-
ment of Mozambique enacts
policies, especially on envi-
ronmental laws.
When will you begin construc-
tion of your base in Pemba?
In Mozambique we are op-
erating in a joint venture,
through a public-private
partnership (PPP) with ENH,
Mozambiques national gas
Energy & Mining THEBUSINESSYEAR 63
INTERVIEW
company. ENH will hold the
51% of the shares while Or-
lean Invest keeps 49%. The
Orlean Invest
construction of the base starts is a part of a Joint
in 2015, and will be a state-
of-the-art development. We
Venture with ENH,
will establish a port and shore Mozambiques
base, where oil and gas com-
panies would be able to re- natural gas
ceive cargo. It will be enable company
companies to receive material
such as cement, water, pipes,
drilling equipment and drill-
ing chemicals, be they liquid
or mud form. The oil indus-
try requires a high level of
professionalism to support
exploration and production,
as well as technical services.
We are currently undergoing
the environmental impact
assessment before project
execution. We have clients
who have shown keen inter-
est in establishing a base as
soon as the Port is ready for
operations.
What makes Orlean Invest
the best company to manage
Pemba?
Although we are a small com-
pany in terms of associates,
we have grown financially. BIO
Organisations with sufficient
experience and expertise to
develop multiple large-scale Simone Volpi studied
projects simultaneously, at American College
such as Orlean Invest, are (Franklin College) in Lugano
rare. We are known for port Switzerland and graduated
management, and Pemba with a BA in International
Management in 1996.
will be no exception. We have
He obtained his Masters
operated in Rwanda, been in-
degree in Integrated
vited to open bases in Brazil
Logistics in Genova at the
and Croatia, and have further Universita degli Studi di
development plans in Angola. Genova, graduating in 2002.
After joining the Orlean
What will be the impact of this Invest Group, he was sent
base in the north of Mozam- to Angola where he started
bique? his career as a Commercial
The socioeconomic impact Coordinator. After one year
is immeasurable. The north he was sent back to Nigeria
of the country will develop, where he has remained
thanks to the oil and gas in- ever since. He is presently
dustry, and we will support Managing Director for Intels
their operations with the Nigeria Limited since 2010,
same high standards that we and is a naturalized citizen
of Nigeria.
have demonstrated in Nigeria
since 1998.
64 THEBUSINESSYEAR MOZAMBIQUE 2015

FOCUS ROVUMA LNG PROJECT

PAULO
MENDONA
E&P Country
Manager
Mozambique, Galp
Energia
How does Galp stand out in
Mozambique in the field of
exploration?
Galp Energia has significant
deep-water exploration experi-
ence gained from ventures else-
Image: Anadarko where in the world, particularly
Brazil. In Mozambique, explora-
tion is also offshore in deep water,
whereby we leverage expertise
gained from world class projects

OFFSHORE,
elsewhere. Galp Energia has
been operating in Mozambique
since 1957, which confirms our
commitment to the nation.

ONSTREAM
The discovery of vast amounts of fuel reserves in Mozambique is a potential
How do you plan to develop
the onshore and offshore
infrastructure in the next few
years?
Currently the Area 4 JV is
game changer for the countrys current itinerary. There is no doubt that
looking at building two onshore
the government of Filipe Nyusi has a unique opportunity to transform 5MTPA trains and we are
Mozambique into one of the most significant African economies. also evaluating the viability of
building a floating LNG facility
in order to anticipate produc-
ALTHOUGH THE GOVERNMENT has it is still insufficient when it comes to the Liq- tion and revenues both for the
actively participated in the progress of the uefied Natural Gas legal structure. The newly Government of Mozambique and
energy sector, Mozambique is now facing the discovered LNG reserves in Mozambiques Area 4 partners, making use of
challenge of providing a legal and institutional offshore are one of the worlds largest natu- the large resource base discov-
framework. It must balance the protection of ral discoveries in the past decade (Anadarkos ered in Area 4. We are currently
the project investors and operators which will studies suggest that there are enough reserves working within the JV and with
conduct these extremely high magnitude cam- to support the development of 50 million tons the Mozambique government,
paigns with maximizing the benefits for the lo- per annum, which would make Mozambique both regarding onshore and
cal population. the worlds third largest LNG exporter) and it is offshore developments, to obtain
Negotiations between the most important ought to become one of the drivers of Mozam- all required approvals and devel-
operators in the energy sector such as Anadar- biques economy in the near future. The scale op the projects successfully for
ko or Ente Nazionale Idrocarburi (ENI) and of the operation might turn Mozambique in all involved stakeholders. The
the government resulted in the passing of the one of the frontline energy exporters not only recent changes to legal and fis-
Enabling Law No 25/2014 of September 23rd in Africa but in the world, but the legal and in- cal frameworks are among the
2014, which replaced the obsolete Petroleum stitutional framework was insufficient. industrys vital developments
Law of 2001. The new law is a large leap towards The recently passed law No 25/2014 autho- of the past few years regarding
the modernization of the legal framework, but rizes the Council of Ministers to legislate a spe- specific legislation.
 Energy & Mining THEBUSINESSYEAR 65

cial regime for the LNG project, Decree law that

is expected to be approved by Mozambiques
Parliament by the end of 2015. Although the
new Petroleum Law still doesnt offer the nec-
essary security of other international modern
legislations, as it leaves a certain level of uncer-
tainty and in some cases, contradictory legis-
lation, the Decree Law for the Rovuma Basin
LNG Project is practical and constructive, as
it allows the participants to negotiate special
conditions and requisites for the new project.
The Decree aims to ease the entire process
of exploration and production of LNG, as well
as offering Anadarko and ENI legal and fiscal
stability. The Decree guarantees the compa-
nies that the tax will not raise in periods of 10
years after the first shipment (which will likely Image: Anadarko
be made in 2018, at the earliest), and at the end
of every interval, it will be renegotiated. The
legislation also sets a limit of 4% increase in
production tax for the years 10-20 and 6% for The Decree Law also protects the local pro- The Decree
the years, in case that no agreement is reached, curement of goods and services while giving guarantees the
protecting the profitability and sustainability some important exceptions, such as if the Mo- companies that the
of the project. Regarding the financing struc- zambican company does not meet the quality
tax will not raise
ture, it must be approved by the government requirements necessary for the operations, the
of Mozambique, but it eliminates the restrains goods and services cost more than 10% of the in periods of 10
in the debt-equity ratio imposed by the Petro- imported ones, contracts for the provision of years after the first
leum Tax Law. Anadarko and ENI may as well special technology worth more than $25 mil- shipment (which will
obtain insurance with foreign companies, as lion or if the goods and services are required likely be made in 2018,
long as the costs of the local ones are 10% more to be procured offshore due to financing with at the earliest), and
expensive than them. It also permits the com- Export Credit Agencies.
panies to maintain foreign currency accounts As a result, the uncertainty created in the
at the end of every
in Mozambique or in offshore accounts. In Petroleum Law has therefore been eased, giv- interval, it will be
the case of offshore accounts, money must ing the LNG market a stability and clarityes- renegotiated.
be transferred to Mozambican accounts just sential for PPPs. It will provide Mozambique a
when paying local taxes, goods and services, solid tool, which will be undoubtedly crucial in
and local workers, turning 50% of the amounts order to face the upcoming challenges of the
into Meticals. energy sector.

Maputo - Moambique

Expandindo a rede de Gs
Natural Vecular Moambicano
Expanding the Mozambican
Natural Gas Vehicle Network

Cel: +258 84 6140001

geral@autogas.co.mz | www.autogas.co.mz
66 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
FILL
her up
TBY talks to Joo das
Neves, General Director
of Autogs, on savings
on consumer fuel
bills, the advantages of
natural gas, and setting
up filling stations.
Autogs was created in 2008,
but what was the motivation be-
hind it and how has the compa-
ny developed in the intervening
years?
Autogs was created by a group
of Mozambican entrepreneurs
following a study confirming
that the use of natural gas for
vehicles in Mozambique was
a viable concern. It is a PPP
that from the public sector
features the Institute for the
Management of State Hold-
ings (IGEPE) and state-owned
petroleum product distributor
PETROMOC, and from the pri-
vate sector a consortium called
INDICO ENERGIA SA. The
initial days of Autogs opera-
tions were challenging as peo-
ple, unaware of the potential
use of natural gas in vehicles,
were reluctant to change. Only
after several years of proven
experience with private sector
public transportation with the
so-called Xapas vehicles, the
public began to have faith in
the project. The project has a
tremendous impact on the na-
tional economy by rendering
transportation cheaper for the
general public, while helping
to reduce pollution.
What does the conversion of pri-
vate commercial vehicle engines
to natural gas utilization entail?
The conversion of petrol ve-
hicles to CNG is simple and is
basically done by inserting a
T connection in the inlet pipe
of the engine. This connection
allows the supply of natural
gas or petrol controlled by a
butterfly valve operated by a
switch activated at the drivers
discretion. By doing this the
vehicle can run either on petrol
or CNG, therefore allowing the
vehicle to use CNG, while with-
in the range of CNG filling sta-
tions, but continuing to run on
petrol in other circumstances.
What are the benefits of such a
conversion?
The immediate advantage of
converting vehicles to CNG
is paying only approximately
40% on fuel bills compared
with petrol and enjoying be-
tween 50% to 60% savings. The
advantages do not end there.
Natural gas burns completely
and therefore does not pro-
duce carbons that petrol or die-
sel engines do. This means that
the maintenance periodicity
on natural gas vehicles can be
extended reducing the number
of maintenance services over
time and extending the life of
the engine. Moreover, natural
gas pollutes far less than other
fuels. The savings on pollution
are so high that certain cities
today are only allowing natu-
ral gas vehicles in their public
transport fleets to mitigate cur-
rently high pollution levels. In
the case of Mozambique there
is one extra reason for using
natural gas, namely that as it is
available and produced local-
ly, by using CNG we are using
our own fuel and substituting
imported fuels with our own
gas, which improves our econ-
omy by reducing the importa-
tion costs and ensuring greater
control on fuel prices.
How many natural gas vehicles
are currently in operation in Mo-
zambique and how do you ex-
pect the number to evolve over
the next five years?
The number of vehicles run-
ning on CNG in the cities of
Maputo and Matola today is
growing rapidly, and it is fore-
cast that in 2020 approximate-
ly 30,000 vehicles will be using
natural gas in Mozambique.
How many filling stations does
Autogs have? What are your
strategies to expand the station
network nationwide?
Currently, Autogs has opened
five CNG filling stations with
a further 12 stations projected
Autogs
will have 12
additional CNG
filling stations
over the next five
years
for the next five years. Mozam-
bique has a fleet of about half
a million vehicles, of which
around 67% run in the greater
Maputo area. It is, therefore,
expectable that the focus of fill-
ing station network expansion
will meet demand in this area
and only then start gradually
expanding throughout the rest
of the country.
What types of partnerships are
you looking for to further devel-
op this project?
Autogs has achieved profit-
ability with this project and is
now looking to replicate the
experience by expanding its
filling station network to in-
crease the business volume.
This requires substantial in-
vestment and Autogs is seek-
ing serious partners to share
the opportunity. Affordable
capital for investment is the
main priority, but options for
equipment leasing, or an op-
tional share for strategic CNG
equipment producers may
also prove interesting.
What are your goals for 2020?
Autogs aims to continue in-
troducing financially feasible
natural gas filling stations that
will supply over 300 million
equivalent liters of natural gas
in 2020.
BIO
Mozambique-born and
bred, Joo das Neves is a
Mechanical Engineer, and
has worked for more than 25
years in the private sector, in
the tourism and automobile
industries. He managed a
leading car distributorship in
Mozambique for brands such
as Ford, Mitsubishi, and Man
Truck and Buses for over
12 years. Over the past six
years he has been devoted to
implement from scratch the
use of natural gas in vehicles
in Mozambique. Due to his
passion and dedication in this
field today he is popularly
known in Mozambique as
John of the Gas.

waste not,
WANT NOT
How would you characterize the
services of your business lines
in social and environmental pro-
tection?
AMB e Veritas started as a
service provider in the qual-
ity arena in 2007, but rapidly
evolved to provide services in
environmental advisory, sus-
tainability, climate change,
and management of social
projects. The team is com-
prised of consultants with a
high degree of specialization
in several environmental and
social areas. To complement
these services, AMB e Veritas
regularly collaborates with
the main universities in the
country and with renowned
experts. AMB e Veritas adheres
to its sustainability and social
responsibility policy through
the transfer of knowledge to
young Mozambican universi-
ty alumni, by offering intern-
ships at the company. Our ser-
vice strategy rests on effective
and personalized delivery in
a constantly changing society
and market.
Which sectors can benefit the
most from your expertise in sus-
tainability and environmental
issues?
The industrial sector is the one
we work the closest with; there
we help our clients expand
their industrial assets, improve
competencies, and translate
the latest process technol-
ogies into workable design
TBY talks to Susana
Serra, Manager of
AMB e Veritas, Grupo
Meridian32, on the
companys social
responsibility model,
non-hazardous waste
solutions, and key
projects for the firm.
solutions. In mining, we sup-
port operations throughout
the lifecycle of a mine, with
expert environmental and
sustainability advice and legal
compliance work, from start-
up of exploration through to
rehabilitation plans for mine
closures. In this particular sec-
tor, we provide environmental
monitoring reporting back on
the environmental impact of
the mine. Energy is also an im-
portant sector for us. We have
the ability to perform studies
and deliver recommenda-
tions that help reduce energy
consumption and deliver en-
vironmentally friendly energy
projects, helping create a sus-
tainable future with a small-
er environmental footprint.
Lastly, transportation is the
most challenging sector of all.
It involves all of our techni-
cal skillsfrom noise and air
quality experts, social experts,
resettlement teams, to biolog-
ical experts.
How would you describe the
current use of non-hazardous
waste in Mozambique, and what
solutions can you offer for waste
management?
For many years, waste man-
agement was not a priority for
national leaders. Yet today,
with a developing economy,
the major cities are concerned
by the challenges presented in
effectively disposing of waste.
And landfills are not the only
Energy & Mining
problem; informal garbage
collectors who earn their liv-
ing at the dumpsites are also
a factor to consider. All waste
management systems must
take into consideration that
when dumpsites are closed,
these entrepreneurs lose a
source of income. One waste
management solution could
be the creation of Industrial
Ecological Parks, with the aim
of developing the integrated
management of non-hazard-
ous waste. In this approach
products or raw materials that
can be sold or reused are pro-
duced, minimizing their refer-
ral to landfills or dumpsites.
What are AMB e Veritass key
projects in Mozambique?
The most challenging project
we have participated in to date
is the preparation and imple-
mentation of a resettlement
plan for 1,700 families on a
road project between Cuamba
and Massangulo, under the
supervision of the African De-
velopment Bank, where the
management of public opin-
ion was successfully achieved.
Another interesting project
was the environmental impact
assessment of the FACIM real
estate project in the heart of
Maputo that will become an
icon of the city. The tall build-
ings will require coordination
not only with MICOA (Envi-
ronmental Ministry), but also
with the Civil Aviation Insti-
tute due to potential interfer-
ence with flight paths. Last but
not least, the environmental
impact assessment of a 9,300
ha rice plantation and rice
processing plantundertak-
en with supervision from the
International Finance Cor-
poration (IFC)was also a
project where public opinion
surrounding water issues had
to be managed through a de-
tailed water supply study indi-
cating how, where, and when
water would be utilized.
What are your main investment
and development projects for
the near future?
Our main investments are
THEBUSINESSYEAR 67
INTERVIEW
AMB e
Veritas, Grupo
Meridian32
in 2015 aims to
establish Made
in Mozambique
and ISO
certification
for all business
components
channeled toward developing
the training component of
the practice in areas related to
safety, health, environment,
and quality (SHEQ). We re-
cently concluded an agree-
ment to be the NOSA agent in
Mozambique and will during
2015 be delivering on the vi-
sion of becoming the trainer
of choice in Mozambique.
In a country with the level of
growth that Mozambique is
experiencing, it is important
that industry be prepared to
face the challenges that SHEQ
provides by training its em-
ployees in accident preven-
tion, and pollution avoidance,
and work to worldwide recog-
nized quality standards.
BIO
Susana Serra has
a background in
environmental engineering,
management, and training.
She worked as a consultant
at Jindal Africa and was
project manager of the
environmental impact
assessment of OLAM
Mozambique. Additionally
she is a qualified quality
auditor for TUV Reinhard
and a certified trainer for
NOSA.
68 THEBUSINESSYEAR MOZAMBIQUE 2015

FOCUS THE ELECTRICITY DEFICIT

Image: Cahora Bassa Mozambique

STRONGER
CURRENTS
With the majority of the population living off
the grid, the government is looking to foreign
investment, new regulations, and low-cost tariff
strategies to develop energy sustainability.

MOZAMBIQUE, AFRICAS second largest investment mar-

Image: Cahora Bassa Mozambique
ket, is rich with untapped coal, natural gas, hydropower, and
bio-fuels. The growing international attention has been tem-
pered by strategic and regulatory inefficiencies in the electrical
power infrastructure. In February 2015, The United States Agen-
cy for International Development (USAID) attributed Mozam-
biques acute energy shortage to administration, transmission,
and distribution losses, which totaled 32% of gross power gen-
erated.
According to current World Bank estimates, 15% of Mozam-
biques population has access to the electricity grid. Cahora Bas-
sa Hydroelectric facility accounts for 90% of the countrys 2.392
GW capacity. According to Post-Stabilization Economics in
Sub-Saharan Africa: Lessons from Mozambique, the key to the
sustainable development is to distribute the energy with foreign
investments, new regulations, and low-cost tariff strategies of the
Electricidade de Mozambique (EDM).
Januarys torrential rainfall and flooding ravaged the country
leading to 170 deaths, 80,000 homeless, damaging roads and
bridges, and leaving the north without power. Mozambiques

Business Monitor Internationals
Mozambique Power Report estimates
power generation to increase 6.5%
in 1Q2015 to 25.3TWh, growing to
35.8TWh in 2023. International
donors are expected to elevate
energy consumption levels to
31.2TWh by 2023.
economic activities were stopped during four
weeks of blackouts, which paralyzed the energy
corridor of South African Development Com-
munity (SADC), the South African Power Pool
(SARP) and Zizabona Transmission project.
Based on the recent natural disaster, the
governments debt levels will continue rising,
Standfirst
states Moodys Investor Services. General gov- Endi
ernment debt has risen by more faccusam
than a third fuga.
and will now likely exceed our forecast of 58.3%
ium vellupi
of GDP this year as a result of the higher budget diamusantio
HEAD LINE
deficit and lower GDP growth figure. At this lev-
el, Mozambiques general government indebt-
edness is high relative to many regional and
rating peers.
Aggreko, a UK-based temporary power
generation company, has been working with
EDM in order to offset losses from the natural
disaster. Aggreko upgraded the power utili-
ties capacity to 11MV with an additional 7MV
expected in the coming weeks. By delivering
this fast-track power solution, we are helping to
provide a more consistent and reliable power
supply to the people of Nacala while helping to
support the economic growth in the northern
region. stated James Shepherd, Managing Di-
rector of Aggreko Southern and East Africa.
Energy & Mining THEBUSINESSYEAR 69
According to Maccauhub, Tokyo Electric
Power Services Co. (TEPSCO) and Oriental
Consultants Japan Co. (Oriconsul) have pro-
vided a loan of 17.26 million yen with a 10-year JOS MENDES
grace period and a maturity of 40 years to Elec-
tricidade de Mozambique. The loan will fund a COELHO
natural gas power plant with 100MW capacity Director, EIP
in Maputo, the capital of Mozambique, by 2018. Moambique
The Chairman of EDM, Gildo Sibumbe, expects
the thermal power plant to strengthen the
supply of electricity so that more people have We set up in Mozambique
access to it. in 2010 attracted by the
Ncondezi Energy, a London-traded compa- large electrical projects
ny, is moving forward with the development scheduled to be realized.
of a Thermal Power plant for the Electricidade
The largest is STE
de Mozambique in the Tete Province. Con-
struction expenses are expected to reach $500 (CESUL), which comprises
to $600 million. According to the Ncondezi two new lines that will
press release, This large scale project will be run from Cahora Bassa to
destrum
developed inctuststarting
in phases, aspedwith mint odignimusdae
a 300MW Maputo, corenis arum
one for domestic
integrated mine and power plant (300MW consumption
Optate est etus. Derci dunt ut vel minulle cuptaeprecab and the other
Project), expanding ultimately to an 1800MW
for export. However, the
power plant. dolorio.
ongoing delay presents
New Delhi-based International Coal Ven-
tures Pvt Ltd plans to construct another pow- a problem for both
er plant in the Tete Province. ICVL recently Mozambique and our own
purchased the coal mining assets of Rio Tinto business, as economic
Group for $50 million in 2014. According to Ajay development is greatly
Mathur, chief executive officer of ICVL, they
will use some of the thermal coal and waste
indexed to energy, without
product to generate power locally. The Rio which many projects have
Tinto Group had purchased the coal assets for yet to commence. We have
$4 billion back in 2011. experience in hydroelectric
Business Monitor Internationals Mozam- projects, electrical
bique Power Report estimates power genera-
substations, as well as
tion to increase 6.5% in 1Q2015 to 25.3TWh,
growing to 35.8TWh in 2023. International do- wastewater management,
nors are expected to elevate energy consump- but have yet to participate
tion levels to 31.2TWh by 2023. in tenders.
ESCOPIL INTERNACIONAL,
since 1998 An Investor in Technology
Since 1998, Escopil Internacional has contributed to the
development of Mozambiques economy, through the provision of high
standard engineering services, investment in training and technology
for various private ndustries and information technology solutions
for government.
With a track record of over 16 years, we are proud of being one
of the best 100% Mozambican-owned companies, with a history of
success. Our commitment to the development of Mozambiques
economy with zero harm to people and the environment has
allowed us to became a preferred partner in cement, ports, sugar
mills, petrochemical, aluminum, mining and various industries.
Av. Ahmed Sekou Tour, n. 406 R/C, Maputo
T +258 21 492725/492967 | F +258 21 492974
info.industria@escopil.co.mz | www.escopil.co.mz
70 THEBUSINESSYEAR MOZAMBIQUE 2015
Mining related investments in Mozambique are attracting some of the
largest megaprojects in Africa. These projects have the potential to
recreate the countrys infrastructure and boost exports.
Review MINING
NOTHINGS EASY
News broke in early 2015 that an Indian pub-
lic-owned consortium, International Coal Ven-
tures Limited (ICVL) had invested $2 billion in
Mozambiques mining sector. Months earlier,
Mitsui had agreed to invest almost $1 billion
in Vales coal projects in Mozambiquea sign
of Japans growing interest in the countrys
natural resources. The news confirmed a pri-
or KPMG assessment that demand from India
and China would put the countrys extraction
levels among the top ten global producers of
coal, at an estimated output of 41.8 million tons
by 2017. By this metric, the sector is expected
to reach an annual value of $735 million with-
in two years. The country has concurrently
systematized its regulations, and in doing so
earned the reputation as one of the top two
mining investment friendly countries in Afri-
caa designation it shares with South Africa.
And while this news has industry shareholders
champing at the bit, macro economic factors,
infrastructure deficits, and social impediments
must not be overlooked. This reality is perfectly
clear to industry bosses, who are taking the lead
in developing the countrys decrepit transpor-
tation infrastructure.
Of more immediate concern, major mining
companies are feeling the pinch as commodity
prices slump in the wake of slowing growth in
major markets. As Chinese firms curb their en-
thusiasm, mines must anticipate and respond
to market conditions. In global terms, mining
is the canary in the coal shaft. Ultimately, min-
ing brings in some of the worlds biggest firms,
and underpins the global economy. Coal from
Mozambique fuels power generation thou-
sands of miles away, and plays a critical link in
other countries production and development
strategies.
BIG CHANGES
The 2014 Deloite African Construction Trends Getting coal to the
publication reported that investment in market is a major
megaprojects in Africa was up by 46% in 2014. challenge for mining
This trend was especially apparent in Mozam- firms. This dilemma
bique, which attracted $14 billion for three is catalyzing new
megaprojects, as well as millions more for
smaller undertakings. All three of these projects
railway, road, and
will have direct implications for the countrys shipping infrastructure
mining sector. that stands to benefit
According to Deloite, Mozambique has at the whole country.
least 18 large infrastructure development proj-
ects valued at over $24 billion under way. The
nature of these projects rejects a shift towards
new economic areas. Only 5.5% of the funding
is allocated to the countrys current economic
backbone, agriculture. Meanwhile, 50% is des-
tined for energy and power and 45% for trans-
port related projects. Both of these areas are
critical to the success of mining ventures.
One such investment in the Nacala Integrat-
ed Logistics Corridor will transform the way
that coal, and other raw materials are trans-
ported to international markets. Tracks now
run from Moatize, where Vale operates coal
mines, to the coal terminal at Nacala-a-Velha,
built on the opposite side of Nacala Bay from
the old port of Nacala, which will export around
18 millions tons of coal annually.
The project is 80% owned by Vale, with the
remaining 20% owned by Mozambique's pub-
licly owned port and rail company, CFM. The
railway runs for over 900km, with the expec-
tation of moving 20 coal trains a day. This will
require a fleet of 100 locomotives and 2,700
wagons, to service the 12 ships a month that are
expected to call at the coal terminal.
One of these projects, the $3 billion Mphan-
da Nkuwa Hydropower Plant Project is one of

multiple planned and ongoing corrections to
the countrys power deficit. Mozambiques
current electricity-generating capacity peaks at
2,200MW, supplied for the most part by the HCB
dam65% of which is exported to South Africa.
Locally, only 18% of Mozambicans have access
to electricity. Further exacerbating this paucity,
the countrys power requirements, currently
at 1,600MW, are rising by 15% annually. Pow-
er-intensive mining operations are therefore
especially susceptible to power outages, and
the high costs generated by supply-demand
imbalances in the market. By some estimates,
demand for electricity from mining companies
is rising by 20% per year, warranting immedi-
ate, and costly investment.
To power their projects, coal miners such
as Vale plan to build plants to generate elec-
tricity using waste coal. This generation might
even contribute to the national grid in the fu-
ture. In addition, significant gas discoveries are
expected to spur development of more power
projects over the coming decade, most of which
would occur near the offshore Rovuma basin in
the north of the country. In addition, 2014 saw
nearly 300MW of gas-fired power plants come
online, which helped to address the countrys
supply gap.
TOUGH TIMES
Downward pressure on commodity prices
has mining companies on the back foot, but
firms are not ceding groundand still writing
checksand their counterpunch should send
the economy lurching in the right direction.
Vales Moatize produced a record 4.91 million
tons of coal in 2014, 3.124 million tons of met
coal and 1.784 million tons of thermal coal. In
4Q2014, Moatize saw a quarterly record of 1.433
million tons, 10.6% higher than 3Q2014. Once
the railway upgrade is completed, increased
flow to and from the mines will allow for suc-
cessive record breaking years.
Vale finds itself facing the same dilemma as
its counterparts in the liquid energy sectora
glut in production and diminished demand.
Vales 2014 numbers showed that the group
has taken a hit as coal prices tumbled on the
international market, forcing it to reduce ongo-
ing investments in Mozambique. Vale Moam-
biques losses rose to a stunning $507 million,
in the wake of a $397 million loss the previous
year. They were not alone. In 2011, Rio Tinto
purchased Australian firm Riversdale Minings
Mozambique coal coking venture for $3.7 bil-
lion as part of a massive deal that signaled im-
mense confidence in the financial viability of
Energy & Mining THEBUSINESSYEAR 71
coal production in the country. However last
year, Rio Tinto took an asset impairment charge
of $3 billion on the venture, citing challenges in
building the infrastructure required to bring
the project on stream. In late 2014, Rio Tinto fi-
nally unloaded the disastrous investment onto
to Indias International Coal Venture Private
Ltd (ICVL) for a paltry $50 million. At the time
of sale, Rio Tintos executives insisted that the
incident was isolated, and that the firm's oth-
er multi-billion dollar investments were going
ahead at full steam.
COAL TALKS
Coal is the fastest growing segment of the
economy according to Frost & Sullivan. This
news is substantiated by a recent discovery of
significant reserves of coking coal in the Tete
province and the Zambezi area.
Vale has been producing coal from the
Moatize mine since July 2011. The company
has invested in developing two railroad proj-
ectsthe Sena railroad project and the Nacala
corridor project. Upon completion, both proj-
ects will contribute a combined 1,547km of
high capacity rail connectivity, and 24 million
tons of coal transport ability to the national
infrastructure. Vale is also expanding produc-
tion at the Moatize mine, which is expected to
double capacity to 22 million tons per annum.
These projects represent a significant invest-
ment for Mozambique, with a major part of fu-
ture coal production expected to come from the
Moatize project.
With Vale leading the charge, the country is
set to produce a record 29.5 million tons of coal,
according to BMI. The same report anticipates
year-on-year increases that will boost output to
41.8 million tons by 2017.
72 THEBUSINESSYEAR MOZAMBIQUE 2015

VOX POPULI MINING COMPANIES

Mining has been bearing the brunt of depressed prices and markets, but
prudent strategies are enabling it to see a light at the end of the tunnel.

DIGGING
A LITTLE
DEEPER
BEN JAMES
I
foresee the sector developing steadily. And despite
the low price environment and logistics shortfalls
Managing Director, the fact remains that the quality of the coal in
Baobab Resources Moatize is good. What is more, it is easy to extract, being at
a shallow depth, unlike some deposits in, say, Queensland. GARETH CLIFTON
W
e are looking to lever- Another point to consider is our proximity to the Asian mar-
age our unique access ket. In an international context, our geographical location
Mozambique
to captive iron ore renders us are closer to India, and it is that proximity that Manager, Kenmare
(our global resource invento- makes the Mozambican coal important. So I think business Resources Plc
ry stands at three-quarters of a will develop, even if not to the extent we anticipate, and

billion tons) and the locally-pro-
duced thermal coal to establish
a vertically integrated, mine-
mouth smelting operation pro-
ducing iron and steel products.
By-products of vanadium and
possibly titanium will also be
produced. Against a backdrop
of slowing global economies
and the flattening of Chinese
development, Mozambique
and the SADC region contin-
ue to enjoy strong growth rates
of more than 7%. The demand
for construction steel in Mo-
zambique is growing very fast,
driven by the commissioning of
large-scale infrastructure, min-
ing, LNG, and power projects.
However, the country is entirely
dependent on imports.
CHANDRA SHEKHAR SINGH
Country Head, Jindal Africa
W
there will definitely be major growth over the next five years. e completed the ex-
Vale has already started doubling its capacity, and we are set pansion works at the
to do so, too, as is Jindal; so while prices are indeed low, this Moma mine in 2013
means it is time to either optimize the scale of operations, and have all but ramped up to
or else pull out. full, expanded capacity, having
invested approximately $400
million. With this expansion we
RICARDO have seen a significant QoQ rise
FERRO JOSE in production since mid-2013.
Overall expansion increased our
BHR Country capacity from 800,000 tons per
Manager and year of ilmenite to 1.2 million
Director MML, tons. We export to around 35
Minas Moatize countries, but the main ones are
the US for ilmenite, Europe for
LdaA Beacon zircon, and China for ilmenite
Hill Resources and zircon. We will be renewing
Company our mine concession in 2029,
and have 100+ years of mine
life. We would expect prices to
recover quite strongly in 2015.
We have a large deposit with
considerable opportunities for
further production.

T
he initial production plan is for 3 mil-
lion tons per annum, yet in the inter-
national coal market over the past one
and a half years prices have declined by 50%.
Unless the market improves we cannot increase
production. Having now decelerated we await
improved market conditions. Among measures
to adapt to prevailing conditions we recently ter-
minated outsourced mining contracts. There are
three aspects that we are still considering; one is
the mining itself, another is processing, and the
third is logistics. We have removed contractors
from the mining component, in processing we
have negotiated lower costs with our contrac-
tors, although not sufficiently. And meanwhile,
logistics currently poses the greatest challenge,
as our costs reflect the high volume of handling
and re-handling, whereby around 45% of our
cost structure is accounted for by logistics. We
are discussing steps with the government to
address these excess charges. It has adopted a
highly sympathetic view, and a committee is
in the process of studying the issue with a cost
structure and comparing it to other countries
such as South Africa. This will hopefully lead to
lower logistics costs.
 THEBUSINESSYEAR 73

76
Daniel Murray, Asset President of
Mozal, on merging business lines,
Mozals contribution to GDP, and
influence on other sectors.
77
Industrial and trade facilities
geared at promoting sectors, will
play a larger role in diversifying
Mozambiques economy.
79
Boosting reliance on local
production for raw input
promises to reduce prices, while
propelling the wider economy.

Industry
REVIEW

Last years industrial sector was marked by increasing potential in

FMCGs, as disposable incomes rise with the growing economy.

HEAVY METAL
R
ising incomes, a
broadening con-
sumer base, and
a steady stream of
new investments and projects
coming online are creating
boundless opportunities for
the countrys industrial sec-
tor. The latest statistics from
the World Bank showing that
industry accounts for 20.8%
of the countrys GDP and em-
ploys 40% of the population.
Making a name for itself in
several diverse and growing
markets as well as in Special
Economic Zones, Mozam-
bique is developing an ideal
business environment and
distinguishing itself on the in-
ternational scene. Consolida-
tion of factories in industrial
centers is essential for man-
ufacturers in the country due
the lacking infrastructure, lim-
ited power supply, and high
transportation costs across its
expansive geography. Com-
panies like Barbot cope with
the challenge by transporting
the precise quantities of their
products ordered by their cli-
ents in trucks to cut cot costs.
However many domestic ben-
efits outweigh the challenges
faced by the industrial sectors.
One of the main advantages
in Mozambique is having a
government that is willing to
work with investors and busi-
nesses to actually create op-
portunities. An advantage for
larger investors like Mozal, is
the ports along the coastline,
which ensure efficient logis-
tics and access to our raw ma-
terials, Mozals Asset Presi-
dent Daniel Murray told TBY.
HELTER SMELTER
While Mozambiques natural
gas resources put the econo-
my on the map as a top global
performer, the countrys met-
als and minerals industries
play a significant role in inter-
national markets, particular-
ly with aluminum, iron, and
Image: Ferpinta Moambique steel. BHP Billitons Mozal
smelter, the largest company
in Mozambique, was estab-
lished in 2001 and contrib-
BHP Billitons Mozal Smelter is utes 7% to the countrys GDP,
producing 570,000 tons per
the backbone for the industrial sector, annum of primary aluminum
providing raw materials to a variety of ingot. However BHP Billiton
markets, while burgeoning infrastructural announced last year their
plans to demerge their alu-
developing ensures increasing demand minum business, along with
for its aluminum. manganese, nickel, and silver,
74 THEBUSINESSYEAR MOZAMBIQUE 2015

to create the company South32 to operate these
assets, according to Murray.
The need for domestic development and
growing potential in several sectorssuch
as LNG, construction, petrochemicals, and
agro-industrialpromise strong and steady
growth rates for metals through the long term.
Mozal has confirmed the countrys strategic
status for industry, and the readily available
raw minerals have allowed companies like Mi-
dal Cables to flourish, though Mozals primary
market is designed for export to Europe. Midal
was the first local market for the downstream in-
dustry, currently running a production capacity
of 50,000 aluminum wire rods and 22,000 tons
of overhead conductors out of their $70 million
factory that was completed December 2014.
Mozal has also been a major boon for the trans-
portation sector through road-access projects
and port development, importing more than
one million tons of alumina per annum through
the port. Major infrastructural projects planned
such as bridges and gas projects in Nacala and
Pemba are set to drastically increase demand of
steel and rebar, and Ferpinta Moambique has
already grown 15% in 2015 according to their
General Manager Romeu Rodrigues.
The construction boom has also been benefi-
cial for paint manufacturers Barbot, whose fac-
tory was constructed in 2014 with a production
capacity of 1.5 million liters following an invest-
ment $1.2 million, and is operated by 15 work-
ers. According to Joo Carlos Barbot, Adminis-
trator of Barbot Moambique, a main challenge
for the paint industry is the countrys proximity
with competitors in South Africa. The local tax
regime should be amended to raise import du-
ties on paint, Barbot told TBY. In Angola, for
example, imported paint incurs duties of 60%
of the product cost, whereas the figure in Mo-
zambique is just 20%. This is unfortunate as it
curbs the motivation invest in developing qual- Spirits producers like
ity local alternatives. Diageo are currently
working with the
LETS HAVE A DRINK
FMCGs represent a major portion of the coun-
government to further
trys manufacturing industry, particularly with regulate import
beverages and tobacco. Room for growth is taxes on spirits, and
endless at the moment, says Simon Everest, the government has
Country Manager of Coca-Cola Sabco, which created new legislation
has influenced Coca-Cola to up investments in
regarding the
existing capacity in the Maputo and Chimoio
facilities, in anticipation of increasing dispos- production, marketing,
able income in the country. Currently under and consumption of
development, the 21-ha Maputo plant will ul- alcoholic beverages.
timately have seven lines in place, expected
to provide sufficient capacity until 2022, after
which additional lines will be added; its first
line will go into production in 3Q2015, the sec-
ond at the end of 2015, and the third is set to
be commissioned in 1Q2016. Due to electricity
grid challenges, the plant will most likely have
to initiate operation running on generators. An-
other recent innovation for the bottling indus-
try are PET polymer bottleslightweight, easy
to transport, unbreakable bottles preferred
for packaging many foods and beverages. Co-
ca-Cola has recently invested $130 million
in their Maputo PET line factory, $20 million
in Chimoio, and $15-20 million in Nampula,
which require fewer people to operate and pro-
duce four times the quantity.
The countrys most prominent beer brand
2M was established 50 years ago, and Mozam-
biques oldest brand Laurentina is over 80 years
oldboth are exported to South Africa and
Portugal along with Manica beer, the countrys
third major label. Employing close to 1,400
workers, Cervejas de Moambique (CDM) pro-
duces 2 million hectoliters of beer with three
breweries in Maputo, Beira, and Nampula, op-
erating at about 75% capacity, with plans for

HAMID RASHID AL ZAYANI

Managing Director, Midal Cables
What was the main reason behind the construc-
tion of a plant in Mozambique?
Our location in Mozambique is highly strategic
because of its proximity to raw materials, which
are sourced from the adjacent BHP Billiton
Smelter, MOZAL. Additionally, when I first
visited the country I was impressed by how
readily trainable the local workforce was. We
signed a construction contract in 2013, and the
building work was completed in 2014 on a total
investment of $70 million. The factory occupies a
third of our land, which allows us the potential to
grow. The current production capacity is 50,000
tons of aluminum wire rod and 22,000 tons of
overhead conductors. Midals Mozambique facil-
ity has been conceived and implemented using
the best practices of the group.
What are the benefits of operating out of Mozam-
bique?
Our facility will cater to the demands of the Sub-Sa-
haran market as well as Europe, but will also supply
the local markets. One positive aspect of Mozam-
bique for us is that it is a large country with power
generation in the north and consumption concen-
trated in the south, which spells huge potential for
the cable business. We also arrived to the country
before it became overdeveloped. In Europe we
renew existing systems, but here we are building
new ones. Furthermore, the current consumption
of electricity in Mozambique is relatively low, but
sure to increase with future prosperity. Mozambique
has signed several free trade agreements, making
it an ideal intermediary country for trade. I would
estimate that between 15% and 20% of our total
production will derive from Mozambique.
 Industry THEBUSINESSYEAR 75

major extension in each of their breweries; they Main Exports: % Share of Total
are also the countrys largest tax contributors Source: KPMG
according to their Managing Director Pedro
Cruz, amounting to nearly $200 million in 2014. 25

In addition to beer, CDM produces alcoholic 20

fruit beverages and Chibuku, a traditional Afri-
can beer with a lower alcoholic content, made 15

from sorghum and maize, as well as Impala 10

the first beer in the world to be produced from
5
the high-carbohydrate cassava root. Impala is
derived from small-scale farms and locally pro- 0

cessed materials, enabling the employment of 2013E 2014F 2015F

locals as opposed to subsistence farming, with Aluminum Coal Electricity Tobacco

two mobile cassava-processing units moving
from field to field, and packaging cassava for
transportation to breweries. CDMs has also re- Industry, Value Added (% of GDP)
cently launched the lemon and orange-flavored Source: World Bank
beer Flying Fish, imported from its main share-
holder South African SAB Miller, with plans to 30

produce locally if successful. 25

In terms of the spirits industry in the country,
20
according to Miguel A. Soto, Regional Manager
of Southern African Emerging Markets (SAEM) 15

at Diageo, growth of mainstream spirits is lim- 10

ited by the large number of competitors in the 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

market selling in extremely small formats at

exceptionally depressed prices. We believe that
is unsustainable in terms of quality, in terms of
consumer choice, as well as legislation. Spir-
its producers like Diageo are currently working
with the government to further regulate import
taxes on spirits, and the government has cre-
ated new legislation regarding the production,
marketing, and consumption of alcoholic bev-
erages. Diageos new innovative facility The
Cube, initiated production in 2014 launching
two brands of spiritsGilbys Gin in 75cl and
25cl format, and Masters Choice in 20cl, in ad-
dition in to producing Smirnoff Spin. The plant
is 100% locally operated, with total investment
nearing $20 million.
LIFE IN THE FAST LANE
Following a 2010 agreement and an estimated
$200 million investment from Shanghai-based
Tonjian Investment Co., Mozambique start-
ed to manufacture its first automobiles last
year. The initial agreement outlined the facility
would produce 10,000 vehicles a year though
Tongjian plans to building 30,000 in the initial
year of production, to expand to 100,000 units
in 2016 and 500,000 by 2020. The Matchedje
brands factory is located in the Machava area
of Matola, and put its first car on the market in
September 2014a four-wheel-drive pick-up
that will be marketed for $23,700, according
to Bloomberg. South Korean manufacturer
Hyndai also opened a car assembly plant in
Matola last year, following an agreement be-
tween South Korea and Mozambique called
Somyoung Motors. A $5.45 million private in-
vestment between Mozambican Somotor and
South Korean YoungSom went towards the
construction of the factory and purchase of the
vehicle assembly equipment. The installed ca-
pacity of the plant aims to assemble 4,500 cars
annually, from 1,200 units in 2015 and 2,500 in
2016.
Accounting for 7% of industrial production,
production in the tobacco industry has in-
creased rapidly over the past ten years, covering
73,630 ha out of 321,314 ha of total cultivated
area of cash crops, according to the Food and
Agriculture Organization of the United Nations.
Tobacco accounts for nearly 34% of total agri-
cultural exports and almost 4% of total exports
ROMEU
of good and services, recent official statistics RODRIGUES
show. The sub-sector has operated in a con- General Manager,
cessionary system since 2002, with the gov-
ernment granting tobacco companies closed Ferpinta
concessions as exclusive buyers in specific Moambique
geographical areas, and the majority of Mo-
zambican tobacco companies are subsidiaries We are the current market
of multinational tobacco corporations who op- leaders domestically.
erate in economies of scale by concentrating Approximately 50% of our
cigarette manufacturing in a determined geo- production is geared at
graphical location. Part of the success of Mo-
zambiques tobacco sector can be attributed to
exports to markets such
the collapse of Zimbabwes tobacco industry in as Zimbabwe, Zambia,
the early 2000s due to political instability, relo- Malawi, and from 2015 to
cating investments to Mozambique. Tobacco Tanzania and Madagascar.
cultivation is predominately carried out in the The target for 2015 is to
three provinces of Tete, Niassa, and Zambzia, grow by about 30% to 40%
which together account for 90% of tobacco pro-
duction in the country. A major player in the
in total. We produce locally
tobacco industry is British American Tobacco at our Ferpinta plant, while
(BAT), at a 70% capacity of 3.5 billion cigarettes, the other group company,
which plans to improve machinery and facility Ferromoambique, handles
efficiency in the short-term. According to BATs the trading part of the
General Director Crispin Achola, the countrys
equation. In five years
tobacco industry is a high growth potential
market due to the improving economic circum- time, I want ours to be the
stances of the population leading to an increase largest company producing
in sales volumes and brand mix. tubes in East Africa.
76 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
TBY talks to Daniel Murray, Asset President of Mozal, on
merging different business lines, Mozals contribution to GDP,
and the influence of the company on other sectors.
BHP Billiton has decided to fo-
cus on five business lines, and
is withdrawing from aluminum.
How will this impact the com-
pany?
In August 2014 BHP Billiton
announced its plans to de-
merge its aluminum, man-
ganese, and nickel and silver
businesses along with some
of its coal assets. Subject to
board and shareholder ap-
proval, there would be a new
company operating these
assets under the name of
South32, and Mozal will be-
come quite a significant part
of it. South32 will operate in
five countries and be staffed
by approximately 24,000 peo-
ple. The business will then
transition from a commodi-
ty-based structure into a re-
gional-based entity, and Mo-
zal will report to the African
regional office located in Jo-
hannesburg. The new compa-
ny will have a dedicated board
and management team with
a significant representation
at the Johannesburg office,
which will be greatly benefi-
cial for Mozal.
How would you describe the
evolution of Mozals contribu-
tion to GDP?
Since the company was estab-
lished in 2001, Mozal has con-
tinued to play a prominent
role, contributing around 7%
to GDP. We recently won an
award from President Guebu-
za in recognition of this con-
tribution. Currently, Mozal
aluminum
SHOWER
IN NUMBERS
BHP Billiton
Produces
750,000
tons of aluminum
ingot per year
produces just below 570,000
tons per annum of primary
aluminum ingot, with pro-
duction entirely destined for
export, mainly to Europe, the
primary market for Mozal's
metal output.
What are your plans to support
the domestic use of aluminum?
There has been a spiking de-
velopment in Mozambiques
downstream industry. There
was no other local market
established until the devel-
opment of Midal. We began
delivering to Midal in Octo-
ber 2014 and once they ramp
up their operations, we will
be delivering 50,000 tons of
metal per annum. Business-
es can now be established
downstream of Midal, creat-
ing an increased diversity of
products in the downstream
industry, while a unique ser-
vice industry will also develop
around Midal. I expect our
relationship with Midal to be
long term and sustainable
for many years to come. The
sizeable tonnage of aluminum
that company will be receiv-
ing from us will be a major
catalyst for the downstream
industry.
How would you categorize the
significance of Mozal in other
sectors?
Mozal has played a signif-
icant role in infrastructure
development, with road-ac-
cess projects and a new port
facility. For example, Mozal
imports more than one mil-
lion tons of alumina per an-
num through the port, which
is then brought to the site by
trucks. We also transport the
entirety of our final product
through the port, which is a
considerable contribution to
the transport industry.
In addition to that, we con-
tinue to perform road mainte-
nance even though it was not
a part of our initial undertak-
ing. We also direct around $2
million per annum toward
our community work, some of
which has gone into the con-
struction of schools. To date
we have built nine primary
schools, a secondary school, a
technical school, and a main-
tainer-training center.
What challenges do you foresee
over the next ten years for Mo-
zal?
One major challenge will be
electricity supply. We have
managed to cope with this so
far by working closely with ES-
KOM and focusing on our pro-
ductivity and operational ef-
ficiency to get more out of the
available infrastructure. We
have made good progress and
have implemented a system
we call Maximum Technical
Capability. The other challenge
is with commodity prices. This
has been a challenge over the
recent period, although Mo-
zal has been effective with
regards to cost cutting, as we
have been able to focus exten-
sively on efficiency. We also
pay considerable attention to
skills. All of the potential de-
velopment in the country and
the exploitation of its resources
will result in a great need for a
skilled workforce, which will
present a challenge for the en-
tire industry.
BIO
Daniel Murray has been
Asset President at Mozal
Aluminium since 2012.
Prior to this, he was the
General Manager at the
Bayside smelter. He
joined BHP Billiton in
1994 and was involved
in the commissioning of
the Hillside smelter in
Richards Bay. He was a
member of the inaugural
Mozal management team
from 1998 to 2004 during
the start-up phase of the
business where he held
numerous positions in
production, logistics, supply
and external affairs. Prior
to joining BHP Billiton,
he worked in the process
engineering of crude oil
refining at the NATREF
refinery, partly owned by
SASOL. He holds an MBA
from Edinburgh Business
School and a degree in
Chemical Engineering
from the University of
Stellenbosch.

ZONED OUT
Industrial and trade facilities geared at promoting sectors, international
trade, and competition will play a larger role in diversifying
Mozambiques economic landscape.
UNDER DECREE NO. 75 of 24th December
2007 Mozambique, aware of increasing nation-
al and foreign private investment interestes-
tablished an office to manage special economic
zones called GAZEDA. Since then, this entity
has designated several areas in the country as
Industrial Free Zones (IFZs) and Special Eco-
nomic Zones (SEZs), granting them assorted
incentives for investment.
As Danilo Nal, General Director of GAZEDA,
explained to TBY there are three main differ-
ences between IFZs and SEZs: size, type of ac-
tivity and product destination. SEZs are bigger
than IFZs and can handle a diversity of activ-
ities, while IFZs are smaller and fenced. The
output of SEZs can be 100% sold locally, but the
regulation states that at least 70% of production
realized in IFZs must be exported.
In terms of fiscal incentives IFZs have seven
more years of Corporate Income Tax (IRPC)
exemption until the 10th fiscal year, while SEZs
only have until the third. After that, IFZs offer a
50% reduction on the IRPC rate from the 11th
to the 15th fiscal year, while SEZs offer the same
reduction from the fourth to the 10th. Once
those periods are completed, a 25% reduction
is established for the whole life cycle of a project
at an IFZ, while this only applies from year 11 to
15 in SEZs.
GAZEDA currently manages several areas in-
cluding the Nacala, Mocuba and Manga-Mun-
gassa SZEs, the Beluluane and Mocuba IFZs
and the Tourism SEZ in Nampula.
The Beluluane IFZ occupies 700 ha and is
strategically situated 16km from Maputo city.
Some of the most remarkable projects ever
Industry
SPECIAL ECONOMIC ZONES FOCUS
realized in the country, such as the Mozal alu-
minium smelter, the first major FDI project in
Mozambiques history, contributing around 7%
to GDP since 2001, as well as the recently-estab-
lished Midal Cables, which is situated within
the boundaries of this industrial park. In terms
of logistics, the IFZ is on the backbone of the
Maputo Corridor, a transportation infrastruc-
ture comprising road, rail, border posts, port,
and terminal facilities. As Barbara Mommen,
CEO of the Maputo Corridor Logistics Initiative
(MCLI), explained to TBY, MCLI has invested
$350 million on the building and maintenance
of the road, and over the next sixteen years it
will invest a further $400 million on the road
and rail infrastructure.
The Nacala SEZ, established in 2007, is situat-
ed in the north of Mozambique in the Nampula
province. It is about 200km from the provincial
capital Nampula and has easy access to Tan-
zania from the north and Zambia and Malawi
through the Nacala Development Corridor, a
road and rail infrastructure that is being reha-
bilitated and that, according to Fernando Fre-
itas, Administrator of Somague Moambique
and one of the contractors of Vale for the de-
velopment of this project, should be complet-
ed, by the end of 2015. Two areas, 10 and
20 minutes away from the port and the recently
inaugurated International Airport of Nacala, re-
spectively, have been designed for the deploy-
ment of IFZs. According to the IMF, $1.2 billion
has already been committed to these areas with
53 approved investments, several in the field of
agro-processing.
Besides Maputo in the south and Nacala in
the north, GAZEDA is locating the SEZs stra-
tegically throughout the country. The Mocuba
SEZ is located in the Zambzia province and
includes an Industrial Free Zone, while Man-
ga-Mungassa is in Beira, only 6 and 12 km away
from the airport and port of Beira, respectively.
The only sector-dedicated zone today is the
Tourism Special Economic Zone in Nampula
created in August 2013. The area has 1,750 ha
divided among the continental part as well as
the Crusse and Jamali Islands. According to
Danilo Nal, this zone will attract around $5 bil-
lion over the next ten years. In an interview, he
also told TBY that GAZEDA was looking at other
sectorial zones in the fields of agriculture, fish
processing, and logistics.
These new special economic zones will play
a vital role in sustaining the inflow of FDI into
the country, while supporting development
throughout Mozambiques provinces.
THEBUSINESSYEAR 77
DANILO NALA
General Director,
GAZEDA Special
Economic Zones
Office
What is your assessment of the
current level of foreign interest
in the country?
Interest is growing annually.
Investors arrive with an idea
of their requirements, and we
help them set up. Portugal, the
UK, and China were key for us
last year. A major difference
occurs in our rankings when we
undertake megaprojects. The
average volume of investment
per project is about $40 to $50
million.
Which are the main sectors
investing in the SEZs and IFZs
in Mozambique?
We do not rely on oil and gas,
which is not our focus, and our
zones are geared more toward
agriculture. We diversify and use
our potential for processing. The
goods we normally deal with
range from cashews to seasonal
seeds. We are not involved in
cassava as yet. Our zones are
designed for processing, rather
than production (in the agricul-
ture sector).
What is your 10-year outlook
for the SEZs and IFZs?
We are not considering the
creation of new zones apart
from those already mentioned,
which need top be strategically
positioned. With the investments
we are making in these zones,
and the speed at which they
are developing, the next decade
promises to generate a huge
contribution to the economy.
78 THEBUSINESSYEAR MOZAMBIQUE 2015

B2B DRINKS COMPANIES

raising
PEDRO CRUZ MIGUEL A. SOTO
A GLASS
Managing Director, Regional Manager Local and multinational producers of alcoholic
Cervejas de Southern African and non-alcoholic drinks look forward to
Moambique (CDM) Emerging Markets growth in consumer spending and better
(SAEM), Diageo regulation in the short term.

How is your commercial infra-
structure set up within Mozam-
bique, and what kind of products
do you produce?
PEDRO CRUZ We have three
breweries located in the main
three cities of the country,
namely Maputo, Beira, and
Nampula, and a network of
sales depots in each provin-
cial capital. We have close to
1,400 employees, we produce
approximately 2 million hecto-
liters of beer, and have a high-
er capacity installed than our
current production output. We
are producing at approximately
three quarters of our capacity.
The last plant we built was in
Nampula, and while we have no
plans to build new breweries, we
do intend to expand our existing
facilities. We intend to complete
major extensions at all three of
our breweries within the next
three years, although this de-
pends largely on how the mar-
ket develops in each region. We
produce approximately twenty
brands including beer, alcohol-
ic fruit beverages, wines, spirits
and Chibuku, a traditional Afri-
can beer with a lower alcoholic
content, made from sorghum
and maize, and known as an
opaque beer in some areas.
MIGUEL A. SOTO Until July
2012, Diageo had no direct pres-
ence in the country. We have a
long relationship with our dis-
tributor, CICOTI, which has a
large portfolio and was provid-
ing us access and understand-
ing of the market. I deployed in
July 2012 and by January 2013,
we knew this was the right place
to be. We established a com-
pany in Mozambique and by
August 2013 we had purchased
Lusomoc Ltda, which was not
performing at the time, chang-
ing the name to Diageo Supply
Marracuene Limited (DSML).
We immediately got all hands
on deck to see how we could
produce spirits in an affordable
format to explore more op-
portunities in the mainstream
spirits market, without compro-
mising our values as a responsi-
ble producer of quality drinks.
We started production in July
2014 through an innovative fa-
cility called The Cube, and
launched two brands with three
different formats. This is a plant
shipped in containers, which is
tested and then shipped to the
destination and assembled. We
offer Gilbeys Gin, in 75cl and
25cl format, as well as a pre-
mium branded spirit, Masters
Choice in 20cl format. We then
started producing Smirnoff Spin
in late November 2014.
How have the sales of your
products developed over recent
years?
PC The biggest beer brand in
the country is 2M, which is 50
years old this year. We consider
2M representative of Mozambi-
can culture, being colorful, vi-
brant, and social. We also have
Laurentina, with its different
varieties, which turned 80 years
old in 2013, making it the brand
with the longest tradition in the
country. Manica is also a major
brand, with a strong presence
throughout the country. In re-
lation to the evolution of our
sales, we have been successful
over the many years that we
have been present in Mozam-
bique. CDM celebrates its 20th
anniversary in 2015, and we
have been growing consistently
year after year and have made a
positive impact on society, pro-
viding employment, expanding
capacity, and investing in facili-
ties, equipment, and in produc-
ing better products. We export
the 2M, Laurentina, and Manica
brands to South Africa and Por-
tugal.
What demand is there for your
products in Mozambique?
MAS The growth of mainstream
spirits is limited by the large
number of competitors selling
in extremely small formats and
exceptionally depressed prices.
We believe that is unsustainable
in terms of quality, in terms of
consumer choice as well as leg-
islation. We believe the market
will formalize and diminish in
size; however, it will increase in
terms of quality and affordable
quality choices. Our greatest
challenge on imported spirits
is the large amounts of product
that flows in from different plac-
es, sometimes through the bor-
ders, and not paying the right
taxes. We are working with the
authorities on this because we
believe that Mozambique is los-
ing revenue and we, as a com-
pany, are missing the potential
to invest and grow further and
faster in Mozambique.
 Industry THEBUSINESSYEAR 79

MANUFACTURING VOX POPULI

QUITE A
production
As the government expands infrastructure in
light of a changing reality, boosting reliance
on local production for raw input promises
to reduce prices for local consumers, while
propelling the wider economy.
MIGUEL ROMO DIOGO VICTORIA
Country Manager, Country Manager,
M
avas first investment was in the Sabino soap fac-
tory, and growth in 2004 brought with it the op-
Parmalat Nestl
portunity to build a second plant to manufacture
oils, a complementary product. We then pursued greater

W O
ith current and future
investments to come,
as well as job creation,
training the local workforce,
support for social activities, and
adding value to raw materials
we import to produce our own
output, we are already contrib-
uting to national development.
We also believe that in the future
we could locally source some of
the raw materials we currently
import and produce more prod-
ucts locally. And meanwhile, we
forecast double-digit annual
growth supported by innova-
tion and investments. Looking
ahead, the manner in which the
government chooses to allocate
revenues generated from the
exploitation of Mozambiques
natural resources will determine
the national business environ-
ment and broader national de-
velopment.
ADOLFO CORREIA
CEO, Tropigalia
synergies by packaging our products ourselves, and today ur strategy is to ensure
produce the plastic bottles in which our own products are that our products have
sold. Mava Plast, created in 2006, produces plastic packag- the right nutrients to
ing. Both oil and plastic factories are located in Matola. In to- meet Mozambican necessities
tal we have five factories in the Maputo province, one under widely among the population.
construction, and another in construction in Sofala. Accordingly, we have intro-
And meanwhile, we have plantations in the province of duced a range of products that
Inhambane. We work to empower farmers through sunflow- respond to the economic reali-
er and soya production contracts, to supply the provinces ty of Mozambican families. We
of Manica and Sofala. Our goal is to reduce our raw mate- play an active role in helping
rial imports. If the agricultural industry is able to use locally the country, and being a leading
sourced raw materials, we will be able to decrease the final nutrition, health and wellness
consumer price. The future lies in agriculture. company is precisely where
we can add value. We want to
be part of the socioeconomic
DANIEL development process and part
ALEXANDRE of the solution is providing the
right products to promote na-
MONDLANE tional health. Our intention is
Executive to support a better quality of
Director, Mava life based on our products. We
play an informative role on good
Group nutrition, for example through
our Healthy Kids Program. We
work with the Ministry of Edu-
cation and teachers to provide
modules, tools, and materials
to teach good nutrition to foster
healthy living.

T
ropigalia is a nationwide distribution
company, mainly for food and bever-
age products. We started 10 years ago
with a vision of bringing market leader brands
from Portugal to the Mozambican consumers.
Over the years we have also expanded for into
certain leading world brands. Meanwhile, our
strategic priorities for the next five years include
sustaining our market leadership in formal dis-
tribution. Added to this, we intend to expand
and export our Gourmet brand, currently our
2nd biggest turnover generator with 272 select
SKUs, from groceries, to refrigerated and fro-
zen products. It is also a registered Tropigalia
trademark in Mozambique.
Meanwhile, in pursuit of investment resourc-
es for expansion, our company is going public
in 2015. We must also invest in local production
for the domestic and Southern African Devel-
opment Community (SADC) market, which
provides potential access to around 250 million
consumers of products made in Mozambique
for which no duties are paid. Today we are in
the process of opening an industrial cluster
with five agro-businesses to replicate earlier
successes.
80 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS AUTOMOTIVE INDUSTRY
A DRIVING
FORCE
The village of Matchedje once
hosted the 2nd Congress of the
Mozambique Liberation Front
(FRELIMO), the countrys incumbent
government. Today it is the namesake
of Mozambiques first locally
manufactured car.
According to the World Bank, industry em-
ploys 40% of the population, contributing
20.8% of Mozambiques GDP. Recently, close
Sino-Mozambican relations put the country
behind the wheel of a new industrial vehicle
auto production.
Former President Armando Guebuza, at the
inauguration ceremony of a Korean automo-
tive players new plant revealed that 542,000
cars were registered in Mozambique, and that
of the 45 existing brands, 95% were of Asian ori-
gin. In 2010 Shanghai-based China Tong signed
an agreement for an estimated $200 million
auto-plant investment in Mozambique under
the name of Matchedje Motors. The resulting
Matchedje brand plant rolled out its first vehi-
cle in September 2014a 2.8-liter four-wheel-
drive pick-up with a price tag of $23,700. While
the terms of the initial agreement foresaw the
plant producing 10,000 vehicles per annum, the
Chinese firm plans for the 30,000 units of the
initial year to rise to 100,000 units in 2016, and
to 500,000 by 2020. Mixed vehicle production
capacityto also include buses and electric mo-
torcyclesis projected to have reached around
1 million within a decade. Based in Matola near
Maputo, Matchedje employs around 80 people,
but in its second phase this could reportedly rise
to 500. And as the market pioneer, Matchedje
has tasked itself with establishing a pan-African
sales network and develop Mozambiques auto-
motive sector. Ambitious plans include develop-
MATCHEDJE MOTORS
200 500 5.45 4,500
MILLION USD EMPLOYEES
INVESTMENT BY PHASE 2
500,000
VEHICLES ANNUALLY BY 2020
ing a skilled local workforce capable of taking the
local auto industry forward. The company web-
site also states plans to build a 590 ha industrial
park that will include machinery, chemicals, and
equipment for the electronic automobile pro-
duction chain. In this way the brand hopes to
support the national industry and broader econ-
omy at the same time.
South Korean auto manufacturer Hyundai
also brought its auto assembly plant in Matola
online in 2014 in a partnership between South
Korea and Mozambique dubbed Somyoung
Motors. The $5.45 million private investment
targets the annual assembly of 4,500 cars, rising
from 1,200 units in 2015 and 2,500 in 2016.
TREAD CAREFULLY
With operations spanning Swaziland, Kenya,
Namibia, and the Republic of the Congo, tire
giant Goodyear in 2013 identified Mozambique
as the key country in its Africa growth strategy.
The firms African footprint is the most compre-
hensive among tire makers on the continent,
and it has been present in Mozambique for
over 25 years. Goodyears distribution channel
and services partner Trentyre commenced op-
erations in 2000 and the Beira branch opened
in 2005 accounts for 50% of overall turnover.
Goodyear has a reported market share of 15%
to 18% in Mozambique, and operates from two
branches in Maputo and Beira. A third is located
in the duty-free zone close to Matola and serves
Mozal, Mozambiques giant aluminium smelt-
er, along with related service providers. In 2014
Somyoung Motors was assembling the Hyundai
i10 model, sold at a unit price of $12,000, and the
Accent 1.6 model with setting Mozambican driv-
ers $23,000.
GAINING TRACTION
With roughly 80% of the Mozambican workforce
working the soil in one way or another, and ag-
riculture contributing around 20% of GDP, the
ultimate potential for high-end equipment sales
is promising. Belarus has been exploring the
possibility of promoting its tractor industry in
Mozambique in a deal involving the assembly
of parts manufactured in Minsk. Accordingly, a
general cooperation agreement has been signed.
Several tractors were duly sent to showcase the
range in a permanent in-situ display.
HYUNDAI ASSEMBLY PLANT
MILLION USD VEHICLES
INVESTMENT ANNUALLY
JOO CARLOS
BARBOT
Administrator,
Barbot
Moambique
What is the significance of
the Mozambican market for
Barbot?
Barbot has pursued its inter-
national operations in many
countries, commencing in 2005
in Angola. We then moved into
Spain where we purchased a
large paint plant. In Africa we
are present in three countries:
Mozambique, Angola, and Cabo
Verde. In Europe we were active
in Portugal and Spain, and today
are also present in France, Bel-
gium, and Switzerland. The pro-
duction and volume of Barbot is
40% export oriented. We produce
everything beyond our home
country of Portugal. The African
market represents around 30%
of total sales, with Mozambique
claiming roughly 8%. Nowadays,
Angola is the largest seller in
Africa, and lastly we have our op-
erations in Cabo Verde. In total,
our business volume amounts to
$60 million.
How would you describe your
distribution structure in such a
large country?
Today it is expensive to send a
product to the northern prov-
inces, and so we transport our
products to Nacala and Pemba in
trucks in precisely the quantities
ordered by clients to cut costs.
Shipping by container requires
committing a minimum of thirty
tons of paint, which is why we
opt for trucking products by road.
Our clients are large construction
companies, but we also have
individuals purchasing small
quantities.
 THEBUSINESSYEAR 81

85
Rogrio Paulo Samo Gudo, President
of Escopil, on the Single Electronic
Window, megaprojects, and the
short-term economic outlook.
86
Joaquim Tobias Dai, Executive
Board Director of EXICTOS, on
recruitment, developing specific
technologies, and market share.
92
Jos Guerra, President of the
Council Administration of
Miramar, on TV, social media,
and the quality of journalists.

Telecoms, IT & Media

REVIEW TELECOMS & IT

Mozambique still faces substantial challenges in developing an adequate

ICT infrastructure to connect all of its population, but a number of
concerted moves are underway to expand the network and increase the
number of users.

SPINNING THE WEB

M
ozambiques
economy has
grown consis-
tently in recent
years and this is beginning to
reflect in its ICT sector. The
country was largely unaffect-
ed by the global economic
crisis of 2008-09 and GDP
growth was 7.1% in 2010; it
has remained at that level
through to 2013. Growth was
projected to have increased
to 8.3% for 2014. In 2013,
fixed teledensity came in at
0.4%, whereas overall mobile
penetration was assessed at
33.1% of the population. The
number of Mozambicans
using the internet was only
around 5% (approximately 1
million people), according to
the International Telecom-
munication Union. This was
largely due to cost issues;
while the country ranks as
the worlds 15th poorest,
the price of a fixed broad-
band connection comes in
as the worlds fourth most
expensive, and a basic mo-
bile broadband subscription
costs over 65% of the aver-
age monthly income. The
number of individuals over
the age of 16 who own a mo-
bile phone was listed at 26%,
which puts it in 12th place
in Africa. Social and per-
sonal media was not highly
developed either; the total
number of Facebook users
only amounted to 316,000
(or about 1.5% of the pop-
ulation) and only 64.36% of
internet users have an email
address. Recognizing the
need to harness the internet
to encourage growth, the
Mozambican government
recently became the third
country to join Alliance for
an Affordable Internet, sign-
ing a formal MoU with the
Alliance in April 2014, which
seeks to expand access for
all in developing markets to
help boost growth and ICT
connectedness.
While a great deal of work
is underway, the country still
faces numerous challenges
The government is currently rolling in developing an adequate
ICT infrastructure to connect
out a series of projects to encourage all of its population, which is
broadband internet usage, such as widely spread out geographi-
free internet access on Saturdays via cally. While Maputo remains
well served, there is a signif-
a number of Digital Resource Centers icant divide between urban
(CPRDs) located around the country. and rural users in all forms
82 THEBUSINESSYEAR MOZAMBIQUE 2015
Both public and private players
recognize that the weak existing
fixed-line infrastructure has largely
held back the market for ICT services
and the high cost of international
bandwidth has long hampered
internet use in the country.
of telecommunications technology use; cur-
rently, about 65% of mobile subscribers live
in Maputo. Though a large share of Mozam-
biques population lives in Maputo, millions
live in rural areas that are harder to reach via
the current undersea broadband connection
points that link up the country. Moreover, the
almost 2 decades long civil war has damaged
and stunted growth on much of the nations
existing communications infrastructure.
Yet Mozambiques telecommunications
market was changing rapidly in 2014. While
the fixed segment remains, in real terms,
a monopoly of the Telecomunicaes de
Moambique (TDM), the mobile sector has
become more vibrant since the Movitel com-
pany entered the market in 2012. Two years
into Movitels arrival, the company (a joint
venture between the Vietnamese company
Viettel and Mozambiques own native SPI)
has built 2,800 2G/3G base stations and add-
ed 25,000 km of fiber optic cables covering
100% of districts and extending service to
nearly 80% of the Mozambican population.
In rural areas, by the end of 2013, the compa-
ny had increased its coverage area from 60%
to 85% and doubled the number of covered
people from 35% to 75%. Moreover, Movitel
and other major providers are changing the
ICT landscape. Thanks to its strong network
infrastructure, Movitel now accounts for 70%
of the countrys fiber-optic cable infrastruc-
ture and 50% of the mobile phone network
infrastructure, bringing Mozambique into
the top three nations in terms of fiber-optic
cable infrastructure in Sub-Saharan Africa.
The country now has a strong and modern
ICT infrastructure, in addition to the latest
DWDM (dense wavelength division multi-
plexing) technology and 20Gbps bandwidth.
However, the price of broadband internet
continues to be prohibitive for average con-
sumers. Fixed-line ADSL broadband is only
used by a small number of customers, usually
large businesses. Prepaid mobile internet, for
1GB and 5GB bundles of data, is cheaper than
both prepaid and postpaid ADSL packages
of the same size. ResearchICTAfrica.nets
(RIA) 2013 data for Mozambique, generated
through the 2012 RIA Mozambique House-
hold and Individual ICT Access and Use Sur- About
65%
vey, indicates that in Mozambique, 68.7%
of users rely on mobile phone handsets to
access the internet, 56.8% rely on 3G dongle
style modems, 10.6% on wireless broadband,
and only 3.9% use ADSL connections. The
number of households with a working tele- of mobile subscribers
phone line is also extremely small. The same live in Maputo.
2012 RIA ICT Survey found that only 0.39% of
households have a working fixed line, while
42.5% of individuals own a mobile phone.
Vodacom Mozambique also announced
that it invested $150 million in 2013-14 to In 2013, fixed
upgrade its networks and introduce new ser- teledensity came in at
vices. The countrys number two operator
had 4.5 million subscribers and a 32% share
0.4%, whereas overall
of Mozambiques mobile market at the end of mobile penetration
September 2014, according to the ICT report- was assessed at
33.1%
ing site TeleGeography. Vodacom is set to
roll out even more expansions. Jerry Mobbs,
President of Vodacom Moambique, told
TBY: We have been gaining market share
over the last year, primarily driven on the
back of significant growth in our network. In of the population.
2013, we expanded our network by 70% with
our largest ever investment. In 2014, we have
so far increased our network by 50%. I think
that will give us the second-largest network in
the whole country.
ENCOURAGING CONNECTEDNESS
In 2013 the government drafted a revision of
its guiding 2004 Telecommunications Act,
aimed at developing greater competition
and facilitating access to networks and infra-
structure in a bid to reduce investment costs.
The governments overall Policy Implemen-
tation Strategy aims to improve governance
and public administration through electron-
ic government initiatives, develop Mozam-

bique as a competitive partner in the global
information society, and eventually make the
country a producer, not a mere consumer, of
ICT. However, both public and private play-
ers recognize that the weak existing fixed-
line infrastructure has largely held back the
market for ICT services and the high cost of
international bandwidth has long hampered
internet use in the country. The extensive use
of two international submarine fiber optic
cables (SEACOM and EASSy) has reduced the
cost of bandwidth and led to reductions in re-
tail prices, yet the cost of internet access has
not decreased as much as predicted. In 2014
Alcatel-Lucent was contracted to upgrade the
EASSy submarine cable system, with the de-
ployment of the latest 100 gigabit-per-second
(Gbit/s) technology. Alcatel-Lucents 100G
technology will enable the system to ulti-
mately carry capacity in excess of 10Tbit/s,
further complementing its ability to carry
high volumes of data capacity on the EASSy
system. Other operators are also planning
national level improvements. Zainadin D. A.
Dalsuco, the CEO of Telecomunicaes de
Moambique (TDM), described TDMs own
program in this way: In terms of infrastruc-
ture investment and development plans for
Telecoms, IT & Media THEBUSINESSYEAR 83
the next five years, the objective is to imple-
ment the project of the 2nd Terrestrial Fiber
Optic Route aimed at securing the transmis-
sion, increased capacity, and improved qual-
ity of services on the network backbone. So
significant work is being planned on all sides.
Moreover the government is currently con-
sidering a number of other more innovative
projects to encourage broadband internet
usage. One idea will see citizens offered free
internet access on Saturdays via a number
of Digital Resource Centres (CPRDs) around
the country. The government has also an-
nounced it is in the process of setting up
an ICT Universal Access Fund, and officials
are also promoting the idea of shared infra-
structure among the countrys operators to
help lower the cost of expanding coverage to
many rural areas. So while there is great deal
of work to be done in bringing Mozambiques
ICT sector up to world-class standards, vi-
brant growth and expansion is underway,
and many optimistic investors see the sit-
uation as an excellent opportunity. With so
much serious and significant work under-
way, it seems very likely that the country can
expect to have made great leaps ahead in the
very near future.
WE AIM TO BE THE BEST
IN THE INDUSTRY
Since 1998, Escopil Internacional has contributed to the
development of Mozambiques economy, through the provision
of high standard engineering services, investment in training
and technology for various private industries and information
technology solutions for government.
ESCOPIL With a track record of over 16 years, we are proud of being one
of the best 100% Mozambican-owned companies, with a history
of success. Escopil became a strategic partner to e-government
through the implementation of various information technology turn
key solutions, with flag projects such as the tax & nance system,
the electoral system, and the drivers license & motor vehicle system.
Av. Ahmed Sekou Tour, n. T +258 21 492725/492967 info.industria@escopil.co.mz
406 R/C, Maputo F +258 21 492974 www.escopil.co.mz
84 THEBUSINESSYEAR MOZAMBIQUE 2015

FORUM TELECOMS COMPANIES

COMMUNICATION The national telephone and communications

BREAKOUT infrastructure has expanded exponentially as a

consequence of the growing economy.

ANTNIO ALMEIDA SAFURA DA JERRY MOBBS ZAINADIN D. A.

SAIZE CONCEIAO President, Vodacom DALSUCO
CEO, mcel Chairperson, Movitel Moambique CEO, Telecomunicaes
de Moambique (TDM)

O O
ur priority is to sus-
tain our investment,
not just in terms of
coverage, but also on quality.
This includes services on voice,
data, and image, because today
we also have image services
like mobile television. Our in-
vestment plan will exceed $200
million. Our market share is at
around 28% to 30%. Maintain-
ing this position requires the
provision of excellent services
to our clients, and also enlarg-
ing coverage area not just with
voice services, but also data and
image. Nowadays, smartphones
have become ubiquitous and
people demand image commu-
nication. First there was an in-
crease in data services. For the
voice services we introduced
new packages, and subsequent-
ly we introduced TV services on
the phone. We also pioneered
mobile banking in Mozambique
through the Mkesh service.
ur main focus remains
serving the coun-
try and expanding
communications to everyone
in Mozambique, to all social
groups and to the remotest ar-
eas. We understand that by giv-
ing people access to telecom-
munications, we are opening
their horizons and possibilities
for growth, thus contributing to
the development of the coun-
try. We started our implemen-
tation in rural areas by serving
the un-served or underserved.
About 30% of our clients had
access to communications ser-
vices for the first time with Mo-
vitel. We have not yet fulfilled
our objective of total coverage,
but we are almost there. For the
present year the company tends
to focus on the medium and
high-income segment as well
as corporate sector. It is time
to address other segments of
the market, for which creative
services and solutions must
be developed. The ICT sector
provides many opportunities
to better serve medium- and
high-income clients, and it is
an important component in
corporate development. Access
to good quality communication
services is crucial.
V T
odacom Moambique
is an integral part of
Vodacom Group in
southern Africa. Sharing bor-
ders with South Africa and
Tanzania, which is connected
to the Congo, allows us to serve
as a link between the whole in-
ternational group in southern
Africa in physical terms, mak-
ing us an important part of the
picture. We have been gaining
market share over the last year,
primarily driven on the back of
significant growth in our net-
work. In 2013, we expanded our
network by 70% with our larg-
est-ever investment. In 2014,
we have so far increased our
network by 50%. I think that
will make us the second-largest
network in the whole country.
We certainly cover all the ma-
jor populated areas, and we
are merging into the rural areas
where people live.
here has been signifi-
cant economic growth
due to the recent dis-
covery of important resources,
and a subsequent rise in de-
mand for telecommunications
services is evident. TDM is the
main provider of infrastructure
in Mozambique for landlines,
mobile telephone services, and
the internet. As such, TDM is
an important player in terms of
overall economic development,
and is currently the sole player
in terms of fixed-telecommu-
nications services. Until 2010,
TDMs network was by far the
largest telecoms infrastructure
in Mozambique; in 2008, all
provincial capitals were linked
through a national backbone
transmission network using
fiber-optic cables. This infra-
structure allowed TDM to satis-
fy existing demand. In addition,
TDM also provides an ADSL
network for internet services on
copper cable and a CDMA net-
work for both voice and internet
services in areas not covered by
copper cables.

TBY talks to Rogrio Paulo Samo Gudo, President of Escopil, on the Single
Electronic Window, opportunities stemming from megaprojects, and the
short-term economic outlook.
Escopil was established in
1998. How would you describe
the development of the compa-
ny during these years?
It has been a dream gradu-
ally coming true. We started
the business by offering con-
sulting services and the ITC
came later in 1999. Now we
offer turnkey solutions. Some
of our flagship projects have
been the driving license and
motor vehicle system, the vot-
ers registration digital system,
electronic solutions for the
tax authorities, and the Single
Electronic Window.
Can you elaborate on your flag-
ship project, the Single Elec-
tronic Window, with MCNet,
and its impact on the national
economy?
The concept was created in
2009 when the government
was looking for companies
that could provide services
to help them collect external
taxes. We were awarded the
project and created a new
company, Mozambique Com-
munity Network, SA-MCNet
in 2010 for the design, imple-
mentation, finance and oper-
ation of the Single Electronic
Windows. The product that
we designed is a state of the
art solution that helps the gov-
ernment to collect taxes from
imports and exports in Mo-
zambique. It is for us an honor
and a challenge to be part of
the team that assists the gov-
ernment execute one of its
main challenges, the budget.
Since then we have man-
aged all related processes.
WINDOW
on the
WORLD
Mozambique has many chal-
lenges that we overcome to
deploy the project, such as
the quality of infrastructure,
the human resources, and the
change management process
from paper to electronic sys-
tem, to name but a few. One
of our strategies to ensure
that the project is successful
was to invite the government
to be part of the concession.
In that sense, we partner
with the government instead
of merely providing them a
service. We where pro-active
in terms of business model;
we not only offer a product,
but bring them to under-
stand its daily challenges in
terms of both systems and
management of the business
itself. The main impact of the
Electronic Single Window is
increased efficiency in the
collection of taxes, and that
means that the government
will be able to meet its bud-
get targets. Obviously the rest
will be the consequence: if
the government meets its tar-
gets they will be able to build
much-needed roads, schools,
and hospitals, and provide
other public services. These
also assist the private sector,
the private sector will benefit
through the ease of accessing
these services. Around 80%
of all goods in Mozambique
are imported, so without ef-
ficiency, prices will rise. De-
lays in the importation pro-
cess, increases the logistics
and operational costs, which
mean that the final product
will also be more costly.
Telecoms, IT & Media THEBUSINESSYEAR 85
INTERVIEW
What are your plans to capital- IN NUMBERS
ize on the opportunities that are
materializing from the huge in-
Escopil
ternational investments taking
place in the country?
We have good experience
from working on Mozal, Vale
and other big projects, so we
want to capitalize this expe-
rience, by engaging in new
200
staff at Escopil and
200
partnerships with other or-
ganizations to prepare our-
selves to be ready for new in-
dustries, especially in the oil staff at MCNet
and gas sector. Our strategy,
in order to offer to our clients
the best service on time and
on budget is to partner with
international companies with
good records to acquire new
knowledge and leverage on
their experience.
What are Escopil's goals for the
coming five years in Mozam-
bique?
We are working to exceed our
clients, partners and share-
holders expectation, be rele-
vant in the market, and be a
trusted partner who under-
stands the benefits of a win-
win relationship. Thinking
in this way allows us to un-
derstand our limitations and
BIO
seek the best help. We are
investing in knowledge and Rogrio Samo Gudo was
training for our staff and our born in Mozambique, and
partners, importing technolo- graduated in Electronic
gy and equipment, improving Engineering from
our business processes and Universidade Eduardo
procedures, motivating our- Mondlane. He was part
selves and our partners, and of the foundation of both
constantly identifying areas of Escopil in 1998 and MCNet
improvement to increase our in 2009. He is CEO of both
prearedness as we look to the companies.
future.
86 THEBUSINESSYEAR MOZAMBIQUE 2015

INTERVIEW

TBY talks to
Joaquim Tobias
Dai, Executive Board
Director of EXICTOS
(Mozambique Branch),
on recruitment,
developing specific
technologies, and
increasing market
share in the sector.
How has EXICTOS developed
into its current form, and what
are your priorities?
EXICTOS began operating in
Mozambique with an local of-
fice in 2007. By that time we
had around six banks work-
ing with our application and
software including Millen-
nium Bank, BCI, and certain
other smaller players. Then
we closed several deals with
other banks and helped them
PARTNER up
within your system that al-
lows the banks to create new
products as the need arises.
Exictos means excellence
in consultancy, technology,
outsourcing, and software. In
the beginning we were seen
as a software house. Now we
are even providing manage-
ment consultancy for certain
clients. Our new application
system is called Banka 3G,
which is the core software for
the banks, but we also have Fi-
nanca, Portal Banka Plus and
others.
How have your available re-
sources evolved in the past
years?
At the moment, as an inter-
national group, we have 450
employees and 21 people
working in the company in
Mozambique. We recruited
seven more engineers in late
2014-early 2015. We will need
more technicians and engi-
neers with more experience.
Our major leap in 2015 will be
for a team dedicated to utili-
ties. We have an established
relationship with the utility
companies in Mozambique.
We will develop the Exictos
Academy next year in order to
train them to show our team
to sell our products well, and
to demonstrate to potential
buyers how we can maximize
than to develop new products
and engage in other specific
jobs we are not used to do-
ing. We will sell what we have
with our partnersproducts
in insurance, ERPs (enterprise
relationship products), and
the CRMs. We want to devel-
op consultancy management
training, and we will open a
training room at our facility
shortly. At the moment we
have a partnership with one of
the hotels in town.
BIO
Joaquim Tobias started his
career whilst at university
and served eight years
at the Association of
Mozambican Students
in Portugal from 1999 to
2007, developing economic
conferences for those
interested in developing
business in Mozambique. In
the process, he developed
skills in promoting economic
activity in Mozambique,
based on the needs of
the country. He has a
Business Management
Degree from ISEG Business
School of Lisbon. He has
also served as External
Economic Advisor for
What is EXICTOS's market
share in Mozambique?
It currently stands at 50%.
We rank among the top 25 IT
companies in Portugal and
work predominantly with
banks. We remain the top tax-
payer on Madeira Island. The
growth we have experienced
as a group is quite rewarding
for us, and our potential as a
group is excellent. Our vol-
ume is growing very quickly.
We hold 95% of the market in
terms of the banks in Ango-
la, for example. We expect to
keep growing in client terms.
We are working with eight
banks at the moment in Mo-
zambique and are starting on
our ninth. We are growing at
an impressive rate in terms
of banks. 2015 will be a par-
ticularly good year for us; not
only in terms of the upgrades,
but also for the banks we are
currently dealing with, and
the new entities that are call-
ing us.
IN NUMBERS
EXICTOS
Ranks among the top

undergo the experience of
a takeover to become what
they are today. We helped
them grow and they did the
same for us in actual fact. We
realized through experience
that we are not a service pro-
vider, but rather a partner for
the banks. Being competitive
requires solid products and
distribution channels, such
the growth of their businesses.
We do not want to be just your
service provider, but also your
partner in business.
How would you assess the po-
tential for further growth of
your company over the next five
years?
The market is growing at such
a rate that it is difficult to get
25
the Minister of Science
and Technology and at
Mozambique ICT Institute
(MICTI) from 2007 to
2010. He is Chairman of the
IT companies in
Mozambican Economists
Portugal
Association (AMECON),
Chairman of EXAME
Magazine, and Visiting
Lecturer on Masters in
Strategy of Innovation
Holds
and Internationalization

as debit cards, credit cards,
internet banking, SMS bank-
ing, mobile banking, and
other systems. If you want to
diversify and compete for cli-
ents you must have mobility
hold of everything. Compa-
nies must define a strategy.
For us, we have knowledge as
well as the specific technolo-
gies. It is better for us to devel-
op these specific technologies
50%
at ISG Business School
in Lisbon, Portugal. He is
also a founding member of
the Mozambique-Portugal of the banking market
Chamber of Commerce. in Mozambique
 Telecoms, IT & Media
SECTOR INTEGRATION FOCUS
PLUG AND PLAY
Inevitably, ICT AN ACCOUNT OF BANKING
continues to exact its Mobile banking in Mozambique is still in its
early stages of adoption, compared to other
wholesale significance East African nations. Telco mcel introduced
in propelling business the technology in 2010 allowing cash to be
into the future. paid over the network and redeemed at local
shops, while Vodacom brought in M-Pesa in
2013. Mozambique had the lowest mobile
banking penetration out of 11 African coun-
tries that use the technology surveyed in 2012
by NGO Research ICT Africa, with only 0.2%
making mobile payments. In Kenya, on the
other hand, more than half the population do
so.
Less than a fifth of Mozambique's citizens
have bank accounts. Manuel Marecos Duarte,
chief executive of Millennium Bim bank, says
that its own mobile banking service processes
half a million transactions a month. Nobody
has the money to open a branch to serve in
every single village in Mozambique, Duarte
told The Banker magazine. It will be through
new technology that we reach these people.
PLANTING CHIPS
Mozambique is predominantly an agricul-
tural nation, with farms employing 80% of
the labor force. Communications technolo-
gy helps farmers in developing countries to
access market information. USAID helped
52,628 agricultural workers in 2013 use new
technologies to improve productivity and re-
source management. Mobile phones are cru-
cial in helping farmers access price data, with
research showing that they tend to get better
prices when able to do so remotely. The Mo-
zambique Ministry of Agriculture uses radio,
broadcasts and online publishing to spread
crop price data to rural communities.
Chinese investment is also boosting ag-
ricultural productivity. A project funded by
the Chinese Development Bank has brought
advanced farming methods to Mozambique,
through the establishment of a facility teach-
ing agricultural technology in Xai-Xai district.
"Farming is not easy," said Alexandrina
Nhiacongue, when interviewed by Xinhua
news agency in May 2014. "Cooperation be-
tween the government and Chinese enter-
prise works well since we learn advanced
Chinese technology in agriculture from the
technicians."
THEBUSINESSYEAR 87
ICT FLEET MANAGEMENT
The discovery of 7 trillion cubic metres of
natural gas over the past decade has rapidly
increased the prospects for energy support
industries, including logistics. The findings
put the country close to Venezuela and the
UAE in term of global gas deposits. At Palma,
in the north, a new city for 250,000 people is
planned. Building such a mega-project will
fuel demand for logistical services in Mozam-
bique.
Mozambique provides sea access for
Southern Africa. And rapid economic growth
across the region means trucking firms are
becoming a target for foreign investors. Last
year private equity firm Carlyle Group, which
has $40bn invested in Africa, took over J&J, a
Beira based transport firm. The company's
offering to clients is providing reliable and
efficient international transportation and
state-of-the-art warehouse facilities for
the handling of bulk and container cargo.
The selling point for such companies is the
ability to track goods internationally using
GPS technology and storage software.
ICT OUTSOURCING
Mozambique has implemented a number
of reforms over the past year that make the
country more palatable to international in-
vestment, including changing insolvency and
property rules, the World Bank noted in its
2015 Ease of Doing Business Report.
Companies like SGS Mozambique and Tse-
bo Outsourcing Group are expanding out-
sourcing operations. The bulk of outsourcing
relates to the provision of services for 'mega
projects' in the coal mining and gas industry.
Services outsourcing for consumer orient-
ed companies that has pricked up in Brazil
and Portugal remains in its infancy in Mo-
zambique. Indian-style call centres and busi-
ness process outsourcing have yet to become
a significant part of the Mozambican econo-
my. Education is a challenge, with the World
Bank estimating that only 25% of children
in the country are educated beyond primary
level, compared to 70% in India. Call centers
do exist in Mozambique, with companies like
Howard Johnson, SGS, and Accenture having
local operations, but future growth will re-
quire further social development.
 IT SERVICES
@INFORMATION
Access to information is of
fundamental importance
in Mozambique, as there
seems to be a prevalent
lack of communication
between companies
and consequent lack of
awareness of how key
sectors are progressing.
JOO GOMES
Country Managing Partner,
Maksen (Mozambique)
FOR CORPORATES,
RELIABILITY IS
MISSION CRITICAL,
AND OUR NETWORK HAS
TO BE ROCK SOLID.
HERMANN WOITHE
Chief Executive Officer,
Internet Solutions (IS)
Certain government institutions
relegate security to their lowest
priorities, and we experienced a
boom in contracts and tenders in
the last quarter of the year when
the government realized that it had
remaining funds to allocate.
JAHIR ADAMO
General Manager, Exys
BETWEEN 34% AND 36% OF OUR SALES IN 2014
WERE MADE TO THE PUBLIC SECTOR, ALTHOUGH
WE WORK EXTENSIVELY WITH THE PRIVATE
SECTOR AND MULTINATIONALS AS WELL AS SMES.
DINIS TEIXEIRA
Director, PHC Mozambique
Our systems allow
us to evaluate Policies here are well
people and drafted and there are
identify competent incentives that make
employees while us want to explore new
providing more areas of growth.
training to those in
need of it. NNDIO D. DURO
General Director,
Howard Johnson Call
CARLOS MANJATE Center
CEO Manager, Iogene

MORE MESSENGERS
A pan-African initiative has taken root to encourage the development
of an indigenous media industry that presents constituent nations as
they are, and in their own voice. Its far-reaching objectives champion
journalistic integrity and freely expressed opinion.
A healthy media industrypluralistic, the voice
of civil society, sustainable, and disseminated
over an effective communications matrixis
a cornerstone of a vibrant country capable of
advancement. Today, the numbers dont make
for glamorous reading. Mozambiques compar-
atively low internet penetration is at 4.8%, while
5.4% of the population use the internet (ITU,
2013). The former figure is far shy of the 16%
African average. Mozambique ranked 188th in
the world as of 2012 according to industry data.
For that year fixed broadband reached 0.1%
of the population, while 1.8% went online via
wireless broadband. The arrival of the SEACOM
submarine cable in 2009 followed by the EASSy
submarine cable a year later afforded Mozam-
bique access to cheaper international connec-
tivity ending dependence on VSAT or neigh-
boring South Africa for internet transit services,
reducing the retail price of broadband internet
connection.
SOME METRICS AND A PARADOX
Mozambique was the pioneer African country
to provide broadband wireless services through
WiMax. Yet the shortage of landlines severely
curbs fixed-line broadband penetration, which
keeps prices, and access, beyond the means of
most outside those urban areas deemed strate-
gic to investment. In 2013 the fixed telephone
marketfully liberalized at end-2007had a
penetration of just 0.3%. Mobile-cellular sub-
scriptions stood at 56% at end-2014. Industry
data shows a mobile segment CAGR of 40% for
2003-2013, rising from 435,757 to 12.4 million
subscribers.
Mozambiques internet provider market has
several players. National fixed-line operator
Telecommunication de Mozambique (TDM)
provides home and business ADSL internet ac-
cess. In early 2014 its packages ranged from 512
kbit/s with a 6 GByte cap for (~$21) to 4 Mbit/s
with a 43 GByte cap for (~$118). Another mo-
bile telco in the Mozambican market is mcel,
founded in 1997. By the end of 2011, before the
third operator launched its operations, mcel
sat on a market share of 56%. By end-2013 this
had slipped to 47%. Vodacom Mozambique is a
component of South African Vodacom Interna-
tional, in turn controlled by British Vodafone.
Vodacom was awarded a mobile telecommuni-
cations license in August 2002 and commenced
3G operations in December 2003. At the end of
June 2014 the telco had roughly 4.6 million cus-
Telecoms, IT & Media THEBUSINESSYEAR 89
MEDIA REVIEW
tomers. In November 2010 Movitel received the
third mobile license for $28 million. In contrast
to its operator peers, targeting urban centers,
it addressed the rural populations in pursuit of
scalejust 31% of Mozambiques population
is urbanized according to UN data). Movitel is
said to have set its prices at around 10% below
the market average and at the end of 2012 it al-
ready had 1.4 million subscribers.
ON THE AIR
With electricity access in Mozambique at just
18%, radio remains a vital source of informa-
tion for most citizens. Numerous private radio MRIO FERRO
stations spin discs and data alike, importantly President,
in rural areas, and are able to address specific
small audiences. Many of the 70-or-so commu-
Ferro & Ferro
nity stations in operation in 2012 were funded Comunicao
by UNESCO. Yet state-run Rdio Moambique
pulls in the largest audience broadcasting with We focus exclusively on
programming in around 20 languages. corporate communication,
and explore the new
AND IN YOUR HANDS opportunities made
Newspapers and print media pull in far fewer
citizens than both radio and television. Clear available by digital
reasons make this a no-brainer. Firstly, the technologies in
print media is published in Portuguese, which formulating our strategy.
only around 11% of the populace speaks. Add We also leverage our
to that the prohibitive cost of papers relative extensive database of
to overall income, limited distribution, and a
opinion formers and
44% illiteracy, and readership is set to remain
in the shadows for a spell. Noting a further pit- decision makers, and
fall for the industry was Jos Guerra, President comprehensively scan
of the Council Administration of media group news appearing across
Miramar who, in a TBY interview, observed that all media, including the
while the group has been accepting interns, social networks. We
these young journalists usually have a strong
theoretical background [but] are not always
have prior experience of
knowledgeable on the realities of the market. event management and
advertising also. The
INDEPENDENCE ACROSS THE BOARD latest digital technologies
Prior to independence, the media in Mozam- have of course changed
bique was a facsimile of colonial power Portu- the game in terms of
gal, hence the tool of a then autocratic regime.
With independence, then, came a fresh mo- information delivery.
mentumultimately enshrined in the 2004 Journalism as ever
constitutionfor a pluralist media that recog- remains as much a
nized partisan opinion and sought to reach all vocation as a profession,
citizens nationwide. Moreover, the technology where ethical practice
of dissemination has fostered an entrepreneur-
should still carry weight,
ial spirit that stands to contribute substantially
to national development and hence status on but where in reality the
the continent and beyond. Fundamental to all commercial imperative
of this, however, is the need for a profession- often wins over.
90 THEBUSINESSYEAR MOZAMBIQUE 2015
alism, contingent upon training, and access
to current and accurate data, and the tools
through which to disseminate it. Then there is
the audience itself, where citizen engagement
is key to remedying current media shortfalls.
DRAMATIS PERSONAE
A major pan-African initiative launched ear-
ly in 2015 has the potential to galvanize media
agents across the continent to strengthen media
capacity in such core areas as journalistic scope
and depth of coverage and facilitate the social
applications of ICT through a continent-wide
platform of shared content. Its message is that
where the media is concerned, content is very
much still king. In February 2015, the Ken-
ya-based African Media Initiative (AMI), the
African Telecommunications Union (ATU)
and African Advanced Level Telecommunica-
tions Institute (AFRALTI) linked arms to boost
capacity within the African media and the ICT
sector, and achieve a critical mass of qualified
reporters specialized in comprehensively cov-
ering the media industry. AMI brings together
media owners in pursuit of solutions to the en-
trenched problems facing the media industry
including poor financing, the need for sustain-
able business models, and effective tapping of
the advertising market. The training schemes
it endorses also promote journalistic efficacy.
Meanwhile, the African Telecommunications
Before independence, Union (ATU) is the foremost African entity pro-
the media in moting the development of ICT infrastructure
Mozambique was a and services; it has sought to accelerate the
creation of info-communications conducive to
facsimile of colonial
a knowledge-based society, and full inter-coun-
power Portugal, hence try connectivity. Its research has partnered the
the tool of a then BBC World Service Trust and the UN Econom-
autocratic regime. ic Commission for Africa (UNECA). Finally, the
With independence, African Advanced Level Telecommunications
then, came a fresh Institute (AFRALTI) is an intergovernmental
entity that offering advanced training to mid-
momentum dle- and upper management in technical and
ultimately enshrined managerial positions in the telecommunica-
in the 2004 tions sector in Eastern and Southern Africa.
constitutionfor a
pluralist media that KEEPING IT REAL
recognized partisan The 6th annual African Media Leaders Forum
(AMLF) of 2013 adopted the theme of Media
opinion and sought and African Renaissance. Its many interesting
to reach all citizens conclusions included this telling nugget; The
nationwide. biggest media investment in Africa is coming
from China, and yet much of the coverage of
China in Africa is based on crude stereotypes of
the Chinese. Also discussed was the advantage
of establishing media industry ombudsmen to
ensure accountability, establish trust in media
organizations and foster journalistic integrity,
by protecting media practitioners from legal
challenges to free and accurate reporting. The
news ombudsmen are a link between news or-
ganizations and their readers or viewers.
COMMITMENT
AND DEDICATION
EXICTOS in Africa since 1990
I
Angola Cape Verde Malta Mozambique Namibia
Portugal So Tom and Prncipe East Timor

read ALL over
TBY talks to Jaime Langa, Director of Notcias,
on growth priorities, young journalists in
Mozambique, and what makes the newspaper
stand out.
What priorities have you set for Notcias in Mozam-
bique for the next two years?
Notcias is now 89 years old, and was there-
fore established prior to independence. One of
my main focuses is for Notcias to be the main
opinion maker in our society in educating peo-
ple, and consolidate our presence nationwide.
We also plan to execute a social responsibility
project with the government to promote news-
paper reading in schools.
How would you describe the growth of the news-
paper over recent years?
The newspaper is growing, and were it possible,
I would send it to every household daily, free of
charge. Not all Mozambicans have the money
to buy a newspaper, but our website does pro-
vide the PDF version at no cost. Today, the use
of of technology and communication is devel-
oping very rapidly not least with the platforms
of Facebook, and Instagram, and Notcias is
already involved in that. Notcias is already
present on Facebook. There is a platform for
newspapers, phones and iPad. I now see how
many people read my article when I publish it,
and how many people liked it or didnt. New
technologies give us access to that type of in-
formation and allow us to make strategic man-
agement decisions according to feedback from
readers.
How has interaction with the readership changed
journalism in Mozambique?
It has changed considerably because journal-
ism is not a solo experience, but dependent
upon the needs and wants of readers. Funda-
mental to it all is the timely and accurate de-
livery of sourced facts. Meanwhile, we are cur-
rently building a studio dedicated to interviews
that will appear on our website to bring our
readers inside the newspaper.
Telecoms, IT & Media THEBUSINESSYEAR 91
INTERVIEW
I can now see how many people
read my article when I publish it, and Notcias
how many people liked it or didnt.
New technologies give us access to
currently
that type of information and allow building a TV
us to make strategic management studio
decisions according to feedback from employs 400
readers.
people
How would you describe the new generation of
journalists coming up from the universities in Mo-
zambique?
At Notcias, we have people with 35 to 40 years
of journalistic experience, who did not origi-
nally study journalism. On the other hand, we
have the newcomers from the university, which
together makes for the best of both worlds. To-
day Notcias employs 400 people, almost 150 of
whom are journalists. It is my role to be open to
newcomers with fresh ideas.
What differentiates Notcias from other newspa- BIO
pers in the country?
Firstly, we are committed to delivering the truth
Jaime Langa studied
on which our readers can formulate their own Business Management
ideas on what is happening in Mozambique. at Instituto Superior de
The 56 pages of our newspaper represent the Cincias e Tecnologia de
countrys information source. Secondly, we Moambique (ISCTEM),
provide daily information for provinces. Not all and holds a Masters
newspapers can do this, and those who wish to degree in Business Law
be informed about the country in general turn from Universidade Nova de
to our paper. Lisboa. He is a well-known
businessman and has been
What is your vision for the company for the next Director of Notcias for close
ten years? to two years. From 2009 to
Notcias is not an island, but a sector. Our ob- 2013 he was also Counselor
jective in five, not 10 years, is to launch a TV of Business activities for the
Municipality of Matola.
channel that would ultimately become like the
CNN or BBC of Mozambique.
92 THEBUSINESSYEAR
INTERVIEW
WHATS THE
scoop?
TBY talks to Jos
Guerra, President
of the Council
Administration
of Miramar, on
expanding TV services,
social media, and
the quality of the
new generation
of Mozambican
journalists.
BIO
Jos Guerra is Chairman
of the Board of Miramar
and founder of the Igreja
Universal do Reino de Deus
in Mozambique. Guerra
was born in Marrucuene,
Mozambique, in the Maputo
Province. He earned his
Master's and PhD degrees in
Theological Sciences from
the Christian University of
Florida, a Masters degree
in Business Administration
in South Africa, and a
second Masters degree in
Mechanical Engineering
in the Czech Republic. He
has been a professor at
the Universidade Eduardo
Mondlane for 24 years and
a business manager for over
20 years.
MOZAMBIQUE 2015
What is Miramars history in
Mozambique?
Inaugurated in 1999, TV Mi-
ramar has been operating on
the market for 16 years as part
of a communications network
that includes Radio Miramar.
Nowadays, TV Miramar is
a popular communication
channel known mainly for its
innovative and differentiated
character. It is an open signal
channel available in all pro-
vincial capitals across Mo-
zambique, as well as in Ango-
la through TV Cabo. Miramar
can be viewed through main
pay television and in South-
ern Africa via satellite. It is a
generalist channel offering a
wide range of programs, and
has been successful at ag-
gregating and satisfying the
needs of a diverse audience.
What are some of the invest-
ment and development projects
in progress at TV Miramar?
At the moment, our focus
has been the process of mi-
grating from an analog to a
digital signal. This requires a
large investment guarantee-
ing not only the technical as-
pects of the system, but also
the induction of our techni-
cians. Digitalization will ul-
timately change the way the
world watches TV. We have
learned from the experienc-
es of neighboring countries
that the digital migration
can be a difficult and lengthy
process, although we are
ready to face the challenge.
We want to guarantee that
our channels differentiation
prevails in all aspects linked
to the migration. We are also
working hard to provide com-
prehensive news coverage to
the capitals and main prov-
inces, and eventually the en-
tire country. Currently, apart
from Maputo, news coverage
is only available in some of
the provinces in the north
and the center of the country.
How have new social and inter-
active technologies shaped the
way Miramar works?
Social media has consider-
ably changed the way that
people consume TV and ra-
dio content. As smartphone
usage has grown, people are
now watching TV and simul-
taneously commenting on
social media about what they
see. Miramar has opted to
join its viewers on social me-
dia, and today we are proud
to be the TV station with the
highest number of Facebook
followers in Mozambique.
We recently launched Web
TV, enabling our viewers to
watch Miramar TV and have
access to the latest news in
Mozambique, wherever they
happen to be in the world.
With the link to social media,
viewers can also comment
on our content and share
the channel with their friends
and followers.
How has the profession of jour-
nalism been developing in Mo-
zambique?
Over the past couple of years,
we have seen growth in media
diversity. Big developments
have been realized at the TV
networks, as I mentioned, but
also elsewhere. In journal-
ism we are concerned with
the quality of the product
presented to the viewer, and
are working to provide infor-
mation of integrity backed
by research and investiga-
tion. There are still many
improvements to be made in
the quality of Mozambican
journalism, but we are on the
right path.
Do you feel confident in the
new generation of journalists
graduating from Mozambican
universities?
Miramar has been accept-
ing interns, and these young
journalists usually have a
strong theoretical back-
ground, although they are
not always knowledgeable
about the realities of the
market. There have certainly
been educational develop-
ments in the field, but there
is still much progress to be
made, specifically in teach-
ing practical skills to young
professionals. We have not
been meeting interns who
are absolutely ready to work
in the field upon complet-
ing their studies, but good
efforts are being made with
relatively good results if one
considers that journalism is
a fairly recent discipline in
Mozambique.
Currently, what are the main
challenges journalism faces in
Mozambique, and where do you
see the industry in 10 years?
Every line of work faces its
obstacles, the most relevant
for journalists being access
to information. An issue
of major importance is the
centralization of the media.
There are improvements to
be made in the expansion
of coverage in the rural dis-
tricts. The vast majority of
the media tends to concen-
trate in urban areas covering
central themes, and conse-
quently the outer districts
are left with little to no news
coverage. Despite significant
improvements over the past
couple of years, there is still a
long way to go.
 THEBUSINESSYEAR 93

97 100 105
Emanuel Chaves, Chairman Mozambiques access to the Joo Chiboleca, Managing
and CEO of Aeroportos de Indian Ocean makes it an Director of Globo Distribuidora,
Moambique, on Nacala important regional shipping Lda, on the strategy of pursuing
becoming an aviation hub. center. sustained growth.

Transport
REVIEW

Mozambique is emerging as a central transport node for the region, as

developments in road, rail, air, and port infrastructure are helping to
move the countrys significant mineral resources throughout the region.

FORWARD MOVEMENT
M
ozambique is cur-
rently on the rise
as a transport hub
for the region;
boasting three major ports
at Maputo, Beira, and Naca-
la, five international airports
including Maputo, Beira,
and Nampula, and two main
railway lines at Maputo and
Sena, it is becoming a cen-
tral node through which the
regions impressive natural
resource wealth must pass to
markets near and far. The na-
tional railways alone handle
over 12 million tons of cargo
each year. Mozambiques
location makes it a natural
gateway to South Africa, Zim-
babwe, Botswana, and Mala-
wi, and this is increasing de-
mand for development in its
infrastructure. Mozambique
moves people too; her inter-
national airports can accom-
modate 900,000 passengers
per annum.
Mozambique possesses vast
natural resources, including
large deposits of coal, alumi-
num, titanium, and natural
gas and is estimated to have
the fourth largest gas reserves
globally and nearly three bil-
lion tons of coal reserves. The
major coal deposits are locat-
ed at the Moatize-Minjova,
Senangoe, and Mucanha-Vuzi
sites in the Tete province.
Needless to say, the develop-
ment of the natural resources
and infrastructure go hand
in hand in fostering econom-
ic growth. However, over-
all transport speedsspeed
means efficiencyneed to
improve in order to accom-
modate this growth; official es-
timates indicate that the effec-
tive speed of road transport in
Southern Africa is between 6
and 12 km per hour. Rail trans-
port times are even lower with
an effective speed of 4 km per
hour on some routes. Accord-
ing to the World Economic Fo-
rum, in 2014 Mozambique was
ranked at 126 out of 160 coun-
tries surveyed for the quality of
Image: Maersk Line its overall infrastructure, 142
in terms of its road infrastruc-
ture; 88 in terms of railroad
infrastructure; 107 in its port
Massive harbor infrastructure projects infrastructure; and 110 in its
in Mozambique, including the construction air transport infrastructure.
of a new terminal at Beira, will give the But moves are well underway
to tackle these issues and de-
nation a capacity of between 18 to 26 velop the country as a regional
million tons of cargo per year. transport hub.
94 THEBUSINESSYEAR MOZAMBIQUE 2015
The Maputo Development Corridor is
an ambitious undertaking which has
had important effects, not least of all
in signaling the social and economic
stability of Mozambique following
its nearly two decades of civil war,
and the appeal of carrying out major
investments in the country.
THE FRIENDLY SKIES
In 2014 the European Investment Bank (EIB)
provided a $26 million loan to support Mo-
zambiques main airport in the capital Mapu-
to, which will help it meet international civil
aviation safety standards. Specific improve-
ments will include a resurfacing of the air-
ports runway and taxi areas, new landing
lights, expanded water supply in case of emer-
gency, and improved aircraft fuel supply infra-
structure. This rehabilitation program follows
completion of new international and domestic
terminals at Maputo airport in the last three
years. Investments in safety improvements at
the airport are essential to ensure continued
flights by international carriers and compli-
ance with International Civil Aviation Orga-
nization standards. The upgrade has not only
created jobs during the construction process,
but is also also an investment in generating
long-term economic benefits across Mozam-
bique through improved tourism and global
business links.
ROAD WORKS AHEAD
Mozambiques roads are improving annually,
with many ambitious developments under-
way. The Maputo Development Corridor is a
flagship project and this massive undertak-
ing has had important effects, not least of all
in signaling the social and economic stability
of Mozambique following its nearly two de-
cade long civil war and the appeal of carrying
out major investments in the country. The
project concerns the improvement of nearly
360km of single carriageway highway on the
Great East Road connecting the region. It is
also linked to the Nacala Corridor, a regional
transport corridor linking Malawi and Zam-
bia to the deep-water port of Nacala. The coal
terminal at Nacala is vital for the region; its
1.5km long jetty approach leading to offshore
berthing facilities, makes use of natural water
depth and will be capable of exporting up to
100 million tons of coal a year when fully com-
pleted. The overall project is mainly under the
governance of the Maputo Corridor Logistics
Initiative, a non-profit organization consisting
of infrastructure investors, service providers
and stakeholders from Mozambique, South
Africa, and Swaziland, who are focused on the
promotion and development of the Maputo
Development Corridor (MDC) as the region's
primary logistics transportation route. Bar-
bara Mommen, CEO of MCLI, tells TBY that,
Roughly $350 million has been spent on the
building and maintenance of the road, and
for the remainder of the concession there are
still upgrades, improvements, and mainte-
nance being done, because it is a build-oper-
ate-transfer (BOT) agreement. It is anticipated
that over the next sixteen years we will see a
further $400 million investment in infrastruc-
ture.
RIDE THE RAILS
Major investments in rail link improvements
are underway as well. A 2018 target has been
set by a mixed foreign and Mozambican con-
sortium to commission a $4.5 billion coal
export railway and port terminal project in
central Mozambique. The government has
chosen the Bangkok-based contractor Ital-
ian-Thai Development (ITD) to construct the
537km railway from major coal deposits in
Moatize in the Tete province to port of Macuse
on the coast. Authorities also plan to increase
transport to between 40 million and 50 million
tons by 2020. Rail operator Portos e Caminhos
de Ferro de Moambique also plans to invest
$1 million in infrastructure and rolling stock to
replace current road links to the port with new
rail infrastructure.
PORTS OF CALL
Mozambiques port projects are inextricably
interlinked with all of the major road and rail
projects throughout the country. The ports
of Maputo, Beira, and Nacala are widely ac-
knowledged as central to the development of
the region. Investments are also being made
to develop the northern ports of Pemba and
Palma, where a major logistics base and liq-
uid natural gas (LNG) production plants are
planned that will use gas produced from off-
shore fields. More than $30 billion will be in-
vested initially in Mozambique's natural gas
sector to build capacity to produce 20 million
tons per year of LNG, with the first exports due
to start in 2018, according to the national oil
company. The new port in the city of Pemba
will have a 300 meter dock capable of receiving
ships with a maximum draught of 12 meters
and a variety of other facilities on a 36-hect-
are plot. This has logistics players very excited
indeed. Alexandre Franco, Managing Director
ANTNIO
CAPUCHO
PAULO
Country Manager,
Skynet
What is the significance of the
market in Mozambique for the
overall strategy of Skynet in
Africa?
Africa is an emerging market for
the whole world with immense
potential in natural resources,
agriculture, and infrastructure
development. Mozambique has
sustained economic growth and
political stability since the end of
its civil war. There is an ongoing
effort to elevate the standard of
living, to function within a fair and
just society, and to raise health
and education levels, which in
turn lead to a vote of confidence
and continued foreign investment
across all economic sectors. Sky-
net has embraced this stability by
also investing in Mozambique as
part of a long-term strategy.
What trends are you seeing in
the Mozambican transport and
logistics industry?
We find that with investment
there is considerable develop-
ment, and the foreign companies
investing expect a service similar
to what they receive elsewhere
in the world. This creates a
need to upgrade services and
infrastructure accordingly, by
meeting multiple requirements,
including visibility, tracking,
and tracing. We believe that the
coming trends will be focused
on international courier parcel
imports to satisfy the various
production, extraction, and
logistics industries, as well as an
inter-provincial domestic courier
parcel service for the emerging
B2B and B2C markets.
 Transport THEBUSINESSYEAR 95

The new port in the city of Pemba

will have a 300 meter dock
capable of receiving ships with a
maximum draught of 12 meters

Image: Maersk Line

 96 THEBUSINESSYEAR MOZAMBIQUE 2015
Quality of Mozambique Port Infrastructure
Source: Word Development Indicators, World Bank
4 4 million tons annually. The total construction
3 lion, and part of the cost will be met with proj-
2 overseas and Japanese banks. Japanese owned
1 project and Mitsui's initial investment amount
2009 2010 2011 2012 2013
of Transitex Moambique, tells TBY that,Our
plan for 2015 is opening an office in Pemba
because we already have some business and
our own people there. Wed like to capitalize
on the opportunities of the oil and gas indus-
try, maybe as a support company to make cus-
toms and things easier. We offer a full service
from door-to-door. In Mozambique, we oper-
ate in all the ports and airportsNacala, Nam-
pula, Beira, Pemba, Quelimane and Maputo.
The major Nacala Railway Corridor & Port
Infrastructure project is another of the central
improvements underway in the region. Nacala
Port, at a depth of 14 meters, is the deepest nat-
ural port in Southern Africa and the third deep-
est on the eastern coast of Africa. The port is
Mozambiques third busiest, after Maputo and
Beira, which are the busiest and second busiest,
respectively. Nacala Port is also the terminus of
the Nacala Railway, which extends 931 kilome-
ters west into landlocked Malawi, connecting
to Malawis Central East African Railway. The
Nacala project is currently undergoing an up-
grade of the 682km existing rail line and the
construction of the new 230km rail line and
construction of a new coal terminal in the Port
of Nacala, which will lead to the development
of other terminals. By managing the existing
infrastructure effectively, the projects railway
transport annual capacity is planned to in-
crease gradually up to 22 million tons, and the
YOUR LOGISTICS OPERATOR IN
MOZAMBIQUE
Millenium Park Building, Vladimir Lenine Avenue,
179 14th floor P. O. Box 2284, Maputo, Mozambique
port's coal shipping capacity is designed for 18
million tons annually; moreover general com-
modities shipping capacity is set to expand to
cost is expected to be approximately $4.4 bil-
ect finance from public financial institutions
Mitsui will own a 15% equity interest in the
2014 for investment and loans is $450 million for the
mine and $313 million for the infrastructure.
Other major port projects are underway.
Coal producers are looking at building a 20
million ton coal terminal at Chinde, north of
Beira. The New Coal Terminal Beira (NCTB) is
SORABJI
a joint venture between Essar Ports, who hold ROSTANG
a 70% share of the port and the rail authority of General Director,
Mozambique (Caminhos de Ferro de Moam-
bique). Essar Ports has plans to develop a ma-
Blue R
jor 10 million ton per annum capacity coal ter-
We invest considerably
minal at the Beira port. The initial capacity of
10 million tons per annum (MPTA) can also be in quality machinery
increased by a further 10 MTPA in case of more at our branches. At the
cargo and transport links come online. moment, demand for
The port of Maputo is also being upgraded; these services exceeds
plans to increase throughput at Maputo port supply. Initially, we only
will result in $3 billion in investment by 2020,
according to the Maputo Port Development
diagnosed problems
Corporation (MPDC). The MPDC is a partner- with air conditioning and
ship between the Mozambican Railway Com- other units exclusively
pany and the global player DP World. It holds related to cars, but today
the concession for the port until 2033, with an we are undertaking the
option of an additional ten years. The total area
full range of services
for the Maputo port is approximately 129 hect-
ares with 3,000 meters of continuous wharves pertaining to vehicles. We
ranging in depth from 8-12 meters; there are also fabricate components
also terminals for citrus, sugar, and other types upon client request, and
of containers. As Mozambique moves past its have a dedicated engineer
recent history of civil war and into a more pros- supporting this process.
perous and secure future, its impressive invest-
Our employees are trained
ments in infrastructure projects are helping to
assure that all of its natural and mineral wealth daily and we always
are available to the world, and that the world encourage continued
can feel confident investing in Mozambique. study.
THE WORLD CLOSER
Forward and support services
WWW.TRANSITEX.COM
mocambique@transitex.co.mz

BIO
Emanuel Chaves is
Chairman and CEO
of the Aeroportos de
Moambique. He obtained Areas de Moambique, but we have compa-
his Bachelors and Masters nies interested in a joint venture. We are also
degrees in Economics
and Management from
the Catholic University of
Mozambique. He moved to
Maputo in 2006 and became
head of ADM in 2013. He
has recently completed
an aerospace MBA from
Toulouse Business School,
France.
hub TO BE
TBY talks to Emanuel Chaves, Chairman and CEO of Aeroportos de
Moambique, on the opportunity for Nacala to become a new aviation hub
on the east coast of Africa.
How would you describe the new Nacala Inter-
national Airport infrastructure?
The project cost was around $250 million.
It had to be expanded as there were many
adjustments made throughout the project,
although the initial estimate was around
$130-150 million. There were some substan-
tial changes to the project; for example, while
the initial scheme envisaged a rehabilitation
of the existing railway, we had to build an en-
tirely new scheme, which required massive
investment. Also, we had to expand the facili-
ties to make it a future hub. The inauguration
took place on the December 13, 2014.
What is your strategy regarding air transport
agreements and MoUs to bring traffic into the
airport?
We are in talks to partner with certain huge
brands. In handling, we will have one of the
largest operations in the world and are con-
sidering three handling companies. In Ma-
puto, we have the Mozambique Handling
Services company (MHS) and are tendering
to sell a 51% stake in it, as we want to bring
in a strategic partner in order to ensure that
we deliver international-standard service.
Another strategic partnership will be made
with a catering company. Today, the catering
company is owned by the airport and Linhas
craft such as Boeing 747s and 847s, and also
Airbus 380s.
considering bringing in an airport operator to
partner us in managing the airport as soon as
there is a clear strategy and capacity to attract
more airlines. We want a dedicated airport
operator with a huge capacity to mobilize air-
lines to Nacala. Currently, we have secured
almost 90% of personnel already trained to
operate Nacala International Airport. Our
company is 100% Mozambican with all Mo-
zambican employees highly trained to inter-
national standards.
Transport THEBUSINESSYEAR 97
INTERVIEW
From which countries will people be able to fly
directly to Nacala?
Initially, we have Linhas Areas de Moam-
bique securing domestic flights. We have also
already secured South African Airlines flights
to Nacala. We are quite certain, too, that Ethi-
opian Airlines and Kenyan Airways will oper-
ate flights. Kenyan Airlines is already flying to
Nampula and will shift its flights to Nacala,
and Ethiopian Airlines is already willing to fly
to the north of Mozambique and will be open
to flying to Nacala. There needs only to be an
update of the bilateral agreement in order
for them to fly there. Qatar airlines, TAP, and
JAAL will also consider flying to Nacala giv-
en that bringing people to Maputo and then
traveling two and a half hours to the north is
impractical. We also have almost confirmed
intentions from Lufthansa, Air France, and
Emirates to fly to Mozambique. Linhas Areas
de Moambique is entering into a partnership
with Air Austral from Reunion because many
people from Reunion are also keen to invest
in Nacala. The director of ENI Mozambique
has shown clear interest in linking Nacala
to Milan and Oporto. Also, from Anadarko
we have heard that there is a need for flights
from Houston to Mozambique. From 2015,
there will be a large market linking Asia to
Mozambique. Nacala Airport can handle air-
What are the main competitive advantages of
Nacala becoming the main hub on the east coast
of Africa?
Nacala has many natural advantages com-
pared with other hubs. Dar es Salaam is very
close to Nairobi. And from Nairobi to Nacala
is two hours' flight, while Nacala to Johan-
nesburg takes two and a half hours. Second-
ly, Nacala is located close to a future signif-
icant port on the east coast, which is a good
98 THEBUSINESSYEAR MOZAMBIQUE 2015
We want a dedicated airport operator
with a huge capacity to mobilize
airlines to Nacala. Currently, we
have secured almost 90% of
personnel already trained to operate
Nacala International Airport. Our
company is 100% Mozambican with
all Mozambican employees highly
trained to international standards.
combination for a successful hub. Nacala is
closer than Nairobi to Singapore, Australia,
and other countries, as Nairobi is inland and
Nacala is on the coast. Mozambique stands to
surpass the GDP of both Tanzania and Kenya
over the next 15 years, which will be reflected
in air travel statistics. Nacala is closer to the
sea than Johannesburg and Nairobi, mean-
ing more savings on fuel at departure and
more luggage being carried on departures
from Johannesburg and Nairobi. This region
represents 120 million people and is growing
at an average rate of 5%, while Tanzania and
Kenya are at 7%. So as Africa reaches 2.3 bil-
lion people by 2050, the area will have almost
doubled. In the short run we still need to grow
capacity and connectivity in Nacala, and if we
do so capacity will surpass that of Nairobi.
How would you assess the expansion of the Pem- IN NUMBERS
ba airport, which was inaugurated in March?
We made a small investment of about $5 Aeroportos de
Moambique
million on the runway and terminal to cope
with the demand of the next four years, while
concluding the plans and construction of the
new Pemba Airport. We are at the design and
250
feasibility study phase, and expect to submit
proposals for study in 2015.
What is your strategy for improving competitive- million invested in
ness among airlines and increasing the number Nacala International
of connections and companies operating in Mo- Airport inaugurated
zambique? on December 13
Mozambique is growing rapidly, and over
the past 10 years international arrivals have
grown from 400,000 to around 2.3 million.
The airports along the coast are all focused on
tourism. We are making airports viable. The International arrivals
government is working with Linhas Areas of around
2.3
de Moambique on expansion capable of of-
fering connectivity. Additionally, the strategy
for Nacala is to get people to come to Mo-
zambique and from here fly elsewhere. One
strategy is to offer rebates for airport fees and million
air navigation fees for shorter, or regional,
flights. We are offering flights from Nacala to
Pemba and Nacala to Nampula, for example,
at a 50% rebate. That is one of the strategies
to position the airport. But it could as easily
be done somewhere else. For example, we are
launching a tender for the concession of the
three airports: Inhambane, Ponta do Ouro,
and Bilene.

NACLA INTERNATIONAL AIRPORT FOCUS
ECONOMY ON THE WING
A modest military installation has
been transformed into what will
become a regional transport hub,
taking Mozambiques economy to a
higher altitude.
ACCORDING to a 2011 study by Calderon,
Moral-Benito, and Serven for the WB (Is Infra-
structure Capital Productive? A Dynamic Het-
erogeneous Approach,), for each 10% increase
in infrastructure development countries earn
an extra 1% in terms of their long-term growth.
Aware of this, between 2001 to 2006 Mozam-
bique invested an average of nearly 9% of GDP
on infrastructure according to World Bank paper
Financing Public Infrastructure in Sub-Saharan
Africa: Patterns and Emerging Issues.
One of the major infrastructure investments
since 2011 that will position Mozambique in the
international arena is the recently inaugurated
Nacala International Airport. The former Nacala
Air base, a small military airstrip, has been com-
pletely upgraded and transformed into a major
international air hub for southeastern Africa.
The airport is located in the Nampula province
in the north of the country. It was designed by
Brazilian firm Fernandes Arquitetos Associados
and built by the construction firm Odebrecht.
Works began in 2011 on an area of approximate-
ly 30,000 sqm.
As Emanuel Chaves, Chairman and CEO of
Aeroportos de Moambique explained to TBY
that even though the initial estimated cost for the
airport was $130-150 million, the final cost was
around $250 million due to several subsequent
adjustments made throughout the project. For
example, the initial scheme envisaged a reha-
bilitation of the existing railway, but ultimately
the decision was made to build an entirely new
system, which involved a massive investment.
These works extended the existing runway from
2,500 meters to 3,100 meters long and 45 meters
wide. The final construction has a passenger ter-
minal with 16 check-in counters and four board-
ing gates with a capacity for 500,000 people per
annum. The innovative installations can handle
1,240 passengers in peak hours and up to 5 tons
of air cargo. According to Mr. Chaves, they also
expanded the existing facilities to make it a fu-
ture hub. This included a control tower, a traffic
circuit, the freight terminal, a fire station, as well
as ramp equipment, roads and parking for taxis
and rental cars. Space is available now for cus-
tom brokers, and advertising, as well as passen-
ger and handling services.
The first commercial flight arriving at Nacala
International Airport was operated by the na-
tional company Linhas Areas de Moambique
(LAM) on the 8th December 2014. LAM and
Transport
South African Airlines flights are already operat-
ing Nacala flights and according to Mr. Chaves,
LAM is already in talks with Air Austral from
Reunion to offer this service to the many entre-
preneurs from the close island that are keen to
invest in Nacala. In fact, a new satellite Chamber
of Commerce for Reunion will be in operation in
Maputo sometime in June 2015 as Thophane
Narayanin, of the Chamber of Commerce and
Industry of Reunion confirmed to TBY. Mr.
Chaves mentioned that Ethiopian Airlines and
Kenyan Airways would also have flights to Naca-
la and that Qatar Airlines, TAP, JAAL, Lufthansa,
Air France and Emirates had shown their inter-
est on the airport. Without any doubt this is the
time for interested potential partners to step in
as the authorities are considering a partnership
with an airport operator. We want a dedicated
airport operator with a huge capacity to mobilize
airlines to Nacala Mr. Chaves said.
Besides supporting industrial development,
the Nacala International airport will also be-
come a key entrance for tourists in the coun-
try and will support the tourism sector in the
Northern provinces. As Natalie Tenzer-Silva
from Dana Tours said to TBY: The airport will
definitely have an effect on the kinds of packages
and combinations offered, such as Nacala and
Ilha de Mozambique. The excellent road from
Nacala to Ilha de Mozambique makes for a jour-
ney time of just two hours.
Nevertheless, the airport will only fulfill its
objective if the government is able to attract a
number of international airlines and create new
connections. Many touristic operators are still
concerned about flight prices and routes that
limit their package options and raise price lev-
els. The Minister of Culture and Tourism, Silva
Dunduro, has said that Mozambique; feels
the urge to incentivize the growth of the air con-
nections, which is still a great barrier to the de-
velopment of tourism in the African continent.
In conversation with TBY he stated that the im-
provement of the air connections was necessary
based in four factors which are, political stabil-
ity, air safety; airport infrastructure; and gov-
ernmental reforms (such as the opening of the
national airspace, the politics of fees and taxes
imposed to the civil aviation).
Over the past few years, Mozambique has de-
veloped its infrastructure to provide transport
communications with the neighboring coun-
tries. This has supported the creation of hori-
zontal development corridors from South Africa,
Zimbabwe or Malawi all the way to the Mozam-
bican ports. Nevertheless, north-south connec-
tions have been limited. Authorized investment
projects by the Investment Promotion Centre
(CPI) from 2005 to 2009 in the Nacala Corridor
accounted for $7 billion and have continued to
rise over recent years.
THEBUSINESSYEAR 99
THOPHANE
NARAYANIN
Treasurer of
the Chamber
of Commerce
and Industry of
Reunion and Social
Council of Reunion
Historically, how would you
describe the commercial and
economic relationship between
Reunion and Mozambique?
Reunion is a French Island,
located near Mozambique. We are
located just three hours away by
nonstop flight, which of its own is
important. However, the cultural
perspective is critical to a better
understanding. It is important to
know that there are both Indians
and Africans on the African coast.
Currently, we are giving the great-
est importance to Mozambique,
primarily do to its size, but also
because its current development
has considerable potential. We
have decided to locate a satellite
Chamber of Commerce for
Reunion in Maputo. We aim to
bring company managers from
Reunion and subsequently set
up meetings with counterparts
from Mozambique. We intend by
June 2015, at the latest, for the
satellite office to be installed.
How would you characterize the
interest of Reunion investors in
Mozambique after this mission?
Right now we have a private dele-
gation, consisting of the company
managers, who are going to come
to Mozambique in order to do
some prospecting, each one in
its own domain. They come here
looking for potential partners
in multiple and varied sectors
including construction, food, aero-
space, and land transportation.
100 THEBUSINESSYEAR MOZAMBIQUE 2015

VOX POPULI SHIPPING COMPANIES

ALL ABOARD
S
ince it started its
first service in Afri- Mozambiques access to the Indian Ocean
ca in 2001, the CMA
CGM Group has increased its
makes it an important regional shipping center,
presence and become a ma- but the capacity of its ports must be developed
jor player on the continent. It to take full advantage of its location.
has continuously reinforced its
presence and its services, and

is now pursuing its maritime
and inland development in Af-
rica. The Group is present in 43
Sub-Saharan countries, with its
72-branch network and 1,300
employees. As the second ship-
ping company operating in Mo-
zambique, the CMA CGM Group
operates at all five main ports
Maputo, Beira, Quelimane,
Nacala, and Pembawhere it
is also physically represented
by its own agencies. Currently,
refrigerated cargo and exports
of certain dry commodities are
our strategic focus areas. This
includes a diversity of products
such as timber, tobacco, cotton,
grains, and nuts. Our group of-
fers its customers weekly calls
to Mozambique. Our three dif-
ferent shipping services to and
from the country allow us to
accommodate customer needs
by offering personalized ser-
vice with tailor-made solutions.
On top of that, our innovative
inland solutions provide safe
cargo transportation from the
port to ramp, or door-to-door
delivery to any of the hinterland
countries in the region.
LAURENT DEMAIN
General Manager,
CMA CGM
Mozambique
B
esides Maputo, Beira, ment service. We have a joint
Quelimane, Moma, venture with Barloworld in a
Angoche, Nacala, and highly sophisticated transport
Pemba, LBH is also present in management system for bulk
Mocmboa da Praia port, which commodities. Tonnage-wise,
is a small, but strategically po- we probably handled 2 million
sitioned facility at the heart of tons in Beira last year, 8 million
the gas field. We hope to ser- tons in Maputo, and 13 million
vice the larger players from tons nationally.
it. We have also launched a
service called LBH Xpress. We
operate a weekly service from
Johannesburg and Durban all
the way through Maputo in the
north. There is no doubt that
the north is the destination of
future development. The clos-
est sophisticated engineering
systems are in South Africa,
we have warehouses in Johan-
nesburg, Durban, Maputo,
and Nacala to service the LBH
Xpress trucks and the custom-
ers. As shipping agents, we
now handle almost any type
of cargo, from small boxes to
cape-sized vessels, nationwide.
Our services have extended
ATHOL EMERTON
considerably and we can do Managing Director,
a complete logistics manage- LBH Group

MICHAEL NEERSTRAND HELWEG

Managing Director, Maersk Line

W
e arrived in 1998 and
first opened the of-
fice in Beira. A cou-
ple of years later we moved to
Maputo but then in 2013 we
returned. Beira is the busi-
ness center in terms of trade
and is also a gateway to Zim-
babwe, Zambia, and Malawi.
More than 50% of our overall
business moves through Beira.
From a business point of view
it is much easier to connect
to other countries and opti-
mize the cargo we ship. There-
fore, the relocation was done
with business optimization
in mind. We are operating at
the four ports of Nacala, Que-
limane, Beira, and Maputo.
Quelimane is a small port for
us, with a bi-weekly call. Naca-
la has a weekly call and Bei-
ra and Maputo twice a week.
The biggest challenge for us in
terms of expanding that is Bei-
ra because it has yet to develop
into an international port, so
in terms of us optimizing and
enhancing our business even
further, Beira is the bottleneck.
We want to continue the jour-
ney begun in 2014 with an op-
timization of the value of the
business that we have and the
activities that we do.
102 THEBUSINESSYEAR MOZAMBIQUE 2015

FOCUS PORTS

MPDC MATOLA COAL PEMBA SERVICE MOATIZE MINE

TERMINAL CENTER
PROJECTED ANNUAL
EARMARKED PHASE 3.5 PHASE 1 TO BE PRODUCTION
INVESTMENTS

$838 7.5 COMPLETED IN

22
million
million tons (completed 2013) 2018 million tons

2013 PRODUCTION
PHASE 4 LNG EXPORTS TO
INVESTMENTS TO DATE
20 INITIATE IN 3.8
$300
million million tons 2018
million tons

NACALA PORT

PROJECTED CAPACITY PROJECTED TERMINAL

800 m TRANSPORTATION

50
FOOTPRINT
JETTY WITH 12M 22
million tons by 2020 120ha DRAFT million tons per year

COAL LOADING

18
million tons per year

Source: TBY Research

CARGO TERMINAL
LOADING CAPACITY

4
million tons per year

MAPUTO AND MATOLA

The deepwater port of Maputo comprises two
key componentsMaputo Cargo Terminals
and Matola Bulk Terminals. The Maputo Port
Development Company (MPDC) received

the
a comprehensive 15-year operational and
development planning concession in 2003.
MPDC, a public-private consortium, in 2010
extended its Port Concession to 2033 with the

SHIPPING
option of a further 10 years thereafter. This
timeframe enables adequate development in
step with the governments broader Port Mas-

FORECAST
Sustainable growth in Mozambique
and indeed across the continent of
Africais predicated upon resource
exportation, the revenues from which
could swiftly percolate throughout the
economy in the form of employment
and higher standards of living.
ter Plan. MPDC investments to date amount to
$300 million. Volumes handled by the port are
earmarked at 50 million tons by 2020 on addi-
tional investment of $838 million.
The Matola Coal Terminal is a dry bulk facil-
ity operated by South African freight and logis-
tics company Grindrod. Its most recent expan-
sion (Phase 3.5) concluded in October 2013
increased annual export capacity from 6 to 7.5
million tons. Phase 4, to boost capacity above
20 million tons, is at the advanced feasibility
stage. Phase 4 involves excavation and land
reclamation, plus two new berths, a stockyard
and related railway infrastructure. The ter-
minal footprint will ultimately be around 120
ha, and Grindrod also holds a 48,000sqm site
at Maputo Main Port for the handling of sized
coal for third parties.

PEMBA AND PALMA
Since December 2013, Mozambican state-
owned company Sociedade Portos de Cabo
Delgado has held a 30-year concession to devel-
op the ports of Pemba and Palma (the latter a
greenfield project indexed to LNG exploration
in the north). It is a 50-50% partnership between
state port and rail manager Portos e Caminhos
de Ferro de Moambique (CFM) and oil and gas
enterprise Empresa Nacional de Hidrocarbone-
tos (ENH). The first phase of the Pemba Service
Center is set for completion in 2018 and in-
cludes an 800m jetty with a 12m draft. State fig-
ures indicate initial investment of over $30 bil-
lion in the natural gas sector, ramping up LNG
capacity to 20 million tons/year, with exports
forecast for 2018. Put into context, the Rovuma
Basin has reserves capable of supplying LNG to
Germany, Britain, France and Italy for 18 years,
according to Reuters. Duly, related investments
are materializing at the northern ports of Pem-
ba and Palma, to accommodate vast logistics
base and LNG production plants to process and
transport gas produced from offshore fields in
the Rovuma Basin being developed by US oil
major Anadarko Petroleum Corp and Italys Eni.
A second port in Pemba adjacent to the exist-
ing facility managed by CFM is to have a spe-
cial regime to invite private investment. The
two will be points of entry for all equipment of
gas companies operating in the Rovuma basin,
and export nodes for final products, particu-
larly LNG. According to Andr da Silva, CEO
of Portos de Cabo Delgado, The Cabo Delga-
do province has considerable reserves of gas,
with many others yet to be discovered, such as
graphite, of which we have one of the worlds
largest reserves.
FOR YOU WE GO FURTHER...
FROM ROVUMA TO MAPUTO
Aeroporto Internacion al de Maputo T +25821467644 F +25821467643 expressocarga@ecs.co.mz
Transport THEBUSINESSYEAR 103
BEIRA
According to Maersk Line Managing Director
Michael Neerstrand Helweg in conversation
with TBY, The key for Mozambique is invest-
ment in Beira, because if you increase its ca-
pacity you increase trade with the hinterlands.
This would enable a reduction in cost because
by attracting larger vessels it could compete ANDR DA SILVA
with Dar es Salaam and Durban.
CEO, Portos de Cabo
NACALA Delgado
Vale commenced production at Mozam-
biques giant Moatize mine in August 2011, We provide marine
and today exports coal on Sena railway from
the Port of Beira, located around 600km south
infrastructure for the oil
of the mine. Annual production in 2013 of 3.8 and gas industry in Palma
million tons, is set to reach 22 million tons in and Pemba. The latter will
2016. Meanwhile, the Nacala port complexa account for the majority of
coal and general cargo terminalhas been our investment, where we
developed to accommodate future capacity,
envisage establishing an
enabled by the 912km Nacala linerunning
through Malawi and Mozambiquewhich is oil and gas service center.
given over also to general commodities and I foresee Portos de Cabo
public transportation. Nacalas transportation Delgado becoming one
capacity of 22 million tons per year is accom- of the largest national
modated by a local coal loading capacity of 18 companies in Northern
million tons per year, while the general cargo
Mozambique. Within 10
terminal has a 4 million ton per year loading
capacity. years, 90% of the master
plan that was developed
QUELIMANE for the area will have
Located to the north of Beira and South of been completed. The
Nacala, the Port of Quelimane is a prospective Cabo Delgado province
export node for Mozambican coal, located on
the coast of Zambezia province. As of January
has considerable reserves
2015, two potential construction sitesMa- of gas as well as other
cuse or Supinhowere subject to environ- resources such as
mental and social impact assessments. graphite.
Envios Domesticos e Despachos Aduaneiros
Domestic and Customs dispatch Shipping
104 THEBUSINESSYEAR MOZAMBIQUE 2015
B2B CONNECTING MAPUTO
BARBARA MOMMEN
CEO, Maputo Corridor
Logistics Initiative
(MCLI)
What are your organizations
strategic priorities in the short
term?
BARBARA MOMMEN Roughly
$350 million has been spent on
the building and maintenance
of roads, and for the remain-
der of the concession there are
still upgrades, improvements,
and maintenance being done,
because it is a build-oper-
ate-transfer (BOT) agreement.
It is anticipated that over the
next 16 years, we will see a fur-
ther $400 million investment
in infrastructure. The rail line
upgrade, or rehabilitation,
was finished in 2008, and that
investment was roughly $100
million, which included up-
grades to the rails and bridges
and additional rolling stock
and locomotives. Over the
next four years CFM is going
to spend roughly $204 million
on the line in doubling and
electrification of the line and
improvements to signaling,
amongst others. Additional
capacity on this line will assist
the corridor in creating a more
balanced ratio of road-to-rail
cargo. In terms of port Maputo,
an integrated master plan was
developed in 2008 that looks at
increasing the capacity of the
port, improving current facili-
ties, and accommodating new
vessels by dredging to minus
14 meters. Meanwhile, the car
IOLANDA WANE
Ph.D., CEO, Maputo
Public Transport
Company
terminal is a great success story
with increased volumes ensur-
ing maximum use of the re-
cently expanded terminal area.
IOLANDA WANE The strategic
priorities for the next two years
are defined in the 2012-2016
Strategic Plan, which is still
under implementation, and
clearly outlines the strategic
guidelines for the company.
Special attention will be given
to continuing efforts at im-
proving public transport ser-
vices for the citizens of Maputo
and its environs, increasing our
operational efficiency and effi-
cacy and proceeding with the
operation automation policy of
traffic and charging policy. We
aim to improve the corporate
model for the repositioning of
the company in the transporta-
tion market in Maputo Munici-
pality, and to proceed with on-
going restructuring in various
operational and managerial
areas in order to permanent-
ly align the company mission
to the demands of the market.
We also plan to redefine our
social responsibility policy for
internal and external public,
and reinforce the sensitization
actions against fraud in all de-
partments of the company. We
need to ensure strictness and
respect for public goods, and
must be careful in expenditure
control.
metropolitan
GLIDE
How does the development of The impact of
transport infrastructure in Ma- the development
puto affect business?
of transport
BM I would really contend that infrastructure in
infrastructure development the capital will be
enables access right across the profound, facilitating
spectrum; from multi-national
companies through to SMEs. If communication
you create the environment for among businesses and
moving goods, you are enabling individuals.
economic development. It is not
only the major companies that
benefit. Much of the investment
in infrastructure has been made
by companies who obviously
see the possibility of a return on
their investment, so the chal-
lenge for us is to ensure that the
charges levied for the use of in-
frastructure do not compromise
the economic viability of the
corridor.
What are your strategies for im-
proving accessibility to public
transport services?
IW We work as part of the Mu-
nicipality project for installing
bus lines, which differ from
normal vehicles lines, and are
known as BRT (Bus Rapid Tran-
sit). We believe that this system
will improve the medium com-
mercial speed, and that subse-
quently, we will see greater user
satisfaction, since, greater speed
and lower variability (resulting
from line separation), will lead
to a better circulation of buses.

IN NUMBERS
Globo
Distribuidora
100%
Mozambican
company
Expecting to double
sales and business
turnover in
2015
How has the company devel-
oped since it opened for busi-
ness back in 2008?
We are a 100% Mozambican
company with two sharehold-
ers, namely myself and my
brother. Since 2008 we have
experienced gradual growth,
which has proven to be a wise
approach. We have provided
international freight forward-
ing, logistics and transport
services to a diversity of cli-
ents, including certain state
enterprises such as FUNAE,
MCT and EDM-Electricidade
de Mocambique.
What are your key strategies
over the next two years?
Our underlying objective is
sustained growth. We have
also been a logistics service
provider for Movitel, having
undertaken about 90% of its
logistics services. We have
recently purchased a fleet of
large trucks and are set to ex-
pand it with four or five ad-
ditional vehicles. We also un-
dertake all customs clearance
and transportation of materi-
als for those mentioned and
other main clients, which is a
major challenge. Meanwhile,
we have successfully finalized
negotiations for the trans-
portation of equipment to a
gas plant in Ressano Garcia.
a local force
TBY talks to Joo Chiboleca, Managing
Director of Globo Distribuidora, Lda, on the
strategy of pursuing sustained growth and
client diversification.
Additionally, we provide all
logistics and transportation
services for one of our main
clients, ELTEL NETWOKS,
which is constructing a high
voltage power line from Res-
sano Garcia to Morrumbe-
ne. We are still looking for
new opportunities, but our
core business is international
freight forwarding, global lo-
gistics and transportation of
any of non-prohibited cargo
into and out of Mozambique,
as well as in-transit cargo to
and from Malawi, Zambia &
Zimbabwe via Beira and Cu-
chamano Border.
How many TEUs are you moving
a year?
In 2011, the number was at
1,220 TEUs but in 2012 de-
clined to around 800 TEUs.
In 2013, we faced substantial
losses due to instability in the
central provinces of Mozam-
bique, as a result of which
we lost significant business,
although in 2014, we saw re-
covery. I believe that we will
reach 1.500 containers by the
end of the year, while in 2015
the figure will likely double
to 2,000 TEUs, mostly due to
trans-clearance. For example,
while overseas recently we se-
cured a new contract for the
transit clearance and trans-
portation of goods in transit
via Maputo, alone amount-
ing to about 900 containers,
and we have a further 500 to
Mozambique to be handled
shortly. This single project
for the high voltage conces-
sion line alone is estimated
at 700-800 TEUs, and for the
same project we have handled
about 150 TEUs already.
What sectors do you work more
extensively with?
At the moment, we are aim-
ing at local projects with the
Mozambican governments
Transport
Ministry of Science and Tech-
nology (MCT). This concerns
the improvement of rice and
maize production in Mapu-
to Province, Mania Province,
Sofala Province, Tete Province
and Nampula Province. In
general we consider the ag-
riculture, mining, power and
energy sectors to see the most
prominent growth, naturally,
aside from the oil and gas.
Which are Mozambiques key
trading partners?
South Africa is the biggest in
the region, while overseas Chi-
na is one of the most promi-
nent investors, in addition to
India and Vietnam. In Europe,
we trade with Portugal among
other countries. Two or three
French companies are active
in the hydroelectric sector
and we rank among their ser-
vice providers. Meanwhile, we
also work with Norway and
Denmark.
What is the potential for Mo-
zambique to become an interna-
tional hub in Southeast Africa?
The recent discoveries of nat-
ural resources like the min-
erals in Tete, as well as the
discoveries of gas and oil, as
well as marble, heavy sands,
Graphite and other minerals
make Mozambique highly at-
tractive, and one of the fast-
est-growing countries in the
region. As long as there is po-
litical stability, we expect the
economy to experience rapid
growth.
How would you describe Mo-
zambiques business climate
in terms of establishing a new
company?
Todays environment is better
than when we established our
company years ago. Related
procedures have been sim-
plified in the wake of exten-
sive reforms the government
THEBUSINESSYEAR 105
INTERVIEW
has implemented to expedite
company registration. The
Ministry of Trade has been in
regular contact with the pri-
vate sector through the Con-
federation of Business Associ-
ations of Mozambique (CTA).
What are your goals for the
coming five years?
If business goes according to
plan, we intend to rank at least
among Mozambiques top ten
logistics companies. We plan
to purchase around 10 trucks
in 2015, which would ulti-
mately reduce our costs and
boost profitability.
BIO
Born in Mozambique, Joo
Chiboleca has experience
in international freight
forwarding, logistics and
transport dating back
to 1985, and received
professional training
in London, UK in 1990.
Before establishing a joint
venture with his brother
in 2008 he had worked
for Mozambiques first
International Freight
Forwarding State Owned
Enterprise of independent
Mozambique, Mocargo
(privately owned since
1995), ultimately becoming
a National Import & Export
(Mofrete) Business Unit
Manager, and subsequently
Business Development
Manager until mid-2008
before resigning from that
company.
106 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS THE MAPUTO-CATEMBE BRIDGE
A TALE OF SUSPENSE
An iconic structure, ACCORDING to World Bank data, Mozam-
the Maputo-Catembe biques road density per land area is low at
46m/sqm. Whats more, of Mozambiques to-
Bridge is another tal road network, only 6,000km are paved. The
shining component remaining 31,000km thus spell an opportunity
of Mozambiques for the many local and international engineer-
comprehensive ing and construction companies that are com-
peting for tenders in the country.
infrastructure One of the latest companies wining a high-
overhaul. ly interesting project is the China Roads and
Bridges Corporation (CRBC) awarded the con-
struction of an engineering structure that will
become the largest suspension bridge on the
African continent, and among the top 50 in
the world. This bridge will link Mozambiques
capital with Catembe, on the other side of
Maputos bay. The first stone of the Mapu-
to-Catembe Bridge was laid at the end of 2012,
but it was only in 2014 that construction prop-
er began. The total cost of the project is $725
million, $681.6 of which was funded by a loan
guaranteed by the China Export Import Bank
(ExIm). The government of Mozambique will
have 20 years to repay the loan at an interest
rate of 4%, which is why the future bridge will
Image: Andrew Moir
have four tollbooths to contribute towards re-
payment for the state of the art infrastructure.
The project includes a northern viaduct of
1,097m, a south viaduct of 1,234m, and the
bridge itself of 680m in length, standing 60m
over the water. The project entails a total of
around 3km of road with a two by two lane of
20.88m in width. The two bridge towers, each
of 137m in height, have been designed so as
not to interfere with maritime navigation in
the bay. The works should be completed by
the end of 2017 and will allow the expansion
of the already congested Maputo city toward
the south. In fact, Catembe could see tenfold
growth in population over the next 10 years
with the strategically demarcated urban proj-
ects expected to see development. This in-
cludes 3,200ha of residential area, a logistic
platform of more than 1,000ha, green area of
over 1,500ha and 500 hectares for touristic use
near the Indian Ocean.
As important as the bridge itself, is the road
network that will be developed within this
project, also by CRBC. New roads of more than
200km in length will link Bela Vista with Boane

LUS JUNAIDE I. LALGY
Managing Partner, Lalgy
Transportes
Lalgy Transport is a family-owned
Mozambican company that is part
of the Lalgy Group, engaged in the
transport, construction, and trading
sectors. Lalgy Transport started
its activities in 1992 just after the
civil war, at a time when the entire
road network had been destroyed,
which meant huge demand for
transportation to deliver aid to the
public. Our first client was the UN
Welfare Program, which was realizing
considerable food aid delivery. Today
we operate 700 trucks and 75% of
our revenue derives from mining
cargo contracts.
Rua Gago Coutinho, Terminal de Carga,
No. 55, Aeroporto Internacional de Maputo
T +25821467910 | F +25821467909
geral@worldespachos.com
www.worldespachos.amawebs.com
Transport THEBUSINESSYEAR 107
and Catembe with Ponta d'Ouro, one of the As important as the
favorite weekend destinations of Maputo res- bridge itself, is the
idents. This route, which takes about 4 hours
road network that will
today, could be halved once all infrastructure
is in place. This new road network will also fa- be developed within
cilitate the route Maputo-Durban, improving this project, also by
communications between Mozambique and CRBC. New roads of
South Africa. more than 200km in
According to an IMF publication Mozam- length will link Bela
bique Rising, Mozambiques ability to ac-
Vista with Boane
celerate growth through infrastructure in-
vestments to a large extent will depend on and Catembe with
the quality of that infrastructure. In Mozam- Ponta d'Ouro, one of
biques case this is especially important as the favorite weekend
most of the infrastructure being built in the destinations of Maputo
country is regularly destroyed by flooding. To residents.
avoid these problems and guarantee quali-
ty, the Catembe bridge is being supervised
by German engineering company GAUFF,
contracted to act as consultant for the quali-
ty control of the construction of the bridge as
well as the link roads. In a conversation with
TBY, Toms Frade, Vice Branch Director of
GAUFF in Mozambique showed his satisfac-
tion at participating in one of the most signifi-
cant infrastructure projects in the country. To
perform their operations they have an experi-
enced team in Mozambique that hails from all
over the world, and that will ensure the bridge
is built according to the strictest standards.
Detractors may argue that the government
could allocate related revenue elsewhere as
the crossing is covered by regular ferry service.
Nonetheless, the Maputo-Catembre Bridge
will stand as a functioning symbol of Mozam-
biques drive to develop communications,
connectivity and commerce.
YOUR FIRST CHOICE
IN LOGISTICS
Agncia de Despachos Aduaneiros
108 THEBUSINESSYEAR MOZAMBIQUE 2015

INTERVIEW

SETTING SAIL
TBY talks to Alexandre Franco, Managing
Director of Transitex Moambique, on setting
up in the country, cargo volumes, and plans for
the coming decade.
When did Transitex arrive in
Mozambique and how has it
evolved since then?
We were established in Mo-
zambique in 2009, starting in
Maputo, and over those five
years, have already expanded
to new branches in Beira and
Nacala. Today we have three
branches in Mozambique, and
also have a presence on the
main borders of the country.
What is the significance of the
Mozambican market for your
company?
It is highly important as Mo-
zambique enjoys commercial
relationships with Portugal,
Spain, and Italy, where we
have our offices. This enables
us to offer our clients door-
to-door services.
What are your expansion and
development plans?
Our plan for 2015 is to open
an office in Pemba because
we already have some busi-
ness and our own people
present there. We would like
to capitalize on the opportu-
nities of the oil and gas indus-
try, perhaps as an auxiliary
company to render customs
and related issues easier. We
offer a full service from door-
BIO to-door. In Mozambique, we
In land transportation from
South Africa, for example,
we also grew 12%, and ex-
pect further growth. We are
negotiating some new proj-
ects and anticipate sustained
growth next year. We will be
pursuing additional business
from Zimbabwe, Malawi, and
South Africa, using Mozam-
bican ports (mainly Maputo
and Beira) to ship those car-
gos to other countries. Also,
we will be thinking about new
warehousing in Nacala and
elsewhere. Importing cargo
will be crucial for 2015. We
are trying to enter the fertil-
izer sector in Malawi. There
is a huge amount of cargo
coming through Mozam-
bique and going to all those
other countries that do not
have direct connection to the
ocean. We have been doing
normal cargos, containers
and projects, but next year,
our main plan is to capitalize
on geostrategic location to
promote using Mozambican
ports to put cargo into other
countries. Mozambique will
be used to improve the hin-
terland. Most of the cargo
that goes to Zimbabwe and
Malawi use Beira Port, so we
need to capitalize on clients
in Zimbabwe and Malawi and
What is your 10-year outlook
for the future of the company?
Transitex has grown, not just
in Mozambique. We are try-
ing to expand Transitex to
some countries here in Afri-
ca and in South America. We
are supposed to increase our
business in Mozambique,
and also globally, by at least
15% this year. It is hard work,
but achievable. Currently,
our overall African operations
represent 25% of total global
operations and we are aim-
ing to lift this to 30% in 2015.
We opened in Angola and we
have a new branch manager
there. We hope that we will
grow very fast in Angola. We
already have a number of
business and partnerships
established there.
IN NUMBERS
Transitex
Moambique
Expecting a

Alexandre Franco was born
in Portugal. He studied
marketing and publicity
at Instituto de Artes
Visuais, Design e Marketing
(IADE) in Lisbon. He joined
Transitex in 2002 and was
in charge of the Valencia
Branch in 2012. He arrived
in Mozambique almost
operate at all the ports and
airportsNacala, Nampula,
Beira, Pemba, Quelimane,
and Maputo.
How would you describe the
growth of the company over the
past year?
We are moving 2,500 TEUs
a year, although the volume
has been growing over the
15%
promote this port. There is
much happening there.
What are the main countries
growth this year
conducting international trade
with Mozambique?
Those are South Africa, Por-
tugal, Spain, Italy, and China.
We have noticed consider-
Opening an office in
able growth in the cargo from
Pemba in
Italy and China and last year,

two years ago where he is
Managing Director.
2015
past years. In terms of air- we opened two offices in Italy
freight, we grew 25% YoY and this year we will open a
and in sea freight, we 10%. Shanghai office.

NICK
OF
time
TBY talks to Jessy
Sitoe, Managing
Director of Expresso
Carga e Servios (ECS), ket and our client base, the
on plans for the short
term, competitive
advantage, and
government reforms
of the sector.
BIO
Jessy Lurena da Silva Sitoe
graduated in Business
Management from
Universidade Politcnica DHL, FedEx, or UPS?
(ISPO) in 2009. In 2011
she joined ECS as Credit
Supervisor and was
promoted to Administrator
in 2013.
What short-term priorities have
you set for ECS?
Over the next two years, giv-
en the demands of the mar-
objective is to extend our
operational footprint to all
provincial capitals, including
their respective districts to en-
able the delivery of the goods
without the client needing to
visit our head offices. Expres-
so Carga e Servios has always
embraced market challenges,
and in this spirit and accord-
ing to our motto for you, we
reach further, our services
cater to foreign companies
operating in Mozambique,
and have a nationwide reach.
What is your assessment of the
potential for further growth of
the national transport and logis-
tics sector?
Our evaluation of the trans-
port and logistics sector is
broadly is positive, as national
development supports sec-
tor growth. Given the sectors
development in Mozambique
and our objective of expan-
sion, for the next two years we
will pursue partnerships with
suitable foreign companies
active in the sector.
What are the comparative ad-
vantages of ECS over other in-
ternational companies such as
ECS was created with the
objective of galvanizing the
sector and further supporting
the development of transport
and cargo delivery in Mozam-
bique. The advantages of ECS
Transport
when compared to our com-
petitors, is our total commit-
ment to the cargo entrusted
to us. We focus on pick up
and door-to-door delivery
within cities and districts, in-
cluding at weekends and on
bank holidays.
What are the likely coming
trends within Mozambiques
transport and logistics industry?
Operational efficiency tops
the sectors agenda, with the
two ends of the scaledemand
and supplyand dedication
to yielding the excellent re-
sults at the best prices, which
will revitalize the sector.
How would you characterize
the importance of an efficient
transport network for the suc-
cessful development of the Mo-
zambican economy?
An efficient transport net-
work for the development of
the Mozambican economy is
of great importance for the
economic development of
Mozambique mainly due to
the positive spillovers that the
sector creates. The infrastruc-
ture created by the invest-
ment on the transport sector
fosters high economic activ-
ity. Mozambican businesses
are increasingly confident in
the improvement of the com-
mercial environment. Their
general optimism is driven
by the changes introduced
by the government aimed at
improving it further by scrap-
ping the rules regarding the
minimum capital demand
and bank deposits, and the
THEBUSINESSYEAR 109
INTERVIEW
Will extend
coverage to all
provincial capitals
Supports the
development
of cargo and
delivery services
approval of the new code on
fiscal benefits. The changes
also include the introduc-
tion by the government of
the simplified tax regime for
small contributors and the
simplified licensed regime,
which enables the immediate
issuing of licenses to operate
a business.
What is your outlook for the
company over the coming de-
cade?
One of Expresso Carga e
Servioss core goals is to be-
come internationally recog-
nized over a 10-year horizon
as the company of choice for
any kind of cargo. We are keen
also to establish lasting part-
nerships with companies op-
erating in our sector around
the globe to provide the most
reliable cargo service for our
long-term clientele.
110 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
CUSTOM-MADE
SERVICE
TBY talks to Julio Pedro Sitoe, Administrator
of World Despachos, on geographic coverage,
innovation, and challenges in the market.
How has World Despachos developed its busi-
ness since its establishment in 2012?
The World Agncia de Despachos Aduanei-
ros e Servio LDA is a Mozambican company,
founded in 2012 by a Mozambican national,
and has a large domestic footprint as well as
international experience. Strength, trust and
service quality are the main pillars of the com-
pany, and our primary objective is to create
value for customers and other involved stake-
holders. In order to achieve this, the compa-
ny relies on the motivation and capacity of its
technical staff, supported by a continuous and
quality induction of its people and focused on
the establishment of a relationship of trust,
responding innovatively to the most complex
challenges.
In which regions do you operate today?
The World Agncia with its staff of 14 is located
at Maputos international cargo terminal, and
we support our customers in activities such as
customs clearance, and procedures related to
import and export. The technical capabilities
of our staff ensure we have become a reference
name in the sector.
World
Despachos
How do you incorporate innovation into your ser-
vices?
Created in 2012
Our extensive experience in the processes of Uses the
importing and exporting goods provides the
company with the knowledge and expertise
MCNET system
to execute a swift clearance process. It is the
companys aim to have the clearance process
concluded prior to the arrival of the goods
to its point of entry, be it by land, sea, or air.
World Agncias client portfolio is testament
to our ability to realize its objectives and over-
come any challenges that may arise, assuring
service excellence for the client, from the de-
velopment of new solutions to the usage of the
new MCNET system. Innovation is a tool that
lends a competitive market, which underpins
steady growth. The company systematically
works to improve its services, offering a broad
range of integrated solutions and a continuous
commitment to competitiveness, quality and
innovation. And as we continue to expand and
reinforce our presence, we become more ac-
cessible to clients, while actively contributing
to the development of Mozambique. The com-
pany relies on a qualified and multidisciplinary BIO
technical team and has installed sufficient ca-
pacity to address any query related to the cus- Julio Pedro Sitoe, graduated
toms clearance process. From our offices at the from the Teacher Training
cargo terminal we mobilize our own transports Institute and went on to
and goods delivery service upon the customs teach from 1982 to 1987.
clearance, wherever the client requires this He joined DHL International
service. Express in 1989 where
he remained for 24 years,
What are the most common issues faced by com- and later graduated as a
panies when entering the Mozambican market? Customs Broker. In 2011 he
The lack of skilled workers remains a challenge, founded the World Customs
and the effort to develop the talent and techni- Clearance Agency and
cal skills can be frustrating if the competition Services, of which he is now
poaches your staff. You need to preserve and Administrator.
also to be flexible and try new approaches.
 THEBUSINESSYEAR 111

115 117 122

Pedro Ramos, General Director Rui Carrito, CEO of Soares da The 25,000-ha area of Palma is
of Tovisi, on the Gorongosa Dam, Costa, on developments across one of the first projects planned
dealing with competition, and the country, and distinguishing to develop the gas-rich region of
plans for the company's future. operations from competitors. Northern Mozambique.

Construction & Real Estate

REVIEW CONSTRUCTION

Fuelled by an average annual growth rate of over 7% in recent years,

Mozambiques construction sector is flourishing.

STRONG
FOUNDATIONS
T
he construction
sector grew by
nearly 10% and
contributed some
3.5% to GDP in 2014, accord-
ing to BMI Research in its 2015
Mozambique Infrastructure
Report. There is an estimated
$30 billion worth of infrastruc-
ture projects in the pipeline.
Still, BMI expected sector
growth to slow down to some
6% in 2015 and an annual av-
erage of 4.3% over the next de-
cade. BMI has warned that the
governments growing budget
deficit could limit future fi-
nancing.
The budget deficit de-
creased from 4.1% of GDP in
2012 to 2.9% in 2013. But in
2014 the budget deficit is es-
timated to reach double dig-
its () and push public debt
from 41% of GDP in 2013 to
47% of GDP, driven by high-
er spending on infrastructure
and security, the Rabobank
Mozambique Country Report
concluded in November 2014.
While Mozambique may
face some financing restraints
in the short term, the coun-
try, blessed with some of the
worlds largest gas and coal
reserves, seems to have a glori-
ous future in the long term. To
accelerate growth and further
attract foreign investments,
the government has ear-
marked improving the coun-
trys ailing infrastructure as a
key priority.
Small wonder, as the World
Economic Forum in 2014
ranked Mozambique 126th in
the world in terms of the qual-
ity of its infrastructure. The
country, for example, has only
three major ports, and two
main railways, while up to 80%
of its roads remain unpaved.
In contrast with the state-led
economy of yesteryear, Mo-
zambique since 1992 has in-
creasingly embraced private
initiatives and public private
partnerships as a means to
move forward and build any-
Source: Andrew Moore thing from dams and electrici-
ty plants to factories and ports.
MEGAPROJECTS
The government is keen to improve the Investment, especially in
countrys ailing infrastructure, while a megaprojects, boosted growth,
series of new megaprojects that has been accounting for an estimated
2-4 percentage point increase
launched has made the capital Maputo in growth in each year of ac-
look like a giant construction site. tive construction, the IMF
112 THEBUSINESSYEAR MOZAMBIQUE 2015
Improving the countrys
infrastructure, however, is not all
about transport. On August 22, 2014,
the government signed two contracts
worth some $1.6 billion to construct
dams on the Zambezi River to
generate over 800MW of electricity.
concluded in its 2014 Mozambiques Growth
Experience report. In 1993, Mozambique in-
troduced a law offering attractive tax incen-
tives and other benefits to such large-scale
investments.
The tone was set in the late 1990s by South
Africas Trans-Africa Projects rehabilitation
of the Cahora Bassa hydropower station, BHP
Billitons construction of the Mozal aluminum
smelter, and Sasols development of the Te-
mane gas field. These projects showed foreign
investors that Mozambique, after years of war,
was a safe destination. The coming wave of
megaprojects is mainly related to infrastructure,
mining, and energy.
One issue facing the country is how to cost-ef-
fectively transport and market its many natural
resources. For example, a study is underway
regarding the construction of a $6 billion gas
pipeline to South Africa. To boost the countrys
coal export capacity to some 80 million tons
annually, the government in 2013 signed a $4.5
billion contract with Italian-Thai Development
(ITD) to construct a 537km railway line from the
Moatize mines to a new coal terminal in the port
of Marcuse.
The project is facing some financing issues
due to a decline in the global price of coal. Nev-
ertheless, the Brazilian mining company Vale
is pushing ahead with its $4.5 billion project to
construct a 900km railway from the Moatize
mines to Nacale port. In December 2014, the
Japanese firm Mitsui agreed to invest nearly $1
billion in Vale, of which $313 million were ear-
marked for a stake in the Nacala rail and port
project.
One of the biggest projects on the horizon
is the Palma City of Gas. Situated on the
north-eastern coast, this tiny fishermens town
is to become the beating heart of the gas indus-
try that will tap into the offshore Rovuma Basin.
The projects price tag amounts to $50 billion, as
drilling wells and building two LNG plants alone
could cost up to $16 billion. The future city will
be home to some 250,000 people.
Improving the countrys infrastructure, how-
ever, is not all about transport. On August 22,
2014, the government signed two contracts
worth some $1.6 billion to construct dams on
the Zambezi River to generate over 800MW of
electricity. And a consortium of Korean firms
is to complete the construction of the 600-bed
Quelimane Central Hospital in 2015, as the gov-
ernment is well aware that infrastructure has a
social component too.
The United Nations Conference on Trade
and Development (UNCTAD) in 2011 published
an investment policy review on Mozambique,
in which it praised the role megaprojects had
played in kick-starting the countrys economy
following years of war. However, it also warned
of a lopsided economy.
The regulatory bias in favor of mega-projects
(unintentionally) crowds out smaller invest-
ments, according to James X Zhan, Director
of the UNCTAD Investment and Enterprise Di-
vision. Small to mid-sized investments could
contribute more meaningfully to achieve social
objectives such as creating employment and
distributing economic activity more widely.
UNCTAD recommended Mozambique to lev-
el its regulatory playing field" to also encourage
smaller investments that could be beneficial to a
much larger part of the population.
TOWERING MAPUTO
Symbolic for Mozambiques towering ambitions
is the construction of the bridge across Maputo
Bay blessed with the largest single suspended
span on the African continent. The $725 mil-
lion project, which includes the construction
of the Maputo Ring Road (ECM), was largely
funded by loans from the China Export-Import
Bank. A Chinese firm has nearly completed the
74km road network, while construction of the
3km-long landmark bridge is set to start in 2015.
Another major project in the capital is the $500
million expansion of Maputo port.
Mozambiques rapid growth and spur in in-
vestments have attracted scores of migrant
workers, both from rural areas and abroad. Most
head to Maputo and its surroundings. Current-
ly, Maputo and neighboring Matola are home to
some 2.5 million inhabitants, which is expected
to increase to over four million by 2025. As a re-
sult, the capitals skyline is being transformed
into a silhouette of high-rise residential and
commercial towers.
The high-end property market in particular
has witnessed rapid growth. Maputos Polana
Canio district, for example, is now home to a
thriving expatriate community. Rental pric-
es have doubled in recent years. The rent of a
3-bedroom apartment amounts to an average of
$3,000 a month or more, while purchasing the
same property may cost $500,000.
To meet the growing demand for luxury
housing, dozens of projects are under construc-
tion. A typical example is the $45 million Ma-
puto City Tower. Construction of the 27-story
building offering 135 luxury apartments, as well
as office and retail space, started in April 2014. A
partnership between the governments Housing
Promotion Fund (FFH) and Dubais Signature
Group, the tower is set to be completed within
30 months. Signature Group in 2014 also start-
ed construction of some 1,200 homes in Chiuba
Village in Pemba.
It should be noted, however, that most
housing construction in Mozambique is of an
informal nature. Some 75% of the urban popu-
FERNANDO
FREITAS
Administrator,
Somague
Moambique
Can you elaborate on your
projects with Vale?
Our current project is a 600km
railroad track between Malawi
and Nacala, where we have
been awarded two large con-
tracts for two sections of the
line. The first runs from Malawi
to Nampula, and is a complex
section, while a second runs
from Nampula close to Nacala.
The contract is worth $220
million, and we have completed
about 25% of the line extension.
We expect to complete the
project by the end of 2015.
What is your short-term
outlook for the company in
Mozambique?
Our target is to grow, which
should be a natural progression
as we are just starting out. That
being said, it is rather difficult
to speculate as global events,
such as oil price fluctuations
determine local outcomes. In
Mozambique business needs
to be realized within a certain
timeframe to be profitable.
Meanwhile, the regulatory
framework needs to take a
definitive shape to effectively
accommodate new natural
resource discoveries. All of
these fundamentally important
factors render prognostication
difficult.
 Construction & Real Estate THEBUSINESSYEAR 113

Um Mundo de Inspirao

Viver Moambique
construindo o futuro

Presente em Moambique h mais de 22 anos, o Grupo Mota-Engil tem vindo a implementar um percurso de expanso a par
e passo com o crescimento do prprio pas.
Responsvel pela execuo de vrias obras pblicas de referncia nacional como a Ponte sobre o Rio Zambeze, Obras
Sociais realizadas para a Fundao da ENI em Palma e Pemba ou a concesso das estradas do Zambeze o know-how
e capacidade tcnica demonstrados num vasto porteflio tornam a Mota-Engil numa empresa de referncia em reas
de negcio to diversificadas como Engenharia, Construo, Ambiente e Servios e Concesses de Transportes. Desta forma,
a Mota-Engil contribui ativamente para a evoluo da economia e bem-estar das populaes locais.

www.mota-engil.co.mz

ESTRADA DO CHIMOIO CLNICA DE PALMA (ENI)

LINHA DO SENA II ALDEIA OLIMPICA

EDIFCIO PLATINUM ECOLIFE

Ponte Kassuende
114 THEBUSINESSYEAR MOZAMBIQUE 2015
lation lives in so called bairros, which are ex-
tremely basic concrete shelters. In rural areas
many people still live in straw huts. In order to
create a more mature market, it does not help
that the credit market as a whole, including
mortgage and construction loans, remains un-
derdeveloped.
MARKET STRUCTURE
The informal nature of most housing demand
is mirrored in the markets supply side, which
consists of both formal and informal operators.
The latter dominate the housing market, while
the formal market for mega projects and build-
ing materials is largely in the hands of a few large
foreign companies from Portugal, South Africa,
China, and Italy. One of the few major domestic
players is the formerly state-owned firm CETA.
In 2012, the International Growth Center
(ICG) published a white paper on the construc-
tion sector concluding that the domestic indus-
try had hardly been able to break into the formal
market. It even stated that the current construc-
tion boom may represent a lost opportunity
for the countrys construction sector.
The supply response by domestic construc-
tion firms and the overall building materials
industry remains weak, the ICG wrote. The
demand for construction services is generally
undertaken by foreign construction firms in
view of their size and experience in internation-
al markets, while construction materials and
other related inputs are generally imported. As
a result, relatively few Mozambican firms have
entered the market, and those that have typical-
ly end up performing low value-added works.
Causes include: weak credibility due to the
lack of experience and track record, multiple
and lengthy bureaucratic procedures concern-
ing state ownership of land and construction
permits, limited access to credit, limited use
of modern technology, and a lack of qualified
manpower.
Another characteristic of the market is that,
despite the relatively low cost of labor, the total
cost of construction is relatively high. According
to the ICG, construction costs in Maputo in 2012
were on average over 30% higher than in South
Africa. Material costs account for over 50% of
the total costs, as most valuable materials need
to be imported. For high-end construction
nearly 90% must be imported. Only basic mate-
rials, including cement and wood, are produced
locally.
Regarding cement, Mozambique is home to
a number of manufacturers with a combined
output of some 1.2 million tons in 2012. As TAUFIQUE
consumption in 2012 amounted to some 1.6
million tons, the country still relied on imports.
LANGA
Cement consumption is projected to increase Country Manager,
by a compound annual growth rate of 10.7% Afrigrown
between 2012 and 2017, the research firm CW
Group concluded in 2013. We offer companies
The government has responded by the con- procurement services.
struction of new production units, while it is We have relations with
pondering the introduction of an import quota certain South African
system to protect local operators. Illustrative companies and industries
for the promising market prospects in years to
that produce some of
come is Germanys HeidelbergCement AG, Af-
ricas 4th and the worlds 3rd largest producer, the tools our clients
which on March 5th, 2015, announced that it is require in Mozambique,
considering an investment in Mozambique and which enables us to
South Africa to meet growing demand in the offer competitive prices.
whole of southern Africa. We not only undertake
With an eye on the overwhelming presence
of mineral and energy resources, as well as the
the procurement, but
infrastructure needed to properly exploit them, also the logistics as
the Mozambique building boom is likely to con- an intermediary. Our
tinue for some years to come. This includes an clients include Vale,
increased demand for high-end residential and Kenmare, and Stefanutti
commercial property. On an institutional level,
Stocks, and we are
lengthy procedures and red tape remain subject
to improvement, while for the domestic sector in negotiations with
to profit from the building boom, better educa- Anadarko and Minas
tion and vocational training is required to im- Moatize, and also in talks
prove the quality of manpower. with Soares da Costa.

all in one
TBY talks to Pedro Ramos, General Director of
Tovisi, on the Gorongosa Dam project, dealing
with competition, and plans for the future of
Can you provide an overview of
the operations of Tovisi in Mo-
zambique?
Tovisi is a construction com-
pany that has been operating
in Mozambique since 2010.
Work began proper in 2011
with a medium-sized energy
project for EDM through Por-
tuguese company EFACEC.
Since then, we have experi-
enced rapid growth and today
have become one of the larg-
est construction operations in
Mozambique. The sharehold-
ers are 100% Portuguese, but
ours is a Mozambican com-
pany nonetheless and head-
quartered locally. And while
all construction and opera-
tions are in Mozambique, we
are expanding to other African
countries such as Zambia and
Zimbabwe.
What are your main achieve-
ments in the Gorongosa dam
project?
The Nhandale River Dam is a
medium-sized dam located
in central Mozambique, in
Gorongosa. It was originally
studied for water supply, but
once we won the project, we
transformed it and are now
preparing the dam for future
energy production connect-
ed to the national network as
well. Additionally, the dam
will bridge both sides of the
river. This means that with-
in the same cost at which
we won the tender, we will
be providing water, power,
and transport infrastructure.
Construction of this contract
of around $10 million has
now commenced. We expect
the company.
to conclude all the works in
September of 2015. We are
the main contractors, but for
the mechanical and electri-
cal components, we will sub-
contract to other companies,.
The project will employ over
200 workers onsite, but on a
broader scale, around 10,000
locals stand to benefit from it.
Meanwhile, local agriculture
also stands to benefit from
new water infrastructure that
will meet the requirements of
the industry.
How would you describe your
largest project, namely the
headquarters of the Ministry of
Natural Resources?
We won the project in a pub-
lic tender early last year. It is a
comprehensive contract that
includes the procurement of
the plot, as well as the design
and construction. The design
stage, realized by our partner,
the architect Ricardo Maia
Moura, is now complete and I
am confident that our scheme
will come to be an architectur-
al icon in Maputo. The project
features a 15-story building
with a 360-degree tower of
glass that changes color. The
concept involves a symbolic
crystal with interior lighting,
the color of which changes
to represent the various min-
erals found in Mozambique,
with yellow for lithium, red for
ruby, and so on. The scheme
will also feature a five-story
car park. It depends on sever-
al things, but we expect to be
able to open the building by
the end of 2016. The contract
was for $40 million.
Construction & Real Estate THEBUSINESSYEAR 115
INTERVIEW
How do you differentiate your- IN NUMBERS
selves from your competitors?
We aim at differentiation by
Tovisi
bringing better quality engi-
neering to our schemes. In
terms of our public works, our
40
projects save the government
money for investment in new
schemes. The prime example
of this may be seen in our work
million USD contract
on the dam in Gorongosa. We
for the Ministry of
initially had a design solely for
Natural Resources
the concrete wall and water
supply, but later transformed
it to increase the volume of
retained water by fivefold,
within the same budget. That
is precisely what we mean by
creating value engineering.
Meanwhile, we have another
major project in Beira, which
is a youth resources center
with an investment of around
$4.5 million. We have already
begun work on the three-year
project. Being a public sector
funded scheme, it is divided
into three years. We have al-
ready met the targets for 2014,
and in March we will start our
pursuit of the targets for 2015
and 2016.
What are your five-year targets
for the Mozambican market?
BIO
In terms of construction and
real estate, we intend to see Pedro Ramos was born
a certain measure of growth in Porto, Portugal. He
and will certainly maintain studied Civil Engineering
our construction project vol- at Universidade do Minho
ume. That being said, we are in Guimares. He has been
also investing in other key sec- General Director of Tovisi
tors, such as agriculture and since 2010. Prior to that, he
energy, having already estab- had worked for construction
lished Tovisi Energy. We even companies in Portugal, and
have a new education-related has 15 years of experience
project that we intend to start in the industry.
this year.
116 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
What is the significance of
Mozambique for Mota-Engils
overall strategy in Africa?
Mota-Engil frica is cur-
rently operating in the 11
countries of Angola, Mo-
zambique, South Africa,
Cape Verde, So Tom and
Prncipe, Zimbabwe, Zam-
bia, Ghana, Uganda, and
Malawi, having also recent-
ly been awarded its largest
contract to date; a project
in Cameroon worth $3.5
billion regarding the con-
struction of 580km of rail-
way and a deep-water port.
This project reiterates Mo-
ta-Engils capacity in the
development of integrated
solutions and is currently
on the stage of finalizing its
financing process. We have
been present in Mozam-
bique for over 20 years and
the country is an important
component of Mota-Engil
fricas growth strategy.
Currently Mota-Engil fri-
ca has a footprint in pretty
much all provinces of Mo-
zambique. Furthermore,
we have also participated
in the construction of the
Nacala Corridor in Malawi,
which is an excellent exam-
ple of our technical capaci-
ty with regard to projects of
such dimension. This year,
Mota-Engil frica Mozam-
bique, has obtained certi-
fication for the design and
construction of engineering,
infrastructure and build-
ing projects, in accordance
with ISO 9001:2008Quality
Control Systems, from the
Bureau Veritas Certification.
solid
FOUNDATIONS
TBY talks to Anbal Leite, President of Mota-Engil
frica Moambique, and Mozambique Country
Manager of Mota-Engil Engenharia e Construo
frica, on the companys projects across the
country and nurturing competitive advantages.
IN NUMBERS
Mota-Engil frica
Moambique
Installed capacity of
500
heavy-duty machines
What are the main infrastructure
projects of Mota-Engil in Mo-
zambique beyond Maputo?
In general, our infrastructure
projects are located beyond
Maputo. We are working on a
range of projects from roads
and railways, to bridges and
ports, which involve challeng-
ing logistics. For example, we
have just finished the Bridge
Base Kassuende over the
Zambezi River (Tete), which
will enable the circulation of
people and goods between
Mozambique and its neigh-
boring countries. We are also
concluding the rehabilitation
of a 228km long road, which
will link Chimoio to the Es-
pungabera border. This road
will foster the development of
the Manica Province and will
have a major impact on the
national economy in general.
Alongside this, we are also in-
volved in railway projects such
as the Sena line, for which
our contribution was of vital
importance in the logistical
challenge of coal transporta-
tion. Furthermore, we are in-
volved in the rehabilitation of
the Cuamba-Lichinga railway
and on the second phase of
construction of the road be-
tween Milange and Mocuba.
We are also involved in several
other infrastructure projects
that aim to support the future
oil and gas activities in Cabo
Delgado.
What are the main real estate
projects of Mota-Engil in the
country?
Apart from projects that we
already have in development,
we will soon start two joint
ventures of around $50 mil-
lion. We are executing a flag-
ship project at the center of
Maputothe Platinum Build-
ing for real estate developer
Promovalor, a prestigious
project that will be finished
within a particularly short
timeline of 20 months.
What is your strategy to set
yourself apart from your com-
petitors?
We do not believe in economic
success if it is not coupled with
technical success. Our size,
best practices, and technology
represent our huge potential.
One of our steps towards dif-
ferentiation was the recently
obtained ISO 9001:2008 qual-
ity certification. In particular,
due to the fact that we are the
first civil engineering company
in Mozambique to attain this
qualification. Our unparalleled
experience in the construction
of ports and railways is one of
the factors that differentiates
us from our competitors, as
well as our expertise in pre-
cast, concrete, dams, railways,
roads, bridges, and civil con-
struction. which are all well
documented and available for
consultation. Currently, we are
investing in the development
and training of our national
co-workers with projects such
as Crescemos Juntos (Grow-
ing Together) and StartME
Mozambique. The Cresc-
emos Juntos project is a tu-
torial project where our most
experienced foreign co-work-
ers take responsibility for de-
veloping core competencies
of our local co-workers, build
leadership skills, and increases
the level of cultural awareness
within our group. The StartME
project is a program for young
graduates, where 20 Mozam-
bicans are currently enrolled
in induction. Mota-Engil fri-
ca Moambique currently has
over 2,000 co-workers and
an installed capacity of 500
heavy-duty machines, allow-
ing us a quick response and
the fulfillment of deadlines in
accordance with national ne-
cessities.
BIO
Having worked at Mota-
Engil for 32 years, Anbal
Leite has been the
Mozambique country
manager of Mota-Engil
frica since 2012 and
President of Mota-Engil
frica Moambique,
Ltda. since 2014. Prior to
holding these positions, he
was Managing Director/
Administrator of Mota-Engil
Beto e Pre-fabricados,
Maprel and Qualibeto,
Concrete Manager in
Mota-Engil Engenharia e
Construo, Member of
the Administration Board
of Mota-Engil Indstria e
Inovao, and member of
the administration board of
Mota-Engil Africa. He holds
a degree in Civil Engineering
and has had several training
classes in Advanced
Management in EGP and
AESE.
 Construction & Real Estate THEBUSINESSYEAR 117

INTERVIEW

TBY talks to Rui Carrito, CEO of Soares da

Costa, on the restructuring of the company,
developments across the country, and
distinguishing operations from competitors.
What is the result of the compa-

QUALITY
nys recent restructuring?
In 2013, we were a group of
companies operating under
the Soares da Costa name,

active in the areas of construc-
tion, concessions, real estate,
and energy. In February 2014,
we split the business such that
today construction is under
Soares da Costa, while the
other businesses are under
SDC. The main difference is
that we have a new share-
holder, namely Antonio Mos-
quito, who is engaged on the
construction front. We run
construction operations in
Portugal, Brazil, Angola, Mo-
zambique, Oman, Romania,
and So Tom and Prncipe.
Currently, we are focused on
construction in Africa.
What is the significance of Mo-
zambique for Soares da Costa?
In Africa, Angola is the main
market, and Mozambique is
in second place. This year we
expect a turnover of around
$100 million, historically the
strongest performance in Mo-
zambique since the company
delivered
What is the status of your de-
velopments in Tete?
We are close to completing
two projects, one being a
bridge over the Zambezi Riv-
er. The bridge itself is already
complete, and we are now
working to develop access
routes. By the end of October,
we expect to have opened the
new Armando Emlio Guebu-
za Bridge to traffic. Another
project we recently under-
took involved hooking a VIP
Hotel, a Portuguese chain,
in Tete up to the grid. The
company is one of our most
important clients. We have
worked with them in Maputo,
and we have another ongoing
project in Beira.
What is your strategy for distin-
guishing Soares da Costa from
your competitors?
We have two different types of
business in Mozambique: civil
construction, involving hotels,
schools, hospitals, and hous-
ing; and infrastructure, involv-
ing dams, roads, and airports.
We are the only company that
can run such a wide range of ence, and people from Portu-
projects, ranging from just
$500,000 to $150 million in
value. And that is because we
have different teams for small
and large projects. In our first
project in Songo, a village
near the Cahora Bassa dam,
we built 50 houses for Hidro-
elctrica Cahora Bassa, anoth-
er one of our big clients. This
was our fourth or fifth project
with it and worth $15 million.
recognized as one of the best
companies in the market for
house or office interiors, as
well as construction. When
construction is nearing com-
pletion we put in one or two
expatriate foremen only to
maintain a high quality level
in detailing. We have all the
right technologies, experi-
gal available for African proj-
ects.
IN NUMBERS
Soares da Costa
Contracts in Nacala for

arrived in 1981. We are now
approximating the kind of
turnover we see in Angola.
Could you elaborate on your
project in the Nacala Corridor?
We have enlarged our contract
with Vale from $30 million to
$60 million. At the beginning
of 2014, we were also awarded
another construction contract
in Nacala a Vella worth $13
BIO
Rui Carrito joined Soares
da Costa in May 2010.
Previously he had worked
for Somague S.A as
General Manager (Dams,
60
The houses were for its techni-
cians. By the end of this year,
we expect to receive one or
two more projects in Tete. To
set ourselves apart from our million USD and
competitors, we try to be the 13 million USD
best among the best. We are
a Portuguese company with
Mozambican values. We cur-
rently have 1,000 employees
in Mozambique and last year 2014 expected
had 700 employees. Around turnover of

million. Vale is our main cli-
ent in Mozambique, and we
are highly committed to the
Nacala project. We expect the
trains to be up and running
through the Nacala Corridor
by the end of this year. Our
first contract with Vale was to
construct new bridges and re-
furbish old ones. Thus far, we
have completed about 50% to
60% of the project. By the end
of this year, we expect to have
completed about 85%.
Tunnels and Light Rail Train
systems), and at Minas
de Jalles SA as General
Manager. He graduated in
mining engineering and
obtained an MSc degree
in civil engineering at the
University of Coimbra,
Portugal. He also completed
postgraduate study in
management at the Catholic
University in Lisbon,
Portugal.
100
8-10% of our employees are
expatriates and the rest are
Mozambicans. We have board
members, engineers, and
million USD
foremen from Mozambique
and run many trainings for
Mozambicans. While our la-
bor force is as good as that of
other Portuguese and South
African companies, our price
is cheaper. Secondly, we de- 1,000
liver a good quality service in employees in
any work related to concrete Mozambique
or civil construction. We are
CMC, since 1901

ONE OF THE LEADING ENGINEERING AND CONSTRUCTION

COMPANIES IN ITALY

Av. Vladimir Lenine Nr. 174, 9, Edicio Millenium Park, Maputo | T +258 21 343 900 | info.cmcrsa@cmcra.com
cmc.cmc@cmcra.com | www.cmcra.com
As you may be aware, CMC was founded
in Italy in 1901 and for many years focused
mainly on Italy, only establishing overseas
operations in 1975. CMC in fact started
working in Southern Africa as early as the
late 1980s with the Piquenos Lebombo
dam in Mozambique.
Having played a key role in Mozambiques
post-conflict recovery through its
execution and rehabilitation of national
infrastructure, CMC Africa Austral has
come to represent one of the countrys
most enduring civil engineering
enterprises.
120 THEBUSINESSYEAR MOZAMBIQUE 2015

INTERVIEW

TBY talks to Enrico Alicandri, Area Manager

of CMC frica Austral, on the companys
broader strategy in the region, major projects
in Mozambique, and its construction materials
business.

WATCH
How would you assess the
growth of CMC frica Austral
in Mozambique since your es-
tablishment?

We started out in the late
1970s but have been here
permanently since 1982.
Since then, we have changed
considerably, as indeed has
Mozambique. We are adapt-
ing our company to the new
Mozambique.
CMC frica Austral is also
present in South Africa, Ma-
lawi, and Angola. What is the
significance of Mozambique for
the overall company strategy?
As the global crisis particular-
ly impacted Europe, especial-
ly Italy, the companys focus
has shifted to overseas proj-
ects. Mozambique remains a
key area for two reasons. One
is historical, as CMC has been
operating here for more than
30 years. The second reason
we remain in Mozambique
is that liquid natural gas
(LNG) is coming online and
the country is experiencing
economic development. We
are operating in South Africa
and have projects in Zambia,
Malawi, Lesotho, and Ango-
la. We are about to start in
Kenya as well and exploring
the market in Swaziland. Yet
What are the main projects of
CMC frica Austral in Mozam-
bique right now?
We have projects with an
average value of $60 million
and we expect to grow con-
sistently by 50% over the
next two or three years. Over
the next three years, a lot of
LNG-related processes are
set to open up. Presently, the
composition of our turnover
is roughly as follows: 50%
infrastructure, 30% quarries
and batching plants, and 20%
civil works, or buildings and
real estate. For obvious rea-
sons, most of the potential
growth the company is going
to experience will be in infra-
structure. Amongst our main
projects, we can mention the
two roads, Montepuez-Ru-
aa and Lichinga-Litunde.
Still, in the public sector, we
will be working in Massingir
for the rehabilitation of the
dams bottom outlet, and in
Pemba we are building a sta-
that scene
What is the significance of the
commercialization of construc-
tion materials that CMC frica
Austral in Mozambique?
Around 30% of our business
is construction material,
meaning aggregates, ready-
to-mix concrete and railway
sleepers. Again, Palma and
Pemba would be the main ar-
eas of interest for CMCAA to-
gether with other areas such
as Nacala, Tete, Maputo, and
Quelimane.
In terms of industrial construc-
tion which companies are you
working with besides Coca-Cola?
Historically, we have most-
ly worked with public sector
clients in Mozambique as
most of our work was related
to infrastructure. Yet today,
with the LNG plants, Palma,
the Pemba port, Vale, and Co-
ca-Cola much of our future
work will most likely be done
for private clients.
best exemplifies the modest
social contribution we have
made in Mozambique.
What are your key priorities in
Mozambique for the next five
years?
We want to register growth
of 50% over the next three
years and to include private
projects in our portfolio. Un-
derpinning this will be our
focus on safety, and we are
introducing safety systems to
Mozambique that we have al-
ready deployed in other coun-
tries, such as South Africa. We
are determined to raise safety
standards in Mozambique to
international standards.
IN NUMBERS
CMC frica
Austral

Mozambique is the key area
for CMC and remains highly
important.
BIO
Enrico Alicandri is
dium. It will not perhaps be
comparable to the Bernabeu
or the San Siro ones, but it
will be a good sports center,
and a good way to establish
our presence in Pemba. It
is our intention to open an
office in Pemba, to allow
us to closely follow the ten-
ders that will be coming out
30
What role does CMC frica
Austral play in socioeconomic
development?
We have witnessed Mozam-
bique grow and develop over years of experience in
the past 30 years. We also ex- the country
perienced the war here, and
we have worked on infra-
structure projects to help the
country rebuild and grow.

Italian and studied Civil
Engineering at Politecnico
di Milano. He has been Area
Manager of CMC frica
Austral since April 2014.
for the different projects in
Pemba and Palma. In Matola
we are building the new Co-
ca-Cola factory and in Nami-
alo the production of the
sleepers for Vale is ongoing.
50%
Over the past 20 years, we
have employed on average
between 2,500 and 4,000 Mo-
zambicans. Today the figure growth forecast over
the next three years
is at almost 3,000 and is set
to rise. I would say that this
 Construction & Real Estate THEBUSINESSYEAR 121

LOCAL CONSTRUCTION FORUM

BUILDING
SUPPORT
A number of accomplished firms offer
construction support in both the public
and private sectors.

ABDUL IBRAIMO ZEFANIAS MUHATE SULEMANE

Administrator, Executive Manager, Lis ABOOBAKAR
MMDConstrues Moambique Director, Fertha
Construes

M L
MD is a family company estab-
lished in 2005. Our first project
simultaneously involved a dem-
olition at the British High Commission and
construction of a six-floor building on Av.
Karl Marx. Since then we have continued
to grow and we have reached the fortunate
stage where, after only six months, we have
projects and clients in excess of our capacity.
With the need to expand came the decision
to purchase another Mozambican com-
pany that had already been operating for
a number of years called JR Construoes, a
move that provided the additional capacity
required to undertake our projects. In 2008,
we faced the same problem on a larger scale
and purchased another company called
PRUMO. The new scale this provided al-
lowed us to bid for jobs that were previously
only awarded to foreign firms, with whom
we are able to compete today. We now have
550 employees and are a major player in the
market, competing with other large-scale
companies. Yet we are not involved in infra-
structure projects, such as roads and bridg-
es, but focus solely on buildings. Clearly the
oil and gas project locations are significant
prospects. We are looking forward to going
to Pemba and Palma, to which I would add,
Nacala, Tete, and obviously Maputo.
is is a small 100% Mozambican
company, and one of our largest
clients since 2010 has been Cidad-
ela da Matola. We developed the environ-
mental project of that area, and today we
are beginning to build the first phase of the
infrastructure project, while supervising the
construction. This project includes a mall,
residential buildings, a hotel and conference
center, and a building for the provincial gov-
ernment, as well as office buildings, a cul-
tural center, and museum. In construction,
we also undertake work for Henan Gou Ji, a
Chinese company engaged on a landmark
project called 5,000 houses. The project is
a joint venture with the Mozambican gov-
ernment's Housing Promotion Fund (FFH),
which is the agency overseeing affordable
public housing. We are interested in work-
ing for the government in all areas related
to construction of buildings, infrastructure,
and civil engineering projects, among oth-
ers. Our first goal from Lis Construction is
to be able to support the LNG-related con-
struction projects taking place in the north
of the country. We are trying to become a
sub-construction company of the large play-
ers operating there. We want to support all
the industries in the north of the country, in
the first phase of construction of their bases,
and so on.
F
ertha Construes is a Mozambi-
can-owned company that we pur-
chased in 2010. The company was
founded in 2005. Since then we have been
working to bring the company to the next
level. We have secured some tenders and we
are growing slowly on the same path of the
national economy. We are a small company
that indirectly employs 110 people. We are
looking to take advantage of all opportuni-
ties emerging in the country, while gaining
scale to a extent to seek potential partners
of greater financial and technical clout. We
tend to join up with bigger companies so
that we can actually cover the country in
different fields, including building roads,
bridges, water sanitation, dams, electrical
power plants, and so forth. We have been
working mostly in the rehabilitation of ex-
isting infrastructure, of buildings, roads, and
some other private projects. Today we are
predominantly focused on rehabilitating
infrastructure such as the central hospital,
or local municipality roads, mostly for in-
stitutions. Most of the work we undertake is
public sector related, in the education sec-
tor, the health sector, and on a municipal
level. At this time the building sector for us
represents about 70% of our work.
122 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS PALMA PARK
Located in the Afungi peninsula, the 25,000-ha area of Palma is one of the
first major projects planned to develop the gas-rich region of Northern
Mozambique.
NEW TOWN RISING
FORTY-FIVE KILOMETERS to the south
of Tanzania in the province of Cabo Delgado
is Palma, a town washed by the pristine wa-
ters of the Indian Ocean, and soon to become
The City of Gas. The countrys massive gas
reserves in the Rovuma Basin, currently being
developed by Eni and Anadarko, have stimu-
lated growth in several sectorsparticularly
real estate and construction. Over the course
of 2014, the Mozambican government already
received about $1 billion in taxes from gas relat-
ed deals, according the Financial Times, along
with rapidly increasing demand for office space
and housing in Maputo in the southern-most
tip of the country. About 2.65km north of the
capital, Palma is currently undergoing its own
a real estate boom, constructing the gas infra-
structure and a brand new, full-fledged city, in
anticipation of the LNG that is expected to be
in production by 2019, from the nearby plant in
Afunga Park.
The government has allotted a total area of
25,000ha for the project, 7,000ha of which have
been allocated to ENI and Anadarko for the de-
velopment of Palma Parks gas production fa-
cilities and related industries that will involve
up to 150 companies in total. The acreage will
include two natural gas liquefaction units, with
its first production activities scheduled for 2020.
Its power plant will have a capacity of 75mW,
and the gas to liquids (GTL) plant will be able
to produce up to 96,000 bpd. According to John
W. Peffer, President of Anadarko, construction
development to date has consisted mainly of
geotechnical work to design the plant, includ-
ing the offshore and near-shore approach of
the pipeline routing to the future marine facili-
ties, and the liquefaction facility. Anadarko has
also recently received approval to start building
an airstrip and has begun working with local
communities and the government to initiate
resettlement activities and housing design. Port
and logistics operations are being conducted
by Portos de Cabo Delgado, which is currently
constructing marine infrastructure such as the
LNG export jet and a marine offloading facility,
according to CEO Andr da Silva.
The remaining 18,000ha are allocated for the
design of the city and gas industry infrastruc-
ture, as well as infrastructure for other related
industries such as GTL, fertilizers, urea, and
ammonia. A multi-purpose area is being devel-
oped to generate accommodation, leisure, and
services for the 20,000 workers among a total of
250,000 people expected to reside in Palma over
PALMA INDUSTRIAL PARK
21 warehouses
24-hour security
600 sqm galvanized
steel/masonry
warehouse space
the next 15 years. Consulting and design for
Palmas urban development general plan for
the 18,000ha was awarded by the government
to Traus Arquitectos, which through a set of
national and international partnerships con-
ducted a careful study of the social, economic, NUNO IBRA
religious, anthropological, cultural, colonial, REMANE
and historical aspects of the area for the alloca-
tion of space, as well as the development of the Partner and Managing
area. The urban development plan was recently Director, Traus
completed by 30 Mozambicans among a team
of 300 Mozambicans.
We are currently based
African Century Real Estate (ACRE) is devel-
oping the commercial, residential, and other in Maputo, but we also
accommodation options and industrial prop- work in Cabo Delgado
erty in northern Mozambique, including Palma Province in the oil and
Industrial Park, a 4ha site at the epicenter of gas sector. In Maputo we
Palmas oil and gas activities. Palma Industrial are active in property and
Park will include a 600sqm galvanized steel/
masonry warehouse with a 300sqm lay down
real estate development
area, security fencing surrounding the perim- relating to growth and
eter of the park, 24-hour security guards, and high-technology buildings.
security lighting with generator backup in case We currently represent
of emergencies. the government in terms
The apartment hotel Palma Residences has of the design and delivery
already been completed, comprising condo-
minium houses, available for both long-term
of the city of Palma, which
and daily use. Services include Wi-Fi, satellite we call the City of Gas.
television, laundry service, a restaurant and The government delivered
bar, a swimming pool, and other hotel ameni- a 7,000-hectare plot to
ties. ACRE is now in the second phase of the build a new LNG plant,
project, which will add an additional 50 rooms.
which within 15 years
Daily rates at Palma Residences start at $132 for
single en-suite, $206 for a single or double oc- will have brought 20,000
cupancy apartment, and $293 for a villa for up workers and a total
to four people. 250,000 people.
 Construction & Real Estate THEBUSINESSYEAR 123

WORLD-CLASS RESIDENTIAL, COMMERCIAL,

TOTAL
25,000ha
7,000ha AND INDUSTRIAL PROJECTS ARE UNDERWAY TO
for gas production SUPPORT THE COMING INFLUX OF WORKERS AND
RESIDENTS, FROM FULLY FURNISHED LUXURY
18,000ha VILLAS TO HIGH-TECH WAREHOUSE FACILITIES,
for city and industry ALL IN AN IDYLLIC BEACH SETTING.

2
NATURAL GAS
LIQUEFACTION UNITS

75 MW
POWER PLANT

96,000
BB/D GTL PLANT

PALMA RESIDENCES - daily rates starting at $132

Swimming pool 24-hour security WiFi
Restaurant & bar Minibus pick up Gardens BBQ
Daily cleaning Car rental Common outside
Laundry service DSTV lounge

HOTEL

CONGRESS CENTER

Source: African Century Real Estate

124 THEBUSINESSYEAR MOZAMBIQUE 2015
B2B CEMENT COMPANIES
JORGE REIS
CEO, Cimentos de
Moambique
How would you describe the
current nature of the Mozambi-
can market?
JORGE REIS One of the chal-
lenges of cement commercial-
ization in Mozambique is that
the client only focuses on price,
whereby it is difficult to explain
the need to focus on quality. We
are working with our clients and
holding workshops precisely to
inculcate a sense of the impor-
tance of testing the quality of
cement before it is purchased.
Here we produce two types of
cement: 32.5 and 42.5, and we
need to teach companies pre-
cisely what they should buy. If
you need a 32, why buy a 42 that
is more expensive? Or indeed,
vice versa, as where strong ce-
ment needing grade 42 should
be specified.
PIYUSH KUMAR BHARADWAJ
It is impossible not to note the
rapid growth of infrastructure
in the country, and I anticipate
many more construction proj-
ects being realized by both the
government and the private sec-
tor. Many new roads, bridges,
and industries will be construct-
ed in the near future and the real
estate business is set to boom
fueled by economic growth. In
this light, we anticipate no seri-
ous challenges to selling cement
locally.
PIYUSH KUMAR
BHARADWAJ
General Manager, GS
Cimentos
As a long-established company,
how would you describe the lo-
cal business environment?
JR Doing business here is not as
easy as in other markets because
of the prevailing constraints to
be found in the country, notably
logistics and a reliable electricity
supply. Moreover, there is also a
measure of unfair competition
detrimental to Mozambique,
which can seriously damage lo-
cal industries. And meanwhile,
the informal economy, too, re-
mains problematic.
What is the current status of
your cement plant?
PKB We will commence the
construction of our 1,500 ton-
per-day cement production unit
in June 2015, and the plant will
be implemented in two phases.
The first phase involves the
construction of our grinding
unit and will take from 12 to
16 months. The second phase,
which involves the clinker pro-
duction unit, will be implement-
ed two years later. Thereafter, we
will manufacture cement main-
ly for the local market, which we
can readily cater to, although
we might also consider exports
to South Africa, Swaziland, and
nearby areas. Once we establish
ourselves in the market, we will
enter the next phase of clinker
production on an investment of
around $50 million.
concrete
GROWTH
What is the installed produc- TBY talks to two
tion capacity of Cimentos de leading figures from
Moambique, and to which mar-
kets is your output destined?
the cement industry
about the conditions
JR We have a capacity of 2.9 mil- of doing business and
lion tons in total, but in 2013 we
current production
only produced 1.1 million tons.
In 2014, by September we had activities.
already sold 1.1 million tons,
whereby we expect to have sur-
passed the 2013 figure. Mean-
while, the unused available
capacity is accounted for by cer-
tain bottlenecks that we are cur-
rently addressing, and which we
expect to overcome in the near
future. Mozambiques Mutirao,
or "collective effort" project is
focused on the two main pil-
lars of industry and the people.
Accordingly, our production is
currently geared solely toward
satisfying the local market, al-
though given the right margins,
we could also export.
What could the government do
to ensure that projects become
a reality?
PKB The government should
have a time-bound program for
each clearance. This should en-
compass the allotment of land,
clearance, access to mines, and
a connection to power and oth-
er utilities. The allotment of land
should be decided on within
three months, without compro-
mise, and there should certainly
not be any re-examination or re-
view of the terms of business.
126 THEBUSINESSYEAR
INTERVIEW
correctly CONSTRUED
TBY talks to Kevin Pitzer, General Director of Construa, on the stock
market, recycling materials, and maintaining a solid brand.
What is Construas geographi-
cal spread in Mozambique?
Our annual group revenue
is roughly $100 million. We
are currently considered to
be the largest single builders
merchant in the country, and
have 20 outlets nationwide
including the provinces of
Maputo, Gaza, Sofala, Tete,
Manica, Inhambane, and
Zambezia. Over the next year
and a half we will open a fur-
ther five in the north of the
country where we still do not
have a major presence.
What key strategies have you
set for Construa for the next
five years?
We ultimately want to be
listed on the stock exchange,
which to date has seen only
limited development. The
stock exchange has been
around for some years but
remains rather illiquid. Yet
I believe that as more inves-
tors pursuing projects enter
the nation, participation will
increase among local enti-
ties. From what I have under-
stood, it is the governments
intention for companies to
release stock for trading on
the stock exchange to gener-
ate capital that would enable
local companies to partici-
pate in future ventures.
How is Construa taking advan-
tage of the construction boom
in the country?
We sell building materials,
but also offer technical ser-
vices where we design and
MOZAMBIQUE 2015
IN NUMBERS
Construa
Opening
5
new outlets in
the north
100
million USD in annual
revenues
manufacture roofing struc-
tures for housing or office
complexes. That is to say, we
design solutions and man-
ufacture them for construc-
tion contractors.
What is Construas commit-
ment to the recycling of con-
struction materials?
We recycle scrap metals and
manufacture these into rebar
used in concrete foundations
and columns. We have five
factories, where we manu-
facture steel, roof tiles, ce-
ment tile adhesive, and our
own paint.
What are your strategies to set
yourself apart from your com-
petitors?
We focus on cost and quality.
We have built ourselves over
the years to the extent where
we benefit from economies of
scale. What we do is offer the
best quality for the best price.
We represent and co-repre-
sent certain leading global
brands, and Mozambicans are
particularly brand-conscious.
We import globally from an
array of countries, and we also
support local manufacture
where we can. For example,
we are the largest retail distrib-
utor for Mozambiques prima-
ry cement manufacturer.
How would you describe Con-
struas commitment to quality?
We make sure to provide
high-quality products and
services. All of our factories
have laboratories where our
materials are tested. I actu-
ally employ the local engi-
neering authority to audit
my chemists to assure the
best quality. My chemists
and laboratory technicians
give me the results of their
work, whereupon once a
week the engineering labora-
tory of Mozambique will take
samples for testing. Our local
engineering authoritys labo-
ratory is EU compliant.
What are the specific challeng-
es for the construction sector
in Mozambique?
We need to improve our
infrastructure, transport,
and logistics capacity, and
distances are a problem too.
Construction materials are
generally of a heavy, bulky
nature. It seems everyone in
Mozambique sells on parity,
and that pushes up the costs
tremendously, in terms of lo-
gistics, customs clearing, and
so forth. All of these add huge
costs because of the time it
takes to clear goods.
How would you describe the
business environment of Mo-
zambique to potential interna-
tional investors?
Anyone who does invest here
should give a lot of slack to
people on the ground and be-
lieve in them. I have seen busi-
nesses fail here because they
have tried to run them from a
foreign boardroom.
What is your vision for the future
of Construa in Mozambique?
Construa has always been a
good brand in Mozambique,
and if you ask people here,
they know Construa. But we
need to grow further. So, by the
time we manage to list, if it ever
happens, I do believe there are
a lot of local people who would
be eager to buy stock in our
business. People have seen our
operation grow nationwide,
having begun from a modest
office. They have also seen the
factories expand and devel-
oped trust in our business. We
are a Mozambican company.
Both my partner and I are cit-
izens making it 100% national
company.
 Construction & Real Estate THEBUSINESSYEAR 127

ENGINEERING VOX POPULI

OPPORTUNITIES
to build on
The proliferation of megaprojects in
the energy and transportation sectors
is providing ample opportunities for
construction and consultancy firms.

T
he combination of Kentz and SNC-Lavalin is part
MRIO JORGE of building a global Tier-1 engineering and con-
MACARINGUE struction (E&C) company. This created a group
with approximately 45,000 employees, annual revenues of
Managing Director, about approximately $10 billion, and a backlog of roughly
Royal HaskoningDHV $13 billion as per 2013 figures. Our new capability to take
TOMS FRADE
the full EPCM scope on projects will provide further value to
Vice Branch Director,
T
wo years ago we were our clients, while our focus on providing our specialist and
a 90% public service responsive services will mean our execution for clients, who GAUFF Mozambique
provider, and only have supported us for many years, will only be strength-

10% private. We worked for
banks, for example, to provide
new branches and related eval-
uations. Now our business is
60% public and 40% private, and
we want the ratio to level out at
50:50 ultimately, with projects
involving both large corpora-
tions and smaller enterprises.
We have ranked among the top
three in Mozambique in terms
of consultancy services over the
past five years. I think in less
than five years we will be num-
ber one, and we look to double
our business within five to seven
years. Today we design tailored
solutions for our clients, and
over the next few years we will
launch the second phase of our
project to build supply water
systems in rural areas.
CHRISTOPHER W. DELL
Country Manager Moambique, Bechtel
ened. In respect of prospects on the African continent, we
see opportunities that will see us providing technical ser-
vices and delivering more complex, turnkey projects in re-
mote locations. We are now able to meet our clients needs
by offering SNC-Lavalins strong Front-end Engineering
and Design (FEED) capabilities, full EPC projects, as well
as Kentzs leading construction expertise in Structural, Me-
chanical, Electrical, Instrumentation, and Piping (SMEIP).
COLIN
CROWLEY
Regional
Development
Director Africa,
Country Director
Mozambique
Kentz, a member
of the SNC-
Lavalin Group
O
ur main objectives
include becoming a
reliable partner for
the Mozambique government
for the countrys infrastructure
development, which is our core
business. We believe that we can
play a major role in assisting in
that growth, which we can do
through our ability to attract
private investment for the con-
struction of infrastructure at
competitive conditions, deliver-
ing EPPM and turnkey projects;
all of this of course with our long
term experience and knowhow
of working in Africa. We are
proud to be part of the Maputo
Catembe bridge project. This
will be the largest suspension
bridge in Africa and among the
top 50 in the world. GAUFF has
been contracted to act as con-
sultant for the quality control of
the construction of the bridge
and link roads.

B
echtel is the largest engineering and
construction company in the US,
employing about 53,000 people. We
have annual revenues of approximately $40
billion. We currently operate in Angola, Rwan-
da, Mozambique, and Gabon, but also have a
presence in Egypt. What attracted us to Mozam-
bique initially was the LNG project, which was
our flagship scheme through the middle of last
year. Today, three of our four business groups
are looking at all sectors in Mozambique. Mo-
zambique has vast potential, and equally vast
needs, which is widely acknowledged. The new-
ly discovered wealth in the form of coal and gas
reserves, as well as important mineral discover-
ies in recent years, have created a possibility for
Mozambique to begin tackling some of its diffi-
culties. There is some interesting work going on
with respect to Coal-To-Liquids (CTL), and we
are poised to sign a contract to support one of
those contracts with early engineering work. We
have been approached about a fertilizer plant
project, too. Infrastructure is our short-term fo-
cus, as it is for the government.
128 THEBUSINESSYEAR MOZAMBIQUE 2015
Uneven supply-demand dynamics, a boom in Mozambiques extractive
sector and the proverbial rising middle class combine to fuel the real
estate sector.
Review R E A L E S TAT E
THE REAL DEAL
According to the Africa Housing Yearbook 2014,
in Africa robust annual growth of the construc-
tion industry, at 10%, is propelled by vast in-
frastructure investments. Yet the housing con-
struction market is still the domain of SMEs.
All land in Mozambique is state-owned, with
utilization rights obtained through a long-term
title, the DUAT. Therefore, while construction
and assets can be mortgaged, land cannot. Cur-
rent Global Housing Indicators suggest that
20% of all properties are registered.
To this day, the vast majority of house-
holds are responsible for constructing their
own homes, which are often built incremen-
tally, and added to or improved as and when
resources avail themselves. And due to the
greater formalization of urban land housing
finance is essentially an urban issue, although
as Mozambiques extractive revenues benefit a
broader swathe of the population, the rural ar-
eas, too, will demand better housing. It follows
that loans for home construction greatly exceed
mortgages, and the Africa Housing Yearbook
2014 published by the Centre for Affordable
Housing Finance, reveals that 7.3% of the top
60% of earners, and 2.4% of the bottom 40%
had such a loan.
IN RESIDENCE
Rental prices in Maputo as of February 2015
based on Numbeo research of 240 sam-
ples came in at MZN44,200.00 ($1.00 =
MZN33.8616), or $1,303 for a central one-bed-
room apartment and $649 outside the center.
Three bedroom apartments in central and out-
lying Maputo averaged at $2,883 and $1,550, re-
spectively. The price to buy a centrally located
apartment in Maputo averaged at $1,180 per
sqm. Meanwhile for Mozambique overall the
sample returned average rental prices for a city
center and non-central one-bedroom apart-
ment of $901.4 and $626.8, respectively, and for
a city center and non-central 3-bedroom apart-
ment of $1,842 and $1,240, respectively. And to
buy an apartment centrally and non-centrally
located averaged at $950 and $636 per sqm. To this day, the vast
Average monthly disposable salary (after tax) in majority of households
Maputo is at $982, and for the nation overall at
$803. Yet with average mortgage rates for Ma- are responsible
puto and Mozambique respectively at 20.67% for constructing
and 20.50%, few can take out a home loan. their own homes,
At the top end of the market, prices for 5-bed- which are often
room houses in the affluent suburbs of Som- built incrementally,
merschield 1 and 2 command rent of around
and added to or
$6,000 per month, and even greatly above
$10,000 per month. Meanwhile, another driver improved as and
of housing demand is the tendency for some when resources avail
owners to double up the house as an office to themselves.
reduce the cost of living and circumvent the
lack of office space.
Most of Mozambiques 18 commercial banks
offer a mortgage product, but the mortgage
loan to GDP ratio is at just 0.6%. UN-Habitat
data on the extent of housing lending suggests
that banks mortgage portfolios represent 8.3%
of total loans to individuals. Some banks today
offer rent-to-buy plans offering an option to
buy at the end of a lease. Banco nico, is cit-
ed as an example, having signed a deal with the
Fund for Housing Promotion (FFH) to lease
apartments in Maputos Olympic Village where
the monthly lease registered at around $317
for 25 years. The FFH has penned agreements
with five banks to provide loans to individuals
for the purchase of housing units in the Intaka
project in Matola, where 25-years loans ranged
from $60,000 to $80,000 at 19% interest. Other
projects of shorter terms offered higher rates of
around 22.5%.
To put mortgages into perspective, however,
while Mozambiques minimum wage was re-
vised to $95.3 in April 2014, most citizens earn
less than $60 per month. Those banks offering
mortgages stipulate a minimum loan of $9,497,
at 19% interest, and repayable over 25 years. This
is only financially realistic to a household with
a monthly income of about $1,425. UN-Habitat
points to a typical upper middle class income
of $1,472, at which level, the maximum mort-
gage that could be achievedassuming an 80%

loan-to-value ratio over 20 years at 19% inter-
estis about $34,821.The family would need to
save a further third of the purchase price to cov-
er the deposit requirements, registration costs
and taxes, and valuation and origination fees.
according to the Africa Housing Yearbook 2014.
Zubeyir Deirmenci, General Director and
Member of the Board of Deco Group informed
TBY of the groups prestigious 23-floor building
of 42 apartments. Testament to the demand for
quality construction in Maputo, the scheme
sold out prior to completion. Meanwhile, its
Assos seafront condominium project with 160
apartments on a 45,000sqm area. This project
won the African Property awards for the best
apartments in Mozambique. And at the other
end of the spectrum, Zefanias Muhate, Execu-
tive Manager of 100% Mozambican company
Lis Moambique, has undertaken: work for
Henan Gou Ji, a Chinese company engaged in
a landmark project called 5,000 houses. The
project is a joint venture with the Mozambican
government's Housing Promotion Fund (FFH),
which is the agency overseeing.
AFFORDABLE PUBLIC HOUSING
Recent FFH estimates suggest a housing defi-
cit of 2 million units, with over 13.5 million
people, or 60% of the population living in in-
adequate housing. Mozambiques first hous-
ing policy and strategy was approved back in
2011 and conforms with the national Agenda
2025. It champions the construction of ad-
equate and affordable housing for all strata
of the population, recommending improved
land management, and accessible financing
resources. Few private projects address afford-
able housing, but Casa Jovem in Costa de Sol
Maputo is nonetheless one of several exam-
ples. The 36-hectare housing project under de-
velopment on the outskirts of Maputo features
1,680 apartments and 300 houses. Apartments
range in price between $47,000 and $130,000,
it is out of the reach of most Mozambicans.
The governments 201014 program envisaged
constructing 100,000 houses, and ran parallel
to the Plan for the Young, Civil Servants, and
Old Combatants, where 20% of planned hous-
ing was to be realized by the state, 30% by the
private sector, and 50% by residents them-
selves through self-construction. Just 5% of
homes were to be entirely subsidized. Among a
list of partnership projects to boost the quality
housing stock the FFH has signed agreements
for a social housing scheme in the provinces
of Cabo Delegado, Nampula, Tete and Maputo
involving the construction of 50,000 housing
units at a cost of $5.5 billion.
Construction & Real Estate THEBUSINESSYEAR 129
OFFICE PARTY
The office segment of Mozambiques real es-
tate market has indeed been in party mode. In
Maputo the average rental price ranges from
$2,000 to $3,200 per sqm according to consul-
tancy firm Prime Yield Moambique research,
and is set to stabilize over the next five years as
new stock is added; industry experts certainly
do not expect the sound of a bursting bubble.
The Mozambique Real Estate 2013 study iden-
tified Bairro Central B and Polana Cimento B, as
the cheapest areas with average rent of $2,000
per sqm, and Sommerschield the most pricey at
an average of $3,200 per sqm. Total office space
in Maputo is put at roughly 337,000sqm.
FROM STORE TO STORAGE
The retail market has been slow to take off be-
cause of the large size of the informal sector.
However, there has been a flurry of recent ac-
tivity, which has seen South African retailers, in
particular, entering Mozambique. Most retail
developments are out-of-town on the main ar-
PEDRO
terial routes. Shopping centers taking the form CARDOSO
of mixed-use developments include the Polana Executive Partner,
Shopping Centre and the Maputo Shopping
Centre, and more recently the more upmarket
Collins Sistemas de
Mars Shopping Centre. Retail rents average at gua
around $30-$40 per sqm per month, and the fu-
ture looks bright as the middle class finds itself As a civil engineer working
with more disposable income and retailers seek in the field of water
more prime venues to broaden their offering. consultancy for almost 10
Afribiz notes that the congestion charge on years, I was exposed to
commercial vehicles in the Maputo and rising
the main problem areas
land prices have seen much industrial reloca-
tion to the urban periphery. Moreover, former and had the privilege of
industrial areas in central Maputo in proximi- participating in several
ty to port and airport are more frequently be- water supply projects
ing transformed into upmarket office or retail around the country,
warehouse uses. Prime warehouse rents are on mainly for rural areas. We
the rise and at around $10 per sqm per month.
Mozambiques extractive boom has seen the
come up with innovative
steady arrival of companies and the expatriates ideas for areas with a
staffing them, who traditionally demand higher lack of natural water
quality property. And as supply has fallen short sourceswe call it an
of demand, a busy period of growth in proper- excavated reservoirfor
ty stock is on the cards. Therefore, the property storing rainwater then
market remains an investment option of some
appeal; a proposition, according to propertyma-
treating and supplying it.
puto, that is not confined to the capital city, now Normally, for conventional
home to 2.5 million people. Triunfo, a north- water supply systems,
ern coastline suburb of Maputo, has become you spend almost 40%
a source of prime real estate, due in large part of the investment on
to the construction of a ring road. Moreover,
water treatment. With our
around 500 million has been spent on rural
electrification, which will enhance both the life approach, we can afford
of the rural population, and inevitably see prop- a reduction on the cost of
erty spread beyond todays popular cities. 5% to 10%.
130 THEBUSINESSYEAR MOZAMBIQUE 2015
B2B MARKET DEVELOPMENT
ZUBEYR JOS CARLOS
DEIRMENC PINHEIRO
General Director and CEO, Pylos
Member of the Board, Mozambique
Deco Group
How has your companys busi-
ness developed over recent
years?
ZUBEYR DEIRMENC DECO
established itself here in 2009,
although we actually first came
in 2007 to conduct market re-
search, before establishing a
pavement and block company.
It was intially called Akdeniz, a
Turkish name. The DECO group
is not only engaged in construc-
tion, but also operates DECO
Stone, which sells construction
materials such as concrete,
pavement materials, and blocks,
while DECO construction is en-
gaged in building. DECO Stone
is a factory located in Tchumene
with a workforce of 130 that pro-
duces and sells concrete. We be-
gan by renting a plant, but once
this proved insufficient, we had
to build our own. All our current
production is geared at meeting
local demand. Our largest con-
struction competitors buy their
concrete from us, which is a
clear indicator of our production
quality. The DECO residence is a
symbol of DECO construction,
and is a 23-floor building with
three underground parking lots,
offices, and 42 apartments. We
applied the best quality possible,
considering Mozambican stan-
dards. The project is now com-
plete and was sold out prior to
completion. Assos condomini-
um is a 45,000sqm construction
with 160 apartments, 12 shops
and two floors of parking, and
will be completed within 20
key to
SUCCESS
Luxury residential assets, retail centers,
and property management for commercial
enterprises are some of the high-potential
segments in the market.
months. The first block should of another $50 million to $60
be opened by June 2015 at the million from tenants. We are
latest, and the project has won not a construction company,
the African Property awards for but a real estate developer, and
best apartments in Mozam- will therefore develop, rent, and
bique. manage the malls.
JOS CARLOS PINHEIRO We How would you describe the
started in September 2014 in quality of human capital in con-
Tete with our first strip mall, at struction in Mozambique?
7,700sqm. These are not exactly
shopping malls, but more open ZD The skill level remains in-
strip malls. They are not ven- sufficient. We need to keep our
ues for Louis Vuitton or Chanel, quality especially high for an
but essentially retail services for award-winning project. Now
the mass market. The concept we have a team that we trained
behind this project is to take during the construction of the
formal retail to various areas of DECO residence, but we need
the country that lacked it be- more trained workers, which we
fore. We are sure of making a will bring from Turkey. Some-
positive economic and social times they can just come for two
impact as consumer prices will or three months to give train-
tend to decline, and we offer ing and go back. It is difficult to
people different purchasing bring people here for work. The
opportunities that they do not government sets the limit of for-
have access to today, while in- eign workers and they should be
troducing a diversity of brands. more flexible.
Currently, people beyond Ma-
puto do not have proper retail How would you describe the
options, and this lack of compe- local business environment for
tition favors the retailers. After establishing a new company?
the Tete development we will
probably build our next malls JCP Ours is not the easiest mar-
in Nampula, Pemba, Massinga, ket to enter, but you must under-
or Maxixe, and perhaps Naca- stand that were this a developed
la. We will have a minimum of country there would not be the
two additional projects under same opportunities to grasp as
construction before the end of exist here. Having said this, it is
2Q2015. By April-May, we will important for an investor coming
have three under construction to Mozambique to understand
in Tete, Nampula, and Pemba. that this is a country with its own
We estimate our investment for laws, and that if you are fully
the 15 malls will be in excess of aware of them, it is not a difficult
$150 million, with a minimum environment to do business in.
132 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS LUXURY REAL ESTATE
Following an influx of foreign investors, a construction boom and positive
growth perspectives in the country, several companies are developing
luxury real estate projects in Maputo.
OCEAN VIEWS
FOR NOW
SINCE THE END OF A DEVASTATING
civil war in 1992, Mozambique has been in a
period of gradual but intensive growth and re-
construction. In 3Q2013, Mozambiques con-
struction sector represented 7.8% of GDP, close
to a 3% increase on the previous year. The boom
in construction has been largely attributed to
infrastructure projects in energy, mining, and
transport sectors. In Maputo there has been a
significant increase in luxury real estate devel-
opment, due to rising prices and a growing mid-
dle class contributing to an increase in demand.
Increasingly, Portuguese migrants have mak-
ing the move to Maputo, to avoid a eurozone
economy in financial crisis. In 2012, registra-
tions at the Portuguese consulate increased by
25%. Registrations are expected to keep rising
as Portuguese-style architecture and a common
language entice expats, in addition to Mozam-
biques noteworthy economic performance.
In May 2015 Maputo will host the third edition
of MOZAMBUILD, Mozambiques International
Building Materials and Construction Technol-
ogies Fair, in partnership with the Mozambi-
can Federation of Contractors. The conference
brings together suppliers in Mozambiques
building industry, from concrete producers to
aluminum and steel manufacturers, and works
to offer a better understanding of the dynamics
of the market in partnership with groups such as
Portuguese industrial conglomerate Mota-Engil.
Mota-Engil Africa will soon embark on two
$50 million joint ventures, and has already
completed the 20-story Tilweni Condomini-
um. In partnership with real estate developer
Promovalor, they are also involved in the con-
struction of the Platinum Building on Av. Julius
Nyerere in central Maputo. The Platinum tow-
er will provide luxury apartments, offices, and
shops. It is a prestigious project which will be
finished on a very short timeline of 20 months,
according to Anbal Leite, Administrator of Mo-
ta-Engil Africa. For over 20 years Mota-Engil
has contributed to infrastructure and civil engi-
neering in Mozambique including construction
of the Armando Emlio Guebuza Bridge and the
African Games Village.
A luxury real estate project under construc-
tion by the TOVISI company is Miloro, a 60-unit
condominium in the up and coming area of
Sommerschield. The community will be adja-
cent to Portuguese and American schools and
several private hospitals. We will be providing
residents the best apartments available in the
city, says TOVISI general director Pedro Ramos.
More luxury projects on the coast are estimated
for completion by 2016.
DECO Group is a design and construction
company responsible for the luxury complex
DECO Residence, and is currently working
quickly on the completion of Assos Condo-
miniums. DECO Residence is a 23-story build-
ing holding 42 apartments, which had all been
sold prior to the projects completion. DECO
Residence is; a symbol of DECO construction,
says General Director and Member of the Board
Zubeyir Deirmenci. Assos Condominiums is
A luxury real estate project under construction
by the TOVISI company is Miloro, a 60-unit
condominium in the up and coming area of
Sommerschield.
a 45,000 sqm project that will offer 160 apart-
ments, 12 retail shops, and two floors of parking.
Assos will also provide to its residents such ame-
nities as a rooftop pool, Turkish bath and spa, as
well as a multifunctional court and childrens
park. Deirmenci says: 90% of the apartments
will have sea views. [] The quality even exceeds
that of the DECO Residence which is 5-star res-
idence. The project is slated for completion in
June 2015.
In Sommerschield, a central area with a thriv-
ing expat community, two to three bedroom
apartments currently rent for around $2,000 to
$3,000. Office space in the city center is priced at
roughly $40 per sqm. Although it seems that ris-
ing rents may be making it difficult for some Mo-
zambicans to remain in central neighborhoods,
new developments are aimed at high-end buy-
ers coming in droves mainly from a prospering
energy industry. Demand is high. Several thou-
sand Mozambicans and expatriates are seeking
secure and quality urban housing with reliable
utilities. The International Monetary Fund fore-
casts robust growth for Mozambiques econo-
my. Prices on luxury real estate are likely to con-
tinue rising, though time will tell as the market
nears possible saturation.
 THEBUSINESSYEAR 133

137 138 139

Emerson Zhou, Executive Pedro Moura, Administrator and Interesting innovations are
Director, Beira Agricultural Member of the Board of Portucel occurring that make fuller use
Growth Corridor Partnership, on Moambique, on job creation and of local cash crops, and the beer
strategies to boost production. African markets. industry is no exception.

Agriculture
REVIEW

Mozambique has only cultivated 10% of its total arable land, whereby
many now see the potential of finding a solution to food security issues in
southern Africa. The countrys geographical location makes it ideal as an
agricultural hub for the region and beyond.

A FERTILE PLAN
T
he agriculture
sector in Mozam-
bique is hugely
important, both in
its current capacity and the
potential it holds. Around
80% of the workforce is em-
ployed in the agriculture
sector, making it vital to
many peoples lives in more
ways than one. While being
a prominent employer, the
sector also plays a consid-
erable role in GDP, as, ac-
cording to the statistics, it
contributes 23.5% in 3Q2014,
making it one of the largest
industries in the country ac-
cording to the National In-
stitute of Statistics. Between
2Q2014 and 3Q2014, agri-
culture and fisheries showed
impressive growth of 7% and
6.3%, respectively. As the
government and the private
sector begin to take full ad-
vantage of what the sector
has to offer, growth is almost
certain to continue. Howev-
er, one of the main problems
that the sector is experienc-
ing is access to the market.
This is somewhat hamper-
ing the creation of larger
farm holdings and perhaps
explains why there are 3.8
million farms in the country,
with 3.2 million subsistence
farms averaging at 1.2ha in
size producing 97% of agri-
cultural output. This large
number of small farms can
be attributed, in part, to a
current lack of large-scale
transport infrastructure,
whereby a farm must be
close to the market simply to
access it. Only 20% of small-
holders sell their goods in
the market, and only 34% of
those receive price informa-
tion about the crops they are
selling. Still, there are 36 mil-
lion ha of arable land in Mo-
zambique, of which only 10%
is currently being used for
commercial purposes, and
of which only 3% is irrigated.
In order to further unlock the
Image: ILRI potential of the sector, the
government launched the
National Irrigation Strategy
Despite a number of infrastructural in 2011, which will run until
2019. The project has a bud-
and financial issues, foreign investors are get of $645 million and aims
jumping on board and setting up farms to double the usage of irriga-
and factories as transport infrastructure tion in the provinces of So-
fala, Manica, and Zambzia
from the mining sector helps move goods from 66,000ha to 113,000ha
to market. by 2019.
134 THEBUSINESSYEAR MOZAMBIQUE 2015

PA P E R C O V E R S R O C K
Source: FAO and SASK (Trade Union Solidarity Centre of Finland), SINTIQUIAF 2013

While forestry currently represents only 5.6% of the agricultural sectors

contribution to GDP, investments in the paper industry are expected to
grow due to the potential of the countrys forests and natural habitats.

18
FORESTS 683
TOTAL
ACCOUNT FOR WORKERS

51% COMPANIES
OF TOTAL AREA AT

4 22%
40.6 million ha
TRADE UNIONIZATION
UNION AT COMPANY
WOOD BRANCHES LEVEL
FORMATIONS
ACCOUNT FOR

19% PORTUGUESE GROUP PORTUCEL SOPORCEL

OF TOTAL AREA AT STPHANE
14.7 million ha TO CONTRIBUTE INVESTING A TOTAL OF

1
DERWEDUWEN
2.3
billion USD to
Mozambiques billion USD
CEO, AVIAM Lda
10%
annual exports until 2025
Mozambique
MANICA PROVINCE ZAMBZIA PROVINCE
OF ARABLE LAND 183,000 173,000 How would you describe the
UTILIZED DUATs* DUATs* general interest in Mozam-
bique in developing renewable

90% TO BUILD A Creating Finished by energies?

Mozambique exports energy
1.5 7,000 2023 through Cahora Bassa to South
OF UTILIZED million ton jobs in forestry
Africa and other neighboring
ARABLE LAND capacity mill Biomass will generate an extra countries. Energy policy is very
to produce
MANAGED BY 70 MW open. Rural areas will be electri-
pulp for
FAMILIES paper equivalent to 10% of total fied the fastest with solar solu-
energy consumption tions and wind farms, which our
* Rights to use of land company specializes in. Up until
now, we were short listed for the
first wind farm in Mozambique.
There were three companies
PULP FACT on the short list. We work with
a big engineering company in
Mozambiques forestry sector stands to increase its current contribution to agricultural GDP a consortium to respond to the
from 9.1%National Statistics Institute data based on the agricultural census (2009) reveals demands of the Ministery of
that 78% of agricultural GDP derives from crop production. FAO data shows that forests cover Energy. Unfortunately, we with-
40.6 million ha, or 51% of the country. Yet earlier attempts to privatize state-owned forestry had drew our proposal because of
proven fruitless. The second phase of forestry development was initiated in 2000, especially in the sporadic problems between
the Niassa Province, but also in Zambzia and Nampula, and the 2009 government Reforesta- Frelimo and Renamo in the north
tion Strategy encompassed the forestry industry. One million trees may be planted over the
of Inhambane last February
next 20 years, creating 250,000 jobs, based on a ratio of one job per 4 ha planted. Mozambiques
2014. It was an investment
forestry-related goals for 2030 are to reach a critical mass of at least 1 million ha of forest
valued at between $80 million
plantations, create at least 250,000 permanent jobs, and secure private investment enabling
minimum annual income of $1.5 billion over the next 20 years. According to FAOSTAT, in 2014 to $100 million that is now on
Mozambique was joint 80th in the world in household and sanitary paper production, exporting hold. We are currently working
just five tons in 2010, and importing 737 tons in 2013. SINTIQUIAF data for 2013 identifies 18 on a 50MW solar plant in Nacala
local paper industry companies employing around 700 people (13% women). to help with the development of
this area.

WE GOT PLANS
With the discovery of large fields of natural gas,
the expectations of growth are high for Mozam-
biques economy. The government is hoping to
avoid Dutch Disease and develop, in tandem, a
number of sectors, with the agriculture sector
being one. Therefore, in 2014 the Ministry of
Agriculture launched the National Agriculture
Investment Plan 2014-2018 to identify key areas
in the sector to develop and invest in. With the
country being one of the poorest in the world,
in per capita terms the new strategy hopes to
solidify the countrys food security and help
make itself sufficient in staple crops, while also
developing and encouraging the production of
cash crops, such as tobacco, for added value.
According to the WHO, chronic malnutrition
still poses a serious risk to the development of
human capital, with 50% of under-fives suffer-
ing from malnutrition, not allowing them to
achieve full physical, mental, or cognitive de-
velopment. There are regional disparities in the
country, with the north suffering the most with
rates decreasing the further south you go.
National statistics show that Mozambique
currently has a food insecurity rate of 35%;
something the government looks to address.
Under the umbrella of the National Agriculture
Investment Plan 2014-2018, the government
has launched a number of strategies to tack-
le a whole host of issues currently
PubTheBusinessYear210x132F.pdf 2
facing
24/02/15
the
15:46
CREATE AND SHARE WEALTH
AND PROSPERITY WITH
LOCAL COMMUNITIES
THROUGH THE INVESTMENT
IN FORESTRY.
www.portucelsoporcel.co.mz
geral@portucelsoporcel.co.mz
Agriculture THEBUSINESSYEAR 135
agriculture sector, with the Agricultural Pol- With the new flow of
icy and Implementation Strategy (PAEI), the investment coming
Strategic Plan for the Development of the Ag- into the mining and
ricultural Sector 2011-15 (PEDSA), the Fishery
oil and gas sector,
Policy and Implementation Strategy (PPEI),
the Fishery Master Plan 2010-2019 (PDP), the agriculture is looking
Development Plan for Small Scale Aquacul- to piggyback its way
ture 2009-2013 (PDAPQ), the Rural Develop- forward to create a
ment Strategy (EDR), the Food and Nutrition- more solid foundation
al Security Strategy II (ESAN II, 2008-15), the regarding food
Multi-sectoral Action Plan for the Reduction of
Chronic Malnutrition in Mozambique (PAM-
security concerns in
RDC) 2011-20, the National Programme for the country as well as
the Strengthening of Commodities 2011-16, the region.
and the Green Revolution Strategy (ERV) some
of the most significant.
The underlying theme behind each of these
strategies is to improve food security and re-
duce poverty levels across the country, which
in turn will allow the countrys human capital
to fully develop. Many of these strategies also
hope to improve the technologies that small-
holdings use, such as better seeds, chemical
fertilizers, pesticides, and motorized or animal
traction. Currently, the use of all these elements
is below regional averages with only 5% of
smallholders using chemical fertilizers or pesti-
cides and less than 10% using improved maize
seed or animal traction. Despite the challenges
that the country faces, Mozambique holds con-
siderable potential, with more than 36 million
136 THEBUSINESSYEAR MOZAMBIQUE 2015

hectares of arable land, which is 2.8 times more Potato Production (Thousand Tons)
than Ghana and 1.9 times more than Tanzania. Source: FAO
By using improved technologies and farming
methods, it is estimated that farmers could on 200

average more than triple their farming output.

The potential for Mozambique to change the 180

balance of food security in southern Africa is

160
huge. The country is already the second largest
formal exporter of food, and it is well within the 140
countrys grasp to move toward a food surplus
if agricultural and regulatory practices are im- 120

proved. Mozambiques location on the Indian

100
Ocean as well as its land borders with Tanzania,
South Africa, Zambia, Malawi, and Zimbabwe, 80
mean that its export potential is huge. This is
something that international companies are 60

beginning to notice, with Olam setting up the 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

first cashew-processing factory in Africa in the

city of Nampula. Chiquita, a US-based banana
company, recently partnered with local com- Vegetable Production (Thousand Tons)
pany Matanuska in a $50 million joint venture Source: FAO
to export bananas, another example of how in-
ternational investors are gaining confidence in 600

what Mozambique could potentially yield.

500
BEIRA
One of the main developments that holds much
JOHN (PORKY) potential is the Beira Agricultural Growth Corri- 400

CHRISTIE- dor (BAGC) Initiative. The BAGC covers 227,000

sqkm, of which 10 million ha is arable land;
SMITH however, only 1.5 million hectares are current-
300

General Manager, ly cultivated. The Corridor provides a gateway

200
Greenbelt and solid link to South Eastern Africa and a link
to potential export partners Zambia, Malawi,
We create a tailor-made and Zimbabwe. The significant volume of min- 100

fertilizer to suit particular ing investments also greatly improve access to 2006 2007 2008 2009 2010 2011 2012

soil types and the crops
destined to grow there.
Traditionally, farmers have
used a fertilizer blend
with no micronutrients
in it, yet there is a major
worldwide drive today,
especially in Africa, to use
micronutrients in fertilizers.
Many raw materials come
through the Port of Beira,
which is why we built a
factory here so we could
transport to Zambia, as
well as Mozambique,
Zimbabwe, and Malawi.
The investment was large
at around $15 million for
the entire project. We then
started exploring markets
in Zimbabwe, Malawi, and
eastern Zambia.
energy, water, and transport infrastructure
something that is often lacking in other areas
of the country. The Sena Railway Line and the
Beira Port will greatly improve the agriculture
sectors access to both domestic and foreign
markets. An Investment Blueprint set out key
areas in which it hoped investors would par-
ticipate. One of the main tasks it had set was to
deliver 16,000 ha of irrigated farmland. One of
the largest investments would be in the Mun-
da Munda Rice Irrigation Scheme. Costing an
estimated $27 million, the scheme would pro-
vide 3,000 ha of irrigated land for smallholder
rice production, as well as storage, milling, and
a marketing company. The construction of the
system would create direct 1,500 jobs and a fur-
ther 3,000 indirect jobs. Under the plan, a fur-
ther $2.7 million investment would be required
for further extensions and a comprehensive
marketing program. The largest planned in-
vestment is for the Envalor Sugar Estate. Lo-
cated 70km south of Enchope, the large sugar
estate will offer 25,000 ha for sugarcane, sweet
sorghum, and dry beans. These will then be
processed into 150 million liters of fuel-grade
ethanol and 32mW of electricity. The estate
will create 1,800 jobs and produce 10,000 tons
of beans. The project overall is expected to cost
somewhere in the region of $350 million. An-
other sugar estate planned for the region, but
on a smaller scale, is the Sugarcane Outgrower
Scheme planned for the Upper Zambeze. On
3,000 ha of land, it will house 200 families and
provide 2,000 full time jobs. The total amount
of land will be split into 600-700 ha farms for
food production. The estate will produce 110
million tons of fuel-grade ethanol, 15,000 tons
of vegetables, 200 tons of meat, and 2-3MW
of electricity. The scheme is expected to cost
around $20 million.
The government and the private sector un-
derstand the great potential germinating within
the agricultural sector. And with the new flow of
investment entering the mining and oil and gas
sector, it is hoping to create a more solid basis
for addressing food security concerns.

How has the production of agri-
cultural products and livestock
evolved in the Beira Corridor
since the establishment of the
Beira Agricultural Growth Corri-
dor (BAGC) in 2010?
Agricultural production tends
to go through cycles, depend-
ing on the nature of the sea-
sons. But having said that,
we have noticed a general
increase in the level of pro-
ductivity in terms of yields
per hectare, especially at the
level of smallholder farming.
This is due to a slight increase
in the use of improved seeds
and chemicals, which rough-
ly translates into a 15% rise in
yields over this period.
How is BAGCP collaborating
with financial entities to improve
small-scale farmers access to
credit?
Banks are able, to some ex-
tent, to meet demand for
seasonal and short-term in-
vestment finance, but when
it comes to long-term finance,
they have yet to figure out a
way to provide financing win-
dows that can be helpful to
farmers and other agribusi-
ness investors. We continue
talking with them and other
entities about the need for
longer-term capital that will
enable investments in long-
term productive assets such as
irrigation, fruits, and animal
breeding stock. And addition-
ally, addressing the issue of
irrigation and irrigation infra-
structure is paramount for the
rapid growth of agriculture in
the corridor.
HALL
monitor
TBY talks to Emerson Zhou, Executive Director,
Beira Agricultural Growth Corridor Partnership
(BAGCP), on strategies employed to boost
production and exports.
IN NUMBERS
BAGCP
15%
increase in terms of
yield since 2010
What products offer the great-
est potential for the next few
years in the Beira Corridor?
The Beira Corridor is lucky
in that it can support almost
anything that one may want to
produce. However, what has
been coming through is fruit,
such as lychees and avocados,
which offer big opportunities.
Right now, there are some large
companies that want to under-
take a major venture in lychee
production. The livestock val-
ue chain is also producing op-
portunities, such as feed and
processing facilities, and we
have been talking to certain
potential investors. Beef cattle,
dairy, and poultry are clear fo-
cus areas, while horticulture is
also important. Traditionally,
rice is a significant crop in the
Lower Zambezi and Sofala; the
country continues to import
almost all of its rice need, and,
therefore, rice investments re-
main relevant. The challenge
now is to produce it at compet-
itively low cost.
Agriculture
What needs to be done to pro-
mote exports from the Beira
Corridor?
First of all, agriculture within
the corridor needs to improve
its competitiveness. We need
to reduce the costs of produc-
tion for commodities such as
fertilizer and livestock feed.
The country is heavily depen-
dent on imports and these
come in two forms: finished
products and raw materials.
And because we are import-
ing, we are also importing
costs, which impacts our
competitiveness. We have
been discussing ways to re-
duce costs with the fertilizer
industry by lowering taxes and
improving on logistics. Part of
this is the need to improve
roads and other elements
of transport infrastructure.
Meanwhile, the financing of
local businesses is a pressing
matter in need of urgent at-
tention, as inadequate financ-
ing is a major constraint on
the ability of local businesses
to grow through investment.
How would you characterize
the relationship between agri-
culture and mining in the Beira
Corridor?
The opportunities that the
mining sector can provide,
especially to support food
production, are great. At pres-
ent, neighboring countries
produce the food consumed
by the employees of mining
companies. While the mining
companies see this as a pro-
curement problem, our insti-
tution, the Beira Agricultural
THEBUSINESSYEAR 137
INTERVIEW
Growth Corridor (BAGC),
considers that long-term de-
velopment of agriculture in
the region would be a valuable
solution. The BAGC is forging
links between mining and
agriculture by structuring de-
mand and developing supply
chains involving local produc-
ers. The mining companies
need for food gives local farm-
ers a nearby market, espe-
cially during the construction
phase. The role of the BAGC
is to create incentives for local
sourcing, and to develop core
investment in local agricultur-
al development.
What are your expectations for
the Beira Development Corridor
Summit?
The event will raise issues and
take stock of where we are now,
developments in the world of
agriculture, and information
on new programs that might
prove helpful. It also builds
consensus on priorities for in-
vestment areas. Investors can
leave with better knowledge of
the corridor, and information
about where they can invest
tomorrow.
BIO
Emerson Zhou is the
Executive Director of the
Beira Agricultural Growth
Corridor (BAGC), a PPP that
aims to promote investment
in the agriculture sector
in central Mozambique by
facilitating entry by socially
responsible investors willing
to develop business models
supporting smallholder
farmers. Emerson is an
Agricultural Economist with
over 25 years of experience
in managing and providing
technical assistance to
inclusive agribusiness
support initiatives in Africa.
He holds an MSc degree
from the University of
London (UK).
138 THEBUSINESSYEAR
INTERVIEW
TBY talks to Pedro Moura, Administrator and Member of the Board
of Portucel Moambique, on pulp production, job creation, and the
importance of African markets for the company.
BIO
Pedro Moura was born
in Braga, Portugal. He
graduated in Forestry
Engineering. He also holds
an MBA from Universidade
Catlica de Lisboa. He
joined Portucel in 1997 in
Portugal and began working
on the Mozambican project
in 2007. Previously he had
held several positions at a
number of companies within
the same industry.
MOZAMBIQUE 2015
pulp-tastic
What is the status of the euca-
lyptus program and the factory
plan to produce pulp in Mozam-
bique?
The project started immedi-
ately after approval, and one of
the most challenging aspects
was finding the right material
to grow here in Mozambique,
in addition to obtaining the
license for such a large-scale
project. It took some years to
find the genetic material most
suited to our geography and
climate, and which is most
resistant to the diseases found
here. Of course, all of this ne-
cessitates a lengthy process
of environmental and social
impact assessment, and today
we are awaiting a license from
the government in order to
proceed further. Having un-
dertaken a number of trials we
farm about 3,000 ha of plan-
tation in different parts of the
DUATa Mozambican land
use agreementthat we man-
age. Our next step will be to in-
crease the scale of our planta-
tions, once officially licensed.
The next step is to build a mill
to produce pulp for paper, and
also to produce energy. The
project will become self-suffi-
cient in terms of energy sup-
ply, and with the biomass we
use to produce the pulp; we
will generate sufficient surplus
energy to feed into the grid.
We expect a surplus of around
70MW, which amounts to
around 10% of the total elec-
trical energy consumption
in Mozambique. Therefore,
it will make a huge contribu-
tion to the energy needs of the
country, while also helping
stabilize the grid and improve
the quality of electricity supply
nationwide. The mill is expect-
ed to be operational by 2023,
with a capacity of 1.5 million
tons. It will practically double
IN NUMBERS
the Board
of Portucel
Moambique
Operational by 2023,
with a capacity of
1.5
million tons
our groups pulp production
capacity in Portugal, current-
ly at about 1.4 million tons.
The total estimated cost of the
project by 2025 is around $2.3
billion, although this is likely
to rise. The pulp we produce
is planned for export, mainly
for the Asian markets, espe-
cially China and India, but
also for the US and European
markets. All in all, we expect
to contribute $1 billion to Mo-
zambiques overall annual ex-
ports, and to see the creation
of around 7,000 jobs in forest-
ry and a further 500 at the fac-
tory itself. We are looking for
partners with which to share
the risk and also strengthen
the sustainability of the proj-
ect. We signed an agreement
with the International Finance
Corporation (IFC) on Decem-
ber 2015 in Washington, D.C.,
and that institution will shortly
purchase the first lot of shares.
How significant is Africa for the
group in terms of sales?
When you look at demo-
graphic and economic figures
and forecasts, Africa is sure
to become a bigger and more
prosperous market in the fu-
ture, and we will be well posi-
tioned to supply the market as
it grows. After all, our invest-
ment here is a strategic one,
and one we expect to signifi-
cantly further our internation-
al scope and operations. But
in the short term, we are con-
centrating on the Asian mar-
kets, which are huge for us.
Portucel has won various
awards, including Best Euro-
pean Company for 2013. What
underpins your companys suc-
cess?
We have excellent and highly
skilled human resources, and
extremely high-quality assets.
We have a good species in Eu-
calyptus Globulus, which has
enabled us to make products
of high quality, which in turn is
why our Navigator brand is the
most sold product in its seg-
ment worldwide. Therefore,
it is a combination of human
resources, quality assets, and
exceptional raw materials, as
well as excellent management.
How do you assess the potential
of Mozambique in terms of draw-
ing foreign investors to the coun-
try, and investing in major, long-
term projects such as this one?
There are certainly risks that
need to be assessed and eval-
uated, as with any investment.
But the opportunity is there;
otherwise, we would not have
undertaken such a huge in-
vestment. That being said,
you have to take the risks into
close consideration and weigh
the two against each other.
We find that the balance tips
on the side of optimism and
opportunity in Mozambique.
But you have to work hard, do
your homework, and not ex-
pect an entirely smooth pro-
cess, or overnight returns.
 The country boasts
36 million hectares of
arable land

Image: Ian
140 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS BEER
MINES A PINT!
As Mozambique Despite its coal resources and immense gas
rethinks its agricultural discoveries, Mozambique remains a largely
rural country. Land, used appropriately, is a
landscape, interesting non-exhaustible resource and will remain long
innovations are after the coal or gas boom is over. According
occurring that make to the World Bank, growth in agriculture is
fuller use of local cash up to 3.2 times better at reducing poverty in
low-income and resource-rich countries than
crops. an equivalent amount of GDP expansion out-
side of agriculture.
As Smart and Hanlon state in their book
Chickens and Beer, a recipe collection for ag-
ricultural growth in Mozambique, economists
have always assumed that bigger, mechanized
farms, able to use economies of scale, are more
efficient and productive than small farms. To
everyones surprise most large-scale farms
throughout Africa have failed. This is due to the
fact that smaller farmers know the land better,
work harder and with more care.
In Mozambique, real agricultural develop-
ment has often been driven by large companies
working with small farmers, as is the case with
cotton or tobacco. Crispin Achola, General Di-
rector of British American Tobacco, told TBY
that around 12,000 people derive a livelihood
from their products. Even though this model is
far from perfect and may bring along the typical
problems of a monopsony market, it is a first
step toward promoting the agricultural pro-
duction and is now being used for what some
people already call the cassava revolution. A
unique supplementary industry is emerging,
too, effectively amounting a solution in a glass.
According to the Dutch Agricultural Develop-
ment & Trading Company (DADTCO) cassava
is, together with maize, the product that con-
tributes more than any other crop to the diet of
Mozambicans. Their estimates show that cas-
sava production, processing, and marketing in-
volve around 12 million people, almost 88% of
the rural population on approximately 2.4 mil-
lion farms. The provinces of Nampula, Cabo
Delgado, Inhambane, and Zambzia are those
where cassava production is more popular. A
report by the International Fertilizer Devel-
opment Center (IFDC) states that in Nampula
province there are 600kg of cassava roots avail-
able per year per person, equivalent to 1.7kg
per person, per day. This is definitely more than
what it is required for domestic consumption,
which means that there is a surplus that farm-
ers can use to earn some money; though that
may not be as easy as it seems. Experts have
always advocated efficiency to increase pro-
duction, but a farmer will never do that if un-
able to reach markets with his surplus. Access
to markets is a problem that must be solved
before concentrating on being efficient. This is
particularly true for highly perishable cassava,
a root with 70% water content that deteriorates
almost immediately once harvested.
To avoid this degeneration problem, and give
access to markets, DADTCO came up with an
innovative solution: a mobile processing unit
(AMPU) that fits a 40-foot container and travels
to cassava-growing regions to process the root
in situ. The AMPU machine turns the roots into
a cassava cake that can be kept for up to a year.
In one hour, the AMPU converts 3.8 metric
tons of cassava roots into 2 metric tons of cake.
DADTCO has now 4,200 registered growers in
Nampula, who sell an average of 3 tons of cas-
sava each.
BIG CHEER FOR THE BEER
Innovative cassava ideas dont stop here as SAB
Millers local subsidiary, Cervejas de Moam-
bique (CDM), decided to partner with DADT-
CO in 2011 to produce the first commercial
low-cost cassava beer in the world under the
Impala brand. The cassava cakes are transport-
ed to CDMs breweries where they replace up to
70% of the expensively imported malted barley.
CDM is now making high-quality beer at high-
ly affordable prices using local resources and
materials, and contributing to the agricultural
and economic development of the country. The
Managing Director of CDM told TBY that, to
date it has purchased cassava roots from over
5,000 farmers, and has indirectly impacted over
50,000 people.
As legendary American musician Frank Zap-
pa said, You can't be a real country unless you
have a beer and an airline. It helps if you have
some kind of a football team, or some nucle-
ar weapons, but at the very least you need a
beer. Mozambique already had the airline and
several beers, but now it is producing the first
cassava beer in the worldsurely a fact worth
drinking to.
 THEBUSINESSYEAR 141

143 144 148

Nazira Abdula, Minister Mobile technology is gradually Jorge Ferro, Minister of
of Health, on the future of narrowing the health gap in Education and Human
healthcare and the effectiveness remote areas, easing suffering Development, on social
of PPPs in developing it. and reducing risk of epidemics. advancement via education.

Health & Education

R E V I E W H E A LT H

After years of steady growth, healthcare spending has kept pace with the
economy, and both access and quality are now improving.

ITS HAPPENING
H
ealthcare budgets
are feeling the
pinch as aid agen-
cies struggle to
meet global demand, while
courting donors in developed
economies where growth is
sputtering. By 2013, donor
funding constituted 33% of
the national budget, down
from 60% in 1990. However,
foreign assistance remains a
critical source of funding for
social services in the country,
and international aid facili-
tates critical healthcare ser-
vices, especially for the 54%
living at, or below the pov-
erty line. Underfunded, and
struggling, Mozambiques
healthcare system has made
remarkable progress, but
coverage remains low at 60%,
and increased investment in
healthcare in every aspect of
service at every level is critical.
Beyond conventional
healthcare improvements,
a paucity of basic services is
undercutting the health and
prosperity of Mozambicans.
A 2010 UNICEF report found
that in spite of a decade of
strong economic growth, only
47% of residents had access
to safe drinking water, with
rural areas especially under-
served. The sanitation situ-
ation is even direr with 17%
having access in 2008. Those
health care facilities that exist
are concentrated in urban ar-
eas, with only 20.9% of rural
inhabitants having access to
medical care.
From an epidemiological
viewpoint, infectious and
communicable diseases re-
main widespread, in spite of
concerted national and in-
ternational efforts. Malaria,
tuberculosis, and AIDS are
endemic. Malaria alone is
responsible for 30% of child-
hood mortality, 40% of all
outpatient attendance, and
roughly 30% of all hospi-
tal deaths. Vulnerability to
droughts and floods leaves the
population vulnerable to wa-
ter and vector-borne disease
such as malaria, cholera, dys-
entery, and another diarrheal
diseases.
The government and international In pursuit of this goal, a
organizations are experimenting with new Health Sector Strategic
mobile clinics, and working to improve Plan (PESS) 2014-2019 was
approved based on seven
supply chains to improve services in strategic objectives and based
rural areas. on the principles of primary
142 THEBUSINESSYEAR
Between 1997 and
2011, infant mortality
rates fell by more
than 50% from 147
to 71 deaths per
1,000 live births,
while the under-five
mortality rate also
halved 219 to 109.
Maternal mortality
is decreasing ahead
of the sub-Saharan
average.
Total Facility-level Costs
by Level of Healthcare,
20142019
Source: Health Policy Project
Tertiary Hospitals 33%
Mobile Clinics and Outreach 2%
Health Centers 57%
District, Rural, and General
Hospitals 8%
MOZAMBIQUE 2015
healthcare, equity and better quality of services.
The seven objectives are as follows: to increase
access and utilization of health services; im-
prove the quality of service provisioning; reduce
the geographic inequities between different
population groups in accessing and utilizing
health services; improve efficiency of service
provision and resource utilization; strengthen
partnerships for health; increase transparency
and accountability on management of public
goods; and strengthen the health system.
Implementing PESS between 2014 and 2015
is projected to cost $1.86 billion (in constant
2013 dollars). The annual cost of the program
will also rise incrementally with 2015 expected
to cost $1.3 billion, and 2019s projection set at
$1.37 billion. The majority of the funding will
come from the Direco Nacional de Sade
Pblica (DNSP) and the Direco Nacional de
Assistncia Mdica (DNAM) who will contrib-
ute more than half the cost.
The breakdown of spending through 2019 in-
dicates a push towards preventative medicine.
The seemingly slim 2% of the pie allocated to
mobile clinics and outreach actually shakes
out to a sizable $37.2 billion. After a successful
pilot program in 2012 sponsored by Mozam-
biques Ministry of Health, in conjunction with
its partners from the Presidents Emergency
Plan for AIDS Relief (PEPFAR) mobile clinics
are moving to the forefront of the antiretroviral
therapy (ART) effort. If Mozambique is to get its
HIV epidemic under control, the country must
first massively expand ART coverage in order to
prevent further infections and treat new cases
before further transmission can take place. In
other words, widely availableand utilized
testing in conjunction with treatment that
lowers the T-cell count and minimizes the risk
of transmission to new partners. A 2014 WHO
report found that, the mobile clinic strategy
enabled the rapid start-up of HIV care and treat-
ment at fixed-site clinics while the clinics were
being renovated for HIV services and their staff
were being trained, and that the use of mobile
clinic staff as mentors to the local clinic staff en-
abled the transfer of skills and the rapid exit of
the mobile clinic personnel, allowing the mobile
clinic to quickly move to new sites.
The bulk of the budget funds health centers,
at 57%. The country has approximately 17.5
million citizens living in rural areas, based on an
estimated 69% share of the countrys total pop-
ulation (World Bank, 2012). Mozambique has
built a network of rural health centers across
the country to support this demographic. A sig-
nificant majority of these facilities are off-grid,
which makes supplying them with fuel and
medical supplies a costly and logistically com-
plicated affair. The facilities are typically modest
structures of limited capacity. Health workers
stationed at these facilities are often overbur-
dened and under immense pressure to meet the
needs of the local population.
As vast as the countrys health-related chal-
lenges are, some recent developments in the
sector warrant optimism. Access to medical
services is on the rise. Between 1997 and 2011,
infant moratlity rates fell by more than 50%
from 147 to 71 deaths per 1,000 live births, while
the under-five mortality rate also halved 219 to
109. Maternal mortality is decreasing ahead of
the sub-Saharan average. In Mozambique, rates
fell from 692 to 408 maternal deaths per 100,000
live births between 1997 and 2011. In the coun-
tryside, access to healthcare is also on the up.
The difference in the under-five mortality rates
between major cities and villages fell from 58%
in 1997 to 11% in 2011. At the same time, the
average population per health center fell from
57,000 in 1997 to 23,000 in 2011.
Improvements in health financing are un-
derpinning these encouraging developments
according to the Overseas Development Insti-
tute (ODI). The institutes 2014 analysis of the
countrys healthcare system underscores how
important sufficient funding and education
are, and the correlation between poverty and
mortality rates. The first major post-war push
was under the auspices of Health Sector Poli-
cy 1995-1999 and the Health Sector Recovery
Program. These policies emphasized: primary
health care, with particular attention paid to
maternal and child health; immunization and
communicable disease control; the rehabili-
tation of infrastructure and the quality of care;
providing better incentives to medical staff;
and strengthening logistical and administrative
management. Subsequent programs have been
implemented, and always with extensive fund-
ing from external sources such as the World
Bank and USAID. What will ultimately play the
greatest role in the improvement of health ser-
vices in the country will be internal growth.
While total health expenditure as a percent-
age of GDP has hovered between 4% and 7%
over the past two decades, in light of the sub-
stantial levels of economic growth in the last
decade, the resources allocated to healthcare
have increased in absolute terms. Total health
expenditure in constant 2005 US dollars has
risen four-fold between 1995 and 2011from
$159 million to $661 millionwith healthcare
expenditure per capita by PPP rising from $17
in 1995 to almost $66 in 2011 according to the
WHO Global Health Expenditure Database.
External funding has trended upwards from
2002 onwards, reaching 70% of total healthcare
spending by 2011. At the same time, the gen-
eral government health expenditure has also
more than doubled, rising from $102 million
in 1995 to $274 million in 2011. The combined
economic growth, incumbent improvements
in health infrastructure, and increasing levels
of education and options for rural populations
are making a dent in the formidable challenges
posed by diseases and other developmental im-
pediments linked to poverty.

the
RIGHT
MODEL
TBY talks to Nazira
Abdula, Minister
of Health of the
Government of
Mozambique, on the
future of healthcare
and the effectiveness of
PPPs in developing it.
What are the Ministrys priori-
ties for the next five years?
Our fundamental objectives
are to facilitate and broaden
the citizens access to pub-
lic health services, to reduce
waiting times, and to develop
the quality of service. We will
also be better equipping the
healthcare institutions and
broadening their scope of op-
eration, as well as providing
improved working conditions
for SNS officials. Meanwhile,
the management of health-
care facilities will be rendered
more efficient, with an em-
phasis on prophylactic mea-
sures of treatment in order to
promote community health.
How would you characterize
the importance of public-pri-
vate partnerships in Mozam-
biques health industry?
A PPP is an instrument of vi-
tal importance to strength-
en intervention of the sector
for the health benefit of the
entire Mozambican popula-
tion. The action of the State
in the promotion of health-
care in communities is based
upon the assumption that a
healthier population is a de-
termining factor in national
development, as well as being
more productive and aware
of its civic responsibilities.
Building on the last point,
it is crucial that the public
sector, as well as the private
sector and the civil society,
can contribute, each one of
them in its own way, to the
vitality of the national health,
contributing in this way to
the common objective to
develop human capital and
add to the peoples empow-
erment. My view is that the
PPP model has worked suc-
cessfully in the health sector,
and we realize that there is
still much potential to be ex-
plored to bolster the existing
partnership for a greater level
of complementarity, cooper-
ation, and synergy. This can
only benefit all stakeholders,
in particular with the pop-
ulation dependent on the
Mozambican public health
system.
What is your strategy for at-
tracting national and foreign in-
vestment to the health sector?
In the first place, we recog-
nize that the right to health-
care is enshrined in the con-
stitution. Secondly, I would
stress that the country has
policies and a healthcare
strategy in place that under-
pin the strategic objectives,
priorities, and relevant ac-
tions to promote the health
of all citizens. Consequently,
the necessary resources must
be provided to meet the task
of improving public health.
In doing this we recognize
Health & Education
that we lack the resources to
undertake this responsibility
alone, whereby cooperation
among the private sector, civ-
il society, and relevant coop-
eration partners, makes the
vital difference. In formulat-
ing public policies the Min-
istry is working to rational-
ize its resources, and deploy
them transparently and ef-
fectively. And in so doing we
aim to supply those services
of most pressing need for the
general public.
What emphasis do you place on
R&D?
Naturally enough, the Min-
istrys activities, and my
mandate specifically, rest on
the pillars of science, tech-
nology, and innovation. We
believe that fundamental
decisions on the future of
Mozambiques healthcare
cannot be made without the
contribution of universities
and research centers. We
will continue to bolster the
connection between science
and technology, and the con-
crete reality of the day-to-day
life in the healthcare arena.
Universities and centers of
knowledge are key to secur-
ing cost-effective solutions.
We intend to strengthen the
partnerships with institutions
engaged in health-related re-
search in the SADC region,
and the wider world; we have
had had successful experi-
ences in doing so. A case in
point is our vital research
into malaria. Once again, the
role of private and civil insti-
tutions in that domain can
bring added value, as well as
expede the decision-making
process and provide creative
responses to market signals.
How will you address the short-
age of health industry profes-
sionals in the country?
Mozambiques health sector
today is far better equipped
and staffed than it was 25
years ago. Our government
is training staff, both med-
ical and technical, who are
THEBUSINESSYEAR 143
INTERVIEW
contributing to broaden the
citizens access to vital health
services. These healthcare
workers have a diversity of
experience ranging from the
private sector to NGOs. An-
other key component to un-
derline is the improvement
in the working conditions of
healthcare professionals, and
the provision of other benefits
to these essential workers. The
government is currently work-
ing to implement the Medical
Statutes that guarantee work-
ing conditions that motivate
all of our staff within the Na-
tional Healthcare System.
BIO
A pediatrician by
profession, Nazira Abdula
graduated from Maputo
Central Hospital with
complementary stages in
the Hospital So Joo do
Porto in Portugal. Abula
earned a Masters degree
in Nutrition and Dietition
from the University of
Flinders, Australia, in 2006.
She worked as a general
practitioner at Medical
Mavalane General Hospital
from 1993 to 1997 and was
involved in the program
to combat malaria in the
Mavalane area. During
the cholera epidemic of
1997 she led the cholera
infirmary of Maputo Central
Hospital. She has taught
at the Catholic University
of Mozambique, and in the
Health Sciences Institute
of Maputo and Beira. Having
been Deputy Minister of
Health from 2010 to 2014 in
the previous administration,
Abdula was appointed
Minister of Health in
January 2015.
144 THEBUSINESSYEAR MOZAMBIQUE 2015
FOCUS MOBILE HEALTH TECHNOLOGY
DIAL
A DIAGNOSIS
Mobile technology is gradually narrowing the health gap in remote areas of
Mozambique, easing suffering and reducing unnecessary risk of epidemics.
IN LARGE, YET BUDGET-CONSTRAINED
countries, mobile technology has become a key
solution to providing cost-efficient healthcare
in rural and difficult to reach areas. In Mozam-
bique, Malaria is the primary cause of death
among children, accounting for 10.3% of all
child mortality in 2011. Especially in rural areas,
diseases, then, can have fatal consequences,
where inhabitants argue that distance, a lack of
transport, or the cost of healthcare keeps them
from seeking hospital treatment. It is in these
cases that technology can play a vital role.
In 2013, inSCALE (Innovations at Scale for
Community Access and Lasting effects) began
implementing technology-based intervention
in Inhambane. Six districts are already being
monitored as part of the scheme (Inharrime,
Homoine, Morrumbene, Massinga, Mabote
and Inhassoro) and another six are awaiting
action (Zavala, Jangamo, Panda, Funhalouro,
Vilankulo, and Govuro). This plan, financed
by the Bill and Melinda Gates Foundation and
overseen by Malaria Consortium, leverages
mobile technology to support rural areas with
healthcare services. The project involves the
use of APEs (Agentes Polivalentes Elementar-
es), who are community health workers select-
ed in their own villages to receive healthcare
training and, more importantly, technology.
inSCALE provides APEs with mobile devic-
es called Commcare that are equipped with
a software designed to diagnose and recom-
mend treatment for malaria, pneumonia, and
diarrhea through standardized questions and
answers. Some of the innovative tools in this
device include respiratory timers to support
pneumonia diagnosis. These smart phones are
designed to provide immediate feedback and
use audio and imaging to improve diagnostic
support. Thanks to this system, the patients
data is sent to a server allowing the APE to col-
lect key indicators and patient history. Besides,
the devices are connected with Health Centers
to improve communication and support with
APE supervisors. According to Member of the
US House of Representatives, John Doolittle
developments in medical technology have
long been confined to procedural or pharma-
ceutical advances, while neglecting a most
basic and essential component of medicine:
patient information management. Besides
supporting diagnosis and treatment, Com-
mcare aims at managing patients information
in the most inaccessible areas.
Nevertheless, the diagnosis and manage-
ment of patient information is not the entire
story. Despite worldwide vaccine availability,
delivery to rural areas is often a logistically
complex challenge. Margarita Matsinhe and
Village Reach are also making use of mobile
technology to ease this problem on a cost-
share operated project, run and managed by
the government. They have designed a mod-
el, namely Dedicated Logistics System (DLS),
to manage health stocks more efficiently and
improve the vaccine supply chain by pioneer-
ing the use of SMS text messages to improve
systematic immunization. Vaccine stocks in
rural health centers have fallen from 80-81%;
the incidence of vaccines not being refrigerat-
ed has decreased from 60-64% and the vacci-
nation of children aged from 24 to 35 months
has increased from 69% to 95%. Besides being
more effective, the DLS is also 17% more effi-
cient and has decreased the vaccine cost per
child and per dose. Today, DLS serves more
than 400 health centers and a population of
over 6 million. Margarita Matsinhe was grant-
ed the Vaccine Innovation Award in 2013 and
named one of the nine worldwide leaders
changing the vaccine game by Melinda
Gates in 2014.
Private companies are also coming up with
innovative solutions and investing in technol-
ogy in Mozambique to support rural areas.
Jalaludin Sidi, Co-Director at Clinicare told TBY
about their plans: We are working on a mobile
technology project set to become operational
by March 2015. This project includes a mobile
van with generators and special equipment for
performing X-rays, mammograms, laboratory
tests, prostate examinations, and checking for
malaria, among other diagnostics. Clinicare is
set to begin with a catchment area of 150km
surrounding Maputo and, if successful, plans to
expand into other provinces.
It seems, then, that universal coverage, and
not medical technology, is the foundation of
any effective healthcare system. Cammcare,
DLS, and Clinicares mobile van are prime ex-
amples of how medical technology should also
support this objective of universal coverage.
 Health & Education THEBUSINESSYEAR 145

ACCESSING HEALTHCARE VOX POPULI

C HEALTHY PROFIT
linicare has been
growing over the past
two years and our
aim is to continue that growth.
The intention is to expand our The evolution of health insurance has allowed
clinic in Maputo by a further more access to better treatment, offering diverse
ten treatment rooms because
opportunities to clinics across the country.
our work has been positively
received by both the local and
expatriate sectors. In 2015 we

will also be expanding into the
provinces, specifically to Nam-
pula in 1Q2015, and then to
Nacala. We are currently final-
izing details, such as human
resource requirements, in or-
der to move into northern Mo-
zambique. Health insurance is
becoming a significant market
for us because a number of
larger companies are coming
here to serve their expatriate
clientele. Thanks to the envi-
ronment that we provide and
ELIAS PINO
Director, Clinica de Sommerschield
the people that we have, they
dont need to go to other places
for certain surgeries and other
proceduresthey can have
them carried out here. Over
the past three or four years,
even the public sector has
been investing in new equip-
ment and resources which has
been beneficial for the popu-
lation, as is competition. The
number of private clinics in
Maputo has increased over the
past three years.
JALALUDIN SIDI
Co-Director, Clinicare
M
aputo Private Hospi- in more individuals being able
tal is a member of the to be treated at our facility. Pri-
Lenmed Group of hos- vate patients (not covered by a
pitals, South Africa. The Lenmed medical care provider) have to
Group was established more pay significant amounts toward
than 30 years ago, and owns admission deposits, which in
seven hospitals in South Africa, certain instances result in de-
as well as two international fa- lays during admission to the
cilities namely Bokamoso Pri- hospital.
vate Hospital in Botswana and
Maputo Private Hospital. This
is a 105-bed institution, that
provides all the major clinical
disciplines, supported by state-
of-the-art technology. Some of
these disciplines include inter-
nal medicine, general surgery,
anesthesiology, orthopedic sur-
gery, obstetrics and gynecology,
pediatrics, radiology featuring
MRI, CT scans, nursing, ICU,
NICU, casualty (24/7) and four
well-equipped operating rooms.
Supporting the above functions,
we have a modern pharmacy
service. These services are pro-
vided by 16 full-time specialists,
122 nursing staff and a further WYNAND
100 specialist consultants that KLEIJNHANS
make use of our facilities to
see private patients. The pro-
Hospital Director,
liferation of health insurance Maputo Private
in Mozambique has resulted Hospital

T
he clinic was estab-
lished in 1993 and
has seen growth
since then. We began with a
building in Maputo that we
have increased in size with
several new consultation
rooms. In the near future we
will construct a new building.
The sector is improving. In the
beginning, only Cruz Azul and
our own company were offer-
ing good quality private health
services, but today competi-
tion is on the rise, which is a
healthy development. Having
new private clinics in the re-
gion is good because if you
need a specific service, lets
say a scan, several clinics now
offer that service. Also, we
have an excellent relation-
ship between the clinics, and
where needed, we utilize each
others services and technol-
ogies. Besides, many doctors
are present in several clinics at
different times whereby we are
effectively an extended family.
Our business goal, naturally
enough, is to provide patients
the best possible treatment.
Our staff has been at the clin-
ic with me for around 20 years
and is extremely adept at doing
this. At this point in time we
have 140 employees (up from
75 in 1993) and 20 beds where
we offer the best healthcare.
146 THEBUSINESSYEAR MOZAMBIQUE 2015
As the country struggles to provide modern education to all in the face
of immense adversity, rising indicators for attendance and gender
equality are pointing the way forward.
Review E D U C AT I O N
MIND
THE GAP
Educators are up against far more than the
countrys macroeconomic indicators would
suggest in their efforts to provide universal qual-
ity education. After 16 years of civil war and the
incumbent instability, the countrys low levels
of adult education are forcing policy makers
and teachers to rebuild from the ground up
and the task is daunting. Even though the gov-
ernment spent 18% of its budget on education
in 2012 or 6.2% of the nominal GDP, only 63%
of fifth-graders walked, and for 12th graders,
the rate was a meager 7%. But while enrollment
rates, literacy, and gender balance indicators
still require close attention, decades of reforms,
trial, and error are starting to pay off as each year
brings progressively better results than the last.
While encouraging signals are emerging from
the education sector, an unflinching analysis of
the most recent data shows that problems like
gender imbalance and low completion rates will
require more than more just funding to fix. Ac-
cording to the BTI country report, completion
rates are falling in the upper levels of education.
In secondary schooling, only 7% of students
will complete 12th grade. The country report
accredits this to a low quality of teaching, and
teacher absenteeism is also cited as a contribu-
tor to the high attrition rate.
ITS A LONG WAY TO THE TOP
What is important however is that educators
have demonstrated their ability to close gaps
and enact meaningful reforms in schools across
the country. The key now is to extend those de-
velopments into older age categories while im-
proving quality across the board. Dropout rates
are high. Comparing urban to rural enrollment
rates for males ages 6-11, the difference by per-
centage was reduced from 14.2% in 1997 to 1.2%
in 2008. In just over a decade, enrollment levels
by residential density were brought close to par-
ity across the country. That said, education is
still more comprehensive, and of higher quality
in the south. For females, similar trends are at
play although overall enrollment rates are still
far behind those for males.
Turning to a slightly older demographic12
to 13 years of agethe breakdown of schooling
comes into focus. Again between 1997 and 2008,
Between 1997 and
2008, enrollment
differentials shrank
enrollment differentials shrank from 66.2%
to 51.6%. This improvement of around 15% is
from 66.2% to 51.6%.
overshadowed by the overall low enrollment This improvement
rates in rural regionsimproving from 26.1% to of around 15% is
68.6%. For rural females in the same time peri- overshadowed by the
od, the rates are encouraging, up from 13.6% to overall low enrollment
50%. Even though rates are going up, the drop- rates in rural regions
out rates that these numbers indicate are dis-
concerting. In 2013, the gross enrollment ratio
improving from 26.1%
for secondary education was 27.2% for males, to 68.6%. For rural
and 24.8% for females. Meanwhile, the net en- females in the same
rollment rates for males and females were 18.6% time period, the rates
and 18.1% respectively. are encouraging, up
from 13.6% to 50%.
PROGRAMS WORK
The NPS 2008 National Education History
Module revealed other impediments to edu-
cational attainment that indicate insufficient
financial aid for students and supply side
problems. Supply-side problems in this case
include insufficient classroom vacancy, lack
of schooling within a reasonable distance, lack
of age-level appropriate studies, shuttered
schools, no teachers, unmotivated teachers,
and lack of books. High cost includes school
fees, and the costs of uniforms and materials.
In the decade between 1999 and 2008, around
12% of respondents consistently cited supply
side problems as the reason for not attending,
or dropping out of school. Higher Education
High costs polled at above 10% dipped to Enrollment
5.1% in 2004, and remained stable for the re- Source: World Bank
mainder. This decrease comes in the wake of
several internationally backed programs to 140
make education and related materials afford-
able. Education programs work. One such 120
program backed by the Canadian Department
of Foreign Affairs, Trade, and Development 100
provided more than 30 million textbooks and
workbooks to students in primary grades 1 80
to 7. It also developed a strong foundation
for procurement management within the 60
Ministry of Education by developing systems
and processes that are now integrated in the 40
annual planning and reporting cycles of the
Ministry of Education and the Government of 20
Mozambique, all in the first phase of the proj-
ect. This assistance is annual, and continues to 0
procure between 14-17 million primary school
2000
2004
2005
1990
2010
1980
1995
1985
2012
1975
textbooks, workbooks, and teachers manuals
every year. Total Enrollment Private Enrollment
 Health & Education
The third major impediment, which consis-
tently deflates enrollment by around 12%, is
defection to the workforce. Even among 8-year
olds, attrition is at 9.2%, and the rate goes up
with age, peaking at 14, at which point 22.5% of
respondents cited labor issues as their reason
for dropping out of, or not attending school. But
with a per-capita GDP of $605.03 in 2013, many
families simply cannot afford to educate their
children when even a few extra dollars represent
a significant addition to household income, and
the cost of attendance is a budgetary obstacle.
HUGO BOL HITTING BACK
While only a small percentage of Mozambicans
CEO, Rumos make it as far as higher education, the success-
Moambique ful few can avail themselves of a growing num-
ber of institutions where educational standards
are improving yearly. In fact, when Mozam-
Our dedication to the bique gained its independence in 1975, 93% of
the population lacked an education, and at the
development of training
countrys sole university, the Eduardo Mond-
as an incrementing tool lane University (EMU) many lecturers had to
of competitiveness in be hired from abroad. Meanwhile, the state
organizations has made launched massive literacy campaigns in con-
us experts in the training junction with hefty investment in primary and
and technical certification secondary education. Although this campaign
has suffered setbacks, decades of hard work are
market. We clarify any paying off as students who navigate the entirety
and all questions during of the educational system go on to become the
the framing stage of any leaders of Mozambiques emerging economy.
training action, leading Prior to 2000, the higher-education system
the customers to what was plagued by bureaucratic inefficiency and
best suits their needs. lack of funding. Outdated curricula ensured
that those students who graduated were ill-pre-
After each course, pared for the market realities. Institutional re-
through the Post-training form, starting in 1993 paved the way for private
support service, Rumos institutions to operate and in doing so, created
accompanies each trainee more openings while fostering a competitive
free of charge during the environment wherein poorly-run schools were
forced to compete with their more successful
six months after attending
counterparts. In 1995 there were no private uni-
the sessions, so that any versities, and a total of four public universities
doubts that arose can be served 6,890 students. Almost two decades later
immediately resolved. in 2012, private universities outnumbered pub-
THEBUSINESSYEAR 147
lic ones by a ratio of 26 to 18, and the collective
enrollment of all universities in the country was
over 123,779 (some universities did not provide
data on enrollment). Other metrics improved
alongside total enrollment. Between 2003 and
2012, female enrollment rose from 32% to 40%,
indicating that the fight for gender equality in
higher education is paying off. Graduation as
a percentage of enrollment is also up from 4%
in 2003 to 9.1% in 2012. In all areas, universities
exhibit significant room for improvement, but
without accounting for the monumental im-
pediments to growth, it is easy to discount the
significance of these gains.
In 2000, the first Higher Education Strategic
Plan 2000-2010 was implemented under the
auspices of the newly formed Ministry of Higher
Education, Science, and Technology (MHEST).
However, by 2005 MHEST was shuttered, and
the Ministry of Science and Technology (MST)
took over science and technology, leaving high-
er education under the auspices of the Ministry
of Education. Recognizing the need to empha-
size science and technology, the government
approved the science policy in 2003 and by 2006
had laid out the National Strategy for Science
and Technology. These developments laid the
foundation for a regulatory framework condu-
cive to building a STEM intensive didactic agen-
da that was calibrated to the countrys develop-
ment priorities.
This focus on increasing human capacity in
the science and technology fields has been bol-
stered by a slew of scholarships that have been
rolled out over the last decade. In addition to
promoting the countrys most promising schol-
ars, these financial incentives reduce the finan-
cial barriers to education. Currently, through
the Institute for Scholarship, around 3,000 stu-
dents benefit from scholarships of which 33.7%
are funded by the MHEST. About 80% of the
beneficiaries hail from households that earn
less that $270 per month, and of these students
39% are female, and 42% are enrolled in science,
engineering, and health related programs.
148 THEBUSINESSYEAR
INTERVIEW
BIO
Born in the province of
Nampula, Jorge Ferro
graduated in International
Relations and Diplomacy
at ISRI in Mozambique,
completed a Masters
degree in Public Policy at
the University of Zimbabwe
- SARPS and earned his
PhD at the Federal Rural
University of Rio de Janeiro,
UFRRJ in Brazil. Both a
writer and broadcaster,
Ferro is currently Rector
of the University Lrio
(UniLrio) in Nampula,
Mozambique. In 2011 he
assumed the position of
President of the Association
of Portuguese Speaking
Universities (AULP)
and is a member of the
Executive Committee of the
Association of Universities
of Southern Africa (SARUA).
A recipient of both national
and international awards,
in 2012 he was named
Personality of the Year in
Mozambique.
MOZAMBIQUE 2015
SOCIAL
STUDIES
TBY talks to Jorge Ferro, Minister of Education and Human
Development, on facilitating social advancement through effective
educationand valuing the teacher.
What are the main challenges for the Ministry of
Education and Human Development for the next
five years?
We are tasked with nothing less than build-
ing a country. There can be no development
without universal education and a collabo-
ration between between those who know
how to think and those who know what to
do. In this light, we cannot lightly accept
the reality that there are not enough schools
for those who want to study. We are short of
classrooms, equipment and learning materi-
als, which must be remedied. Our teachers,
who are the basis of society and of a future
based on knowledge, tolerance, respect, and
development, need to see their professional
careers recognized as being among the core
professions in civil society. We need also new intake of teachers, as well as those with
to guarantee the effective management of experience, come fully to grips with the basics
schools, and the active intervention of par- of both teaching and nurturing children.
ents. Our ambition is to launch the Club of
the Friends of Education and invite entities How would you describe the existing education in-
such as companies, banks, artists, and reli- frastructure in Mozambique and what investments
gious organizations to contribute to the de- are necessary to fulfill your medium term goals?
velopment of basic and high schooling, in a As in many countries, infrastructure inevita-
concept that we call Solidary Education. bly has its shortfalls. Yet the idea is simple;
There is no progress while our children are to build more schools, be better equipped,
unable to read, write, and express themselves and provide students a nurturing environ-
effectively. ment conducive to development and growth.
In 2015, we will integrate more than 8,000
How do you expect the literacy ratio in Mozam- new teachers into the school system. Senior
bique to evolve? teachers have the responsibility of adminis-
Literacy can be achieved by providing ade- tering, controlling, and implementing policy
quate resources to schools and by galvanizing stipulated by the Ministry, with the support of
society to comprehend the value of education. Provincial Directors. This year has commenced
We still have a high illiteracy rate, but it is des- with the de-centralization of budgets and real-
tined to drop. The previous government had location of some of these to schools. This will
the goal of helping 1 million people into liter- enable schools to establish the necessary au-
acy, and the milestone was almost achieved. tonomy to establish basic operational princi-
Once again, this is a responsibility that be- ples. We will rigorously and effectively control
longs to us all. This year we will ensure that the the resources for maximum effectiveness.

How would you characterize the significance of
education and human development to ensure
long-term good governance and political stability?
Governance and politics require qualified pro-
fessionals to implement policies and create an
environment of confidence that is credible to
investors. Companies, government, univer-
sities, and schools reflect the quality of their
human resources, and it is easy to see why hu-
man capital is the engine of an organization. In
Mozambique, there is a lack of skilled people
across many fields, but especially in the areas
of engineering and the sciences, and we require
an urgent closing of this gap. While the majority
of the developed countries have a plan for pro-
fessional teaching, in Mozambique we still face
an insufficient number of skilled professionals.
We need policies that focus on the planning
and investment in skilled labor in the long-term
or in other words a planned investment in edu-
cation. The educational system should provide
an opportunity for people to become fuller citi-
zens to the benefit of the nation at large.
What are the main investment opportunities in the
education sector for foreign investors?
The pitfalls of the education system are per-
Health & Education THEBUSINESSYEAR 149
fectly clear. We welcome investments in
schools to develop professional education,
universities, and research centers that want
to focus on the disciplines of natural scienc-
es and engineering, mainly in the emerging
areas of oil and gas. We also want to focus
on the first few years of childhood and in
the special schooling for students with spe-
cial requirements. It is necessary to under-
stand Mozambiques reality and to evaluate
the need for relevant investment, although I
would say that there are plenty of opportuni-
ties for investment.
IN NUMBERS
Ministry of
What are the main objectives you would like to Education
achieve during your tenure? and Human
I would like to see a reduction in the number
of students who abandon education, thereby
Development
turning their back on the development of their
country and of greater freedom. It is also im-
portant to make schooling more appealing to Over
youth by exploring the local curriculum and in-
stilling the importance of a solid education. We
also want to underline the dignity of teaching 8,000
as a career, as a fundamentally important sta- new teachers to be
tus within society, and to promote the idea of instated in 2015
thinking, rationalizing, and doing.
150 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
How would you describe the
evolution of your university over
the past 18 years?
ISCTEM was launched 18
years ago, in 1996. We start-
ed with four courses with
less than 200 students at that
time. Today, we have around
16 courses, Masters and PhD
programs, as well as short-
term courses across diverse
fields. Our main focus is on
courses that correspond to
the needs of the market, based
on which we develop our pro-
grams. Mozambique is expe-
riencing growth in the indus-
tries of petroleum, gas, coal,
and other main areas in which
international companies are
interested. It is important
that, locally, we have the ca-
pacity to take part in related
projects by training local staff.
Our institution pioneered in
petroleum gas management
Masters programs in Mozam-
bique. In the future, we will
offer other courses on this.
We are in contact with some
universities all over the world
to create programs that can
be taught by local and inter-
national teachers in this field.
We have academic staff com-
ing on board to offer programs
on informatics engineering,
pharmacy, dentistry, and even
for this course on petroleum
gas management that we re-
cently opened. I am aware of
the need to reinforce the staff
body by bringing on board
other schools that already
have a history of working in
key fields. We started with a
preliminary approach to Can-
ada, India, and Brazil and will
move forward until we create
TBY talks to Joo Leopoldo da Costa, Rector of the Instituto Superior de
Cincias e Tecnologia de Moambique (ISCTEM), on creating links for
work experience, the socioeconomic development of the country, and the
development of new courses.
DOWN TO
A SCIENCE
The Instituto
Superior de
Cincias e
Tecnologia de
Moambique
(ISCTEM)
Pioneers in
Mozambique for
petroleum gas
management
Masters
programs
the optimum balance of aca-
demics and scientists that are
interested in this. Locally, we
are also in a process of discuss-
ing and involving the National
Institute of Petroleum. Fur-
thermore, I see the university
as a universal area of debate,
and the sciences, after all, are
universal. We need to involve
more brains, skills, and vision
to improve our offering. As I
mentioned earlier, we were
also the pioneer of courses
in Dentistry and Pharmacy,
where originally most of our
partners were from Portugal.
We forged links with compa-
nies offering internships to
our students and to also can-
vass their thoughts on gaps in
educational provision that we
could fill. We have a school of
Architecture and one of Law
that has been producing suc-
cessful lawyers for more than
14 years. Currently we have a
PhD course in Law that was
developed together with the
University of Lisbon in Por-
tugal. We have a Biomedical
Science School, which offers
courses in Pharmacy, Den-
tistry, and Medicine. We also
have a course of Social Scienc-
es and an ISCTEM Business
School that offers courses in
Companies Management, In-
surance, Marketing, Tourism
Management, Human Re-
source Management, and Ap-
plied Management. They are
designed as a matrix that fa-
cilitates exchange of contents
among the various programs.
What role are universities play-
ing in the country for socioeco-
nomic development?
The universities might have
the critical mass that could
produce very independent
thinking. But thinking is not
enough; we need to act. It is
important that companies
and society at large also take
part in such debates. How-
ever, the university holds
the principle responsibility
in terms of doing research
to see what the market lacks
and bringing about scientif-
ic solutions. Universities can
empower people and teach
them to deal with problems.
Universities should encour-
age people to play a role. The
main barrier to that is ade-
quate facilities, which require
investment. The ISCTEM also
supports the socioeconomic
development of the coun-
try by collaborating with the
government. For example, we
have signed an MoU with the
Council of Maputo to allow
our health students to go free-
ly to visit families.
What are the objectives of the
university for 2015?
My target is to make the Ge-
ology and Mines Engineering,
Petroleum Gas program, and
the Biomedical Science School
more robust. The other chal-
lenge we have is to open two
more post-graduate programs,
one PhD in Public Health and
another MSc in Nutrition and
Food Security.
BIO
Joo Leopoldo da Costa
studied Medicine at
Universidade Eduardo
Mondlane. He holds a
Masters degree in Public
Health from London
University and a PhD from
Universitat Autnoma de
Barcelona, Spain. He has
been the Rector of ISCTEM
since July 2004. Previously
he was Vice-Dean for
Research and Extension
at the faculty of medicine
at Universidade Eduardo
Mondlane. He is member
of the European Club of
Rectors and was formerly
public heath consultant for
international organizations.
He served as a doctor
for more than 25 years
and spent seven years in
rural areas. He was also
Provincial Director of Health
in Niassa and Maputo.

How has Universidade Politcni-
ca evolved during its 20 years in
education?
Universidade Politcnica ben-
efited from the 1993 law per-
mitting private sector entities
to enter the higher education
sector, which came into effect
on September 13th, 1995. Our
first intake was 165 students,
and initially we did not have
our own building, but part-
nered with LAM, where we
would made five scholarships
available in exchange for use
of their building. Today, our
student body exceeds 7,000.
Over the past 20 years, we
have expanded geographical-
ly from Maputo to Zambezia,
Quelimane, Nampula, Naca-
la, Tete, and Xai Xai. We also
have a distance-learning pro-
gram. In 2004, we opened the
first blocks of the 14,000sqm
university, which feature two
blocks for graduate programs,
a rectory, a block housing the
central library and our Foun-
dation (FUNDE), a block for
the Mozambique Business
School, one for the profes-
sional technical education
and general secondary edu-
cation, one housing the gym,
and another housing the stu-
dent leisure club.
How is the role of women chang-
ing in the education system?
Most of our programs have
more women than men, and
indeed, former President
Guebuzas daughters studied
at our institution. There is a
movement to promote high-
er education among women,
and a number of corporations
also provide higher education
for gifted women who would
make
the grade
TBY talks to Loureno do Rosrio, Rector
of Universidade Politcnica, on women in
education, distance learning, and the difference
between private and public institutions.
not otherwise have the fi-
nancial means to study. This
movement has borne fruit in
that many women have sub-
sequently assumed high po-
sitions in international com-
panies.
To what extent is the universi-
ty leveraging ICT to extend its
services beyond the tradition-
al lecture hall through online
learning?
The national energy deficit
has curbed the uptake of on-
line technology and distance
learning. We made an agree-
ment with UNIUBE, the Uni-
versity of Uberaba in Brazil
that specializes in enabling
distance learning in its home
country, covering remote ar-
eas such as Amazonas and
Mato Grosso. Rather than on-
line education, it relies on dis-
tance learning through clas-
sic media such as telephony,
printed materials, and strate-
gically-located teachers. We
have relied on these methods
since starting our program in
2007. Last year, 800 students
entered this program, where-
by distance learning accounts
for roughly 10% to 11% of our
overall student body.
What are the most important in-
ternational partnerships of Uni-
versidade Politcnica and what
strategies do you pursue to in-
crease cooperation with other
institutions?
International partnerships
have always been our initial
strategy. As national pioneers
in private education we need-
ed a solid strategy, taking in-
spiration from other univer-
sities abroad. This is why we
Health & Education
have internationalized our
teaching staff and post-grad-
uate component. We have
agreements with PUC-Minas
in Brazil, the Federal Univer-
sity of Minas Gerais in Brazil,
the Federal Fluminense Uni-
versity in Brazil, PUC-Rio in
Brazil, the Lisbon University
Institute (ISCTE) in Portugal,
the University of Coimbra
in Portugal, the University
of Groningen in the Nether-
lands, and the University of
Lecce in Italy. With these uni-
versities we have established
graduation, exchange, and
Masters and PhD programs.
As part of the arrangement
graduates become qualified
from both institutions. We
have also hosted prominent
figures on special occasions
to address our institution.
Among those figures are Fer-
nando Henrique Cardoso,
former President of Brazil
and former Portuguese Prime
Minister Antonio Gutierrez.
BIO
Loureno do Rosrio
was born in Marromeu,
in the Sofala province of
Mozambique. He graduated
in Portuguese and French
Arts, and subsequently
completed his PhD in
Literature at University of
Coimbra in Portugal. Before
returning to Mozambique,
he worked for 12 years
at Universidade Nova de
Lisboa. He is Rector of
Universidade Politcnica.
THEBUSINESSYEAR 151
INTERVIEW
ROSNIA
PEREIRA DA
SILVA
Executive Director,
Fundao
Universitria para
Desenvolvimento
da Educao
(FUNDE)
What motivated the creation of
FUNDE?
The Universidade Politcnica is
a private university, and we did
not have the support of donor
partners. As a private institu-
tion we were taxed heavily. As
a consequence, we decided
to create FUNDE to provide
extension courses and activities
that supported the development
of education in the country. Our
motto is Educate to Develop.
We believe in the principle that
only with well-trained people will
effective development take place.
Our focus is on empowering
communities so that they can be
a part of the countrys develop-
ment and can work to improve
their own living conditions.
To what extent are public-pri-
vate partnerships important for
FUNDE?
We have established a partner-
ship with the city council to run
five public schools, at no cost to
the government. We are currently
managing just one school, Escola
Primaria 25 de Junho, but our
goal is to manage five institu-
tions. We have partnered with
construction companies for the
rehabilitation of the school and
organized auctions and fundrais-
ing events. In addition, we are
working with CDN and Vale on
the resettlement of families in
Nampula.
152 THEBUSINESSYEAR MOZAMBIQUE 2015

VOX POPULI PRIVATE UNIVERSITIES

LINKED IN
Private higher education institutions play a key
role in educating the countrys workforce and are
increasingly attracting international students.

L
ast year we approved a new vision and a new mission for
the university, which is to have a greater focus on research.
That means that research will be the basis of all our activ-
ities in terms of training our students. We expect that our research
results will be used to improve our lectures. In order to build a re-
search university, it requires a lot of investment, particularly for the
training of lecturers. We expect to train people as much as possible to
the Masters and PhD level so they can participate more in the uni-
versitys growth and development. Our university has the most inter-
national students in the country. They want to come here because
we are among the best in Africa. Because of our ranking in the region
and the world, we are getting many foreign students, traditional-
FERNANDO VENTURA LEITE
ly from lusophone nations, but also increasingly from other source Rector, Instituto Superior de Transportes e
countries. We are working on developing our relationships with the Comunicaes (ISUTC)
private sector, but not enough people recognize how we can help pri-

W
vate business. The examples that we have with petroleum companies e decided from the outset that ISUTC (Instituto Superior
like Anadarko show that this can be fruitful. Maputo Port is also an de Transportes e Comunicaes) would begin by concen-
impressive example. trating on engineering and technology. Of course that was
a problem because most high school graduates do not tend to favor
ORLANDO A. physics and mathematics, which is why after ten years we still did
not have more than 400 students. We decided to be a more aggres-
QUILAMBO sive in organizing a range of training sessions in these areas. And
Rector, once the post-graduate degree courses began, our schools name
Universidade became more well-known to the extent that over the past four years,
we have more than doubled the student body. The relationship with
Eduardo the private sector is excellent, and we are already on the second of
Mondlane our courses with Vale due to the success of the first. I know that Vale
(UEM) is keen to increase the professional training of its workers, and even
if professional training is not our core activity, we are pleased at
the prospect of entering this area. Meanwhile, we work extensively
with the National Roads Administration (ANE). I organized the citys
courses in the field of maintenance two years ago, and welcomed
around 100 participants from the ANE.

HOME AND AWAY
As more and more foreign workers flock to Mozambique, there is a
growing demand for internationally recognized schools.
MAPUTO HAS numerous options offering
a combination of national, French, English
and American curricula. But it is not just the
capital doing so. Other cities have followed
the trend. One Mozambican-born interna-
tional school even managed to spread its
wings abroad.
Founded in Maputo in 1998 by Anil and
Roshni Melwani, the rise of the Young Gemy-
nds International School is nothing short of a
success story. Having started as a kindergar-
ten in the capital city with only four teach-
ers and eight students, the school today has
a staff of 32 offering early schooling, primary
and secondary education to over 300 stu-
dents. Young Gemynds follows the American
Calvert Curriculum for the pre-primary and
primary levels and the Cambridge Curricu-
lum for the secondary level.
But Young Gemynds has expanded its hori-
zons well beyond Maputo. In 2001, a branch
opened in Beira, Mozambiques second larg-
est city, which today has over 100 students
guided by seven trained teachers and eight
support staff. Other branches were opened to
meet the growing demand for quality school-
ing in cities like Xai-Xai, Chimilo, Nampula
and Tete. Meanwhile, the Melwanis have
set their eye on the growing Asian market.
In 2012, Young Gemynds opened in the
fast-growing city of Pune in India, and a year
later a preparatory school was inaugurated in
BSD City, Indonesia.
The American International School of
Mozambique (AISM) is arguably the most
well-known international school in Mapu-
to. It is also, by some margin, the most ex-
pensive. Annual tuition fees vary from some
$13,000 in Grades 3 and 4 to over $25,000 in
Grade 12. Founded in 1990, the AISM is an IB
World School offering early learning, primary
school, middle school and high school, pro-
viding US-style college preparatory courses.
It has over 60 classrooms, state-of-the-art
sport facilities, and an auditorium for music,
dance and drama. In 2014, some 575 students
representing nearly 40 nationalities were en-
rolled. As most international schools in the
country, the AISM offers a special scholar-
Health & Education THEBUSINESSYEAR 153
INTERNATIONAL SCHOOLS FOCUS
DR. MARY JO
HEATHERINGTON
Director, American
International School of
Mozambique (AISM)
Much of our strategic plan
has been accomplished
over the past couple of
years. Our boards of
directors are elected
from amongst our parent
ship program for Mozambican students who
otherwise would not be able to enter second- bodya high number of
ary school. expatriates along with
The French International School (EFM) about 20% Mozambican
was established in 1979. An initiative of par- parents. Our financial
ents concerned regarding the education of model was developed
their children, the EFM first started in a small
garage for just a handful of pupils. Today,
to help us plan our
the school has over 400 students from some growth and expansion
36 countries. Fees vary from some $3,000 in in terms of anticipated
the early stages up to $7,000 in Grade 12. The student enrollment and
school is strictly bilingual (English-French), the revenue that will be
even in the early schooling stage, while Por-
generated, taking into
tuguese is taught as a foreign language. In-
ternational language certifications in Portu- account our expenses,
guese, English, Spanish, German and French particularly salaries.
are available.
Founded in 1975, the Maputo Internation-
al School (MIS) is the oldest such institution ELISABETH
in the capital. It offers pre-school education CHAVES
based on the British National Curriculum
Early Years Program to children from age 3
Director, Ecole
to 5, while in the later stages up to Grade 13 franaise de Maputo
students prepare for exams conform the Cam- (EFM)
bridge International Examinations Board. An-
nual fees vary from some $1,300 in pre-school
to some $3,300 in the higher grades. The EFM was created
The Willow International School was es- in 1979 by a group of
tablished in 2003. By 2011, it had over 400 parents keen for their
students enrolled in both primary and sec- children to study within
ondary education. Instruction is in English a quality system. They
with additional courses in Portuguese, while
graduates can earn both Cambridge and na-
were pioneers and
tional certificates. Annual tuition fees vary visionaries for the future
from some $2,900 for early schooling to some with an ambitious project
$4,600 in the highest grades. of creating a school
Finally, the Grandeur International School that today hosts 420
in Maputo offers the Calvert Curriculum for
students. In 1989 we
toddlers and kids up to Grade 6, while its
High School Department follows the Cam- got the approval of the
bridge curriculum. As said previously, Ma- French Ministry of National
puto is not the only city offering interna- Education, which ensures
tional schooling. For example, a number of that the educational
concerned parents in Chimoio in the heart of system follows the French
the country established the Chimoio Interna-
educational program.
tional School (CIS). Long story short, people
planning to move to Mozambique need not This means that students
to worry about being able to offer their chil- diplomas are recognized by
dren a proper education. France.
 TANZANIA
QUIRIMBAS
ARCHIPELAGO
NAMPULA

CAHORA BASSA

ZAMBIA ISLAND OF
MOZAMBIQUE

Lago Cahorra Bassa

ZIMBABWE

GORONGOSA MOZAMBIQUE PEMBA

NATIONAL PARK

BEIRA

CINE-TEATRO TOFO
BAZARUTO
ARCHIPELAGO

INDIAN OCEAN
INHAMBANE

TOFO BEACH

MAPUTO
SOUTH MOZAMBIQUE IS INCREASINGLY ON THE
AFRICA RADAR OF INTERNATIONAL TRAVELERS.
PONTA DOURO FROM COASTAL CITIES TO TANTALIZING
SAFARI PARKS AND SEEMINGLY ENDLESS
BEACHES, THE COUNTRYS TOURISTIC
SWAZILAND POTENTIAL IS UNDENIABLE.
 THEBUSINESSYEAR 155

159 162 164

Silva Dunduro, Minister Hiuane Abacar, General Director MICE and business tourism
of Culture and Tourism of of the Mozambique Tourism remain key segments within the
Mozambique, on strategies for Authority, on promoting the industry, while development
attracting visitors. industry internationally. will rely on future investment.

Tourism
REVIEW

The government is working with international organizations to develop a

strategy to help the tourism sector continue on its growth path well into
the next decade.

KING PIN
L
ocated on the In-
dian Ocean with
a 2,700km coast-
line, Mozambique
is coming into its own as
top tourism destination in
Africa. With the dark days
of the civil war drifting into
distant memory, tourists are
flocking to the country to
create lasting experiences
on the countrys sandy white
beaches, vast open safaris
full of flora and fauna, and
traditional African culture.
The government is looking
to capitalize on the countrys
current economic and polit-
ical stability and use that to
develop a sustainable and
solid foundation for its tour-
ism sector. The government
also realizes the benefits a
thriving tourism sector can
providing, such as more for-
eign currencies entering the
country, job creation, and
increased FDI.
According to the latest sta-
tistics by the World Travel
& Tourism Council (WTTC),
tourism and travel directly
contributed $0.38 billion to
GDP, which accounted for
3.2%, which is also expected
to increase by 4% in 2014.
According to the WTTCs
forecast, tourisms direct
contribution to GDP will
then rise 6.1% per annum
until it reaches an estimat-
ed $0.72 billion, or 2.7% of
GDP, in 2024. The share of
GDP is not expected to rise
significantly because of the
major gas fields that will
come online in that period.
The total value of the tour-
isms direct contribution
to GDP will nearly double;
however, the vast amount
of money generated by gas
will reduce the sectors share
of GDP. Tourism and trav-
el total direct and indirect
contribution was somewhat
higher accounting for 7.6%
of GDP, or $0.89 billion, in
2013 according to the WTTC.
In 2014, total GDP contribu-
tion from tourism is expect-
ed to rise by 4.4% and then
a further 6.1% per annum
Image: ILRI
until 2024, when it will have
almost doubled at $1.68 bil-
lion or 6.4% of GDP. These
Mozambique is looking to establish impressive growth figures
place Mozambique 25th in
itself as one of the heavyweights of long-term growth forecasts
African tourism. globally according to WTTC.
156 THEBUSINESSYEAR MOZAMBIQUE 2015

JOBS, GET YOUR JOBS Breakdown of GDP

In terms of employment, the sector cant Contribution
compete with the likes of agriculture; how- Source: WTTC
ever, it will still support a significant number
of the population. In 2013, tourism and trav-
el directly employed 273,000, a figure that is
expected to rise by 1.6% over 2014, and then
by 2.4% per annum until 2024, when the sec-
tor will have 352,000 people in employment
accounting for 2.3% of the total workforce.
If you take into account direct and indirect
jobs, then this number is somewhat larg-
er accounting for 718,000 jobs in 2013 and
represents 6.4% of the total workforce. Over
2014, the total amount of workers is forecast
to rise by 1% over 2014, to 725,000, and then
Direct 42.7%
by 2.1% per annum until 2024 when it will
account for 5.9% of the total workforce or Indirect 15.6%
891,000 jobs. Along with job creation, anoth- Induced 41.8%
er important part of the sector is investment,
which in 2013 attracted $0.15 billion or 5.8%
of total investment in the country. This figure
is expected to rise by 4.7% over 2014 and then
by an approximate 3% over the following 10
years to 2024 to $0.21 billion or 3.7% of the
total investment in the country. This invest-
ment largely reflects the activities of hotels,
travel agents, airlines, and other passenger
transportation companies, as well as restau-
rants and leisure industries directly support-
ed by tourism.
In 2013, 2.17 million tourists travelled to
Mozambique and spent $0.24 billion; howev-
er, the number of visitors is expected to fall
slightly in 2014 by 1.2% to 2.14 million. But this
is not seen as a problem by the WTTC, which
predicts that the figure will rise to 3.2 million
Image: Nuno Ibra Remane by 2024, with those visitors spending an esti-
mated $0.35 billion while in the country.

QUESSANIAS J. MATSOMBE
President, Federaao Moambicana de Turismo e Hotelaria (FEMOTUR)
What is the structure of the Federation in the
country?
We founded the Federation as the best way of
structuring the private business sector on the
tourism front. The Federation is composed of the
provincial associations of Tourism and Hoteliery
plus other associations such as AVITUM, which
is the tour operators and travel agents national
association, AMOS, which is the Association of
Mozambican Safari Operators, which deal with the
bush and safaris, and ANAT, which is Associaao
National de Animadores Tursticos.
What should be done by the Federation, and the
government, to promote the image of the country
abroad?
We are doing our part as the private sector, and are
in close contact with the government, which has yet
to introduce related laws and procedures that would
make the sector more viable. We have built the infra-
structure, hotels, lodges, and resorts, but we cannot
build the roads or put the electricity there. We have to
develop and come together with the communities and
teach them that tourism is a profitable enterprise. We
also need to create a clear brand to promote system-
atically, nationally, and internationally.
What is your assessment of tourism sector
growth over the past five years?
It has been steady, but unfortunately, rather
uneventful. Tourism is a global business where you
first compete with your neighbor, and only then
globally. Tourism should, therefore, be a fixture on
the broader national agenda. All of us are agents
of tourism, from airports, to immigration, customs,
and public transport infrastructure.
158 THEBUSINESSYEAR MOZAMBIQUE 2015
GOING FORWARD
The tourism sector in Mozambique is on the
right path; however, a number of regional
neighbors have well-established sectors and
the country must find ways to distinguish
itself not just from its neighbors, but also
globally. To become a competitive tourism
sector, Mozambique neednt look far, as it is
full of natural bounty and cultural tradition.
Before the civil war, the country was a well-
known tourist destination; however, years of
war ravaged the sectors infrastructure mak-
ing it difficult for tourists to access areas of
cultural importance. Now, numerous groups
and initiatives are working to rebuild this in-
frastructure, such as the Joint Programme for
Strengthening Cultural and Creative Indus-
tries and Inclusive Policies. The project was
funded by the Spanish Millennium Devel-
opment Goals Achievement Fund (MDG-F),
and involved help from UNESCO, ITC, ILO,
FAO, UNHCR, and UNFPA. The main aim of
the project was to promote cultural tourism
by allowing tourists to embrace the people
of Mozambique and their history, tradition-
al practices, dances, music, art, craft, archi-
tecture, religious belief, and other defining
elements of life in Mozambique. Led by UN-
ESCO, ITC, and ILO in partnership with the
Ministry of Tourism, Culture, Industry, and
Trade, as well as local municipalities, the
group provided technical assistance for the
development of cultural tours in the country.
The tours help integrate local entrepreneurs
and communities into the value chain, re-
duce poverty, and foster the creative arts and
industries.
In 2014, following on the success of the
2003 to 2014 tourism development strategy,
the UNWTO in partnership with the Minis-
try of Tourism, Culture, Industry, and Trade
helped prepare a new Strategic Tourism De-
velopment Plan for Mozambique. This is the
countrys second strategic plan for the tour-
Along with job creation, another
important part of the sector is
investment, which in 2013 attracted
$0.15 billion or 5.8% of total
investment in the country.
Business Vs Leisure
Contribution to GDP
Source: WTTC ism sector and looks to set the mood for the
following decade, just like its predecessor.
The new project was officially launched in
May, and the UNWTO sent a team of domes-
tic and international members to the coun-
try to head the project. The team will work
in close collaboration with the government
and the ministries, as well as key stakeholders
in the tourism sector throughout the coun-
try. Like its predecessor, the main aim of
the project is to help develop a documented
tourism strategy for the Ministry of Tourism,
which will hopefully act as a catalyst for rap-
id growth and job creation. Some of the key
Leisure 55.7%
areas that the strategy will focus on is the in-
Business 44.3%
stitutional development of the sector, mar-
keting and branding, business development,
Domestic Vs Foreign land use planning, human resources devel-
Contribution to GDP opment, hospitality quality, and sustainable
Source: WTTC tourism development, especially in protected
and sensitive areas.
Many international organizations are
working to help the government of Mozam-
bique set out strategies to develop its tourism
sector. The country possesses thousands of
kilometers of beaches, a rich biodiversity of
wildlife, and a long cultural tradition, all of
which will be key to attracting more tourists.
Along with developing a marketing strategy,
the sector will also look to boost its infrastruc-
ture, due to a number of years of neglect and
destruction. Analysis by the WTTC suggests
that the sector is set to continue on its growth
Foreign Visitor Spending 36.6% path, increasing the sector's contribution to
Domestic Spending 63.4% GDP over the next decade.

PREPARE
for landing
TBY talks to Silva Dunduro, Minister of Culture and Tourism of
Mozambique, on expanding the remit of the Ministry, key strategies
for attracting visitors, and improving air connections with the
region and beyond.
Culture in Mozambique now falls under the remit
of the Ministry of Tourism. How are you taking ad-
vantage of this opportunity?
Mozambique is blessed with incredibly di-
verse natural resources, and levels of conser-
vation rank among the best in the region, of-
fering the country great potential as a tourism
destination.
The impressive cultural background of the
country presents another element of differ-
entiation, and when combined with the un-
matched hospitality of the Mozambican peo-
ple and the combination of tropical beach
tourism along the countrys immense coast of
approximately 2,700km, make Mozambique a
unique choice. The promotion of the cultural
practices and knowledge of the national com-
munities will also be reinforced by the fusion
of culture and tourism under the same minis-
try. Mozambique has a privileged location and
a diversified climate makes the country attrac-
tive. In addition to this, borders shared with
Tanzania, South Africa, Zimbabwe, Malawi,
and Zambia mean that it is a well-connected
nation. The diversity of touristic attractions,
from beaches and conservation areas to cul-
ture and history combines to attract a broad
spectrum of tourists. Good hospitality and
security are also factors which make Mozam-
bique a strong choice as a tourism destination.
What are the key strategies being implemented
over the coming five years to promote the tourism
industry in Mozambique?
We have to incentivize the creation of basic
infrastructure to support the tourism indus-
try, particularly airports, border control posts,
roads, and energy, water, and telecommuni-
cations utilities. We will also invest in the nec-
essary human resources, particularly in the
Tourism THEBUSINESSYEAR 159
INTERVIEW
hotel and tourism sectors, and focus on devel-
oping opportunities for young professionals
and women in an attempt to stimulate local
tourism. In addition, we will have to create
hotel-schools to ensure the improvement of
service quality and to enable the growth of the BIO
business environment. We must also incen-
tivize the growth of air connections, an area
Silva Dunduro, born in
that is still considered a serious barrier to the
the Buzi district of Sofala
development of tourism on the African conti- Province, has worked in
nent, given the limited choice of connections the public sector since
between regional countries. In addition, we 1987, assuming the
have to enhance the financial system through position of Minister of
an integrated platform that will enable the Culture and Tourism in
monitoring of foreign payments in tourism January 2015. He holds
transactions. Overall, we need to do a better a Bachelors Degree in
job of integrating the numerous contributing Geography Teaching
elements of the sector, creating better condi- from the Universidade
tions for the industry to flourish and provide Pedaggica in Beira, and
more jobs. Furthermore, the sector requires also studied Graphic Arts
fuller commercialization, by promoting arts at the Escola Nacional de
and culture as an integral part of the national Artes Visuais of Maputo.
touristic offering, and by instituting a tax for In 2010, he concluded his
Masters Degree in Cultural
the promotion and development of tourism.
Assets and Social Projects,
through a postgraduate
What is your assessment of the tourism sectors program in history, politics,
contribution to GDP? and cultural assets at the
The performance of the tourism sector in Mo- Fundao Getlio Vargas
zambique is measured through the analysis in Rio de Janeiro, Brazil,
of the performance of key indicators such as as a Ford Foundation
international arrivals, revenue from inter- scholarship recipient. He is a
national tourism, the volume of investment, co-writer of the biography of
and national bed capacity. Between 2010 and Mozambican national hero
2014, these indicators registered some growth Lus Joaquim Jos Marra,
as the result of the diffusion and promotion and is also an exhibited
of investment opportunities and the identifi- painter, both within and
cation of tourism zones, as well as because of beyond Mozambique. He is
concessions for gambling activities in casinos also a founding member and
and the overall development of the business director of Casa do Artista.
environment and the national tourism offer-
160 THEBUSINESSYEAR MOZAMBIQUE 2015
Mozambique provides ample
opportunities to explore its
coastal wonders
ing. In order for us to be able to understand
the tourism sectors real contribution to the
countrys GDP, the tourism satellite account
was created by the World Tourism Organiza-
tion (UNWTO) to measure the real contribu-
tion of tourism to GDP. Mozambique has had
an experimental satellite account since 2013,
and we expect to have a definitive one in place
by 2016. We are working in collaboration with
the National Statistics Institute to achieve this
objective. We estimate the contribution of
tourism to GDP at around 5.6%. Our Nation-
al Accounts only take the revenue generated
by hotels and restaurants into consideration
when assessing the sectors contribution to
the economy.
How would you describe the potential of MICE
tourism in the country?
Any countrys visibility lies in its culture and
in the efforts of the government to promote it.
Mozambique remains an unexplored market,
but nevertheless real estate for the tourism
sector is being developed effectively, and a
five-star development is currently under con-
struction adjacent to the Joaquim Chissano
International Conference Center, along with
several facilities with considerable capacity.
There is also a five-star hotel in central Beira
called the Golden Peacock, while we should
Image: Stig Nygaard
also mention developments in Tete and Cabo
Delgado at Pemba Beach. Tourism
How would you describe the significance of the contributes 5.6%
touristic sector as a catalyst for employment cre- to GDP
ation and socioeconomic growth?
The government of Mozambique has defined Definitive
tourism as one of the strategic sectors that will
contribute to socio-economic development.
UNTWO Tourism
The sector requires the utilization of skilled Satellite Account
and un-skilled labor, representing an excellent
opportunity for the rapid creation of numer-
to be in place by
ous direct and indirect positions, subsequent- 2016
ly contributing to poverty alleviation and in-
creased wealth.
What is your strategy for collaboration with Min-
istry of Transport and Communication to increase
the number of locally operating airlines?
The connectivity issue not only affects Mo-
zambique, but is also felt by other countries,
particularly in Sub-Saharan Africa. The im-
provement of air connections is reliant on
political stability, air safety, available airport
infrastructure, and governmental reforms re-
lated to taxation and airline standards. The
sovereignty of our national airspace is also an
issue to be considered. Public-private partner-
ships will play a crucial role in the develop-
ment of this area.
Bumper years, growth years, record-breaking
years, challenging years. The key players and
their stories are all in The Business Year.

The BusinessYear is also available on tablet, giving you

an insider track into the countrys most dynamic
sectorsin the palm of your hand.

w ww. thebu sin essy ea r. com

162 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
What are the key strategies of
INATUR for the coming years
to promote the tourism sector in
Mozambique?
We have selected specific mar-
kets, and raised the quality of
services, promoting our sunny
beaches, the diversified and
rich fauna and flora, historic
and cultural experience and
other Mozambican attrac-
tions. We are keen to continue
our tourism promotion activ-
ities in the UK, Portugal (due
to our historical ties), Ger-
many, and China, where we
cannot afford to miss such a
major market, as well as Spain
and South Africa. Doubtless,
we will be supplementing our
efforts with those that target
new markets, such as Japan,
France, Middle East, India,
Russia, and Brazil, where we
attended a travel show in So
Paulo. In order to do that, we
attend travel shows and host
fact-finding trips for journal-
ists and writers. Meanwhile,
we continue our efforts in the
domestic market, by promot-
ing Descubra Moambique,
Feira Internacional do Turis-
mo and the thematic festivals
across the country.
What is the contribution of the
tourism sector to GDP?
Tourism contributes 5.6% to
GDP, but we are positive that
within five years the figure can
reach 8% to 9%.
What are Mozambiques com-
petitive advantages as a tour-
ism destination?
Mozambiques unique selling
authoritative
FIGURES
TBY talks to Hiuane Abacar, General Director of
the Mozambique Tourism Authority (INATUR),
on promoting the industry internationally,
MICE tourism, and improving human resources.
IN NUMBERS
the Mozambique
Tourism Authority
(INATUR)
Tourism contributes
with a
5.6%
to GDP
proposition is the combina-
tion of beaches, cultural and
wildlife offerings. Mozam-
bique also has a strong histor-
ical element that includes the
Portuguese, Chinese, Dutch,
Arabs, and Bantu tribes. Our
cuisine itself is reminiscent
of that of Arabian, Asian and
other cultures. Our past is
also reflected in our dance
and music. Mozambique is
also one of the safest plac-
es in Southern Africa. Vasco
da Gama, when arriving to a
warm welcome, called Mo-
zambique terra da boa gen-
te, which means the land of
good people. Centuries ago,
one of the first African samu-
rais in Japan was from Mo-
zambique.
How do you characterize the
potential of Mozambique for
MICE tourism?
Mozambique has many ho-
tels, the occupancy rate of
which is a surprising 70%
plus. We believe that oil and
gas are secondary to tourism,
and this suggests a wonderful
future to the country. Oil and
gas are not mass employers,
in contrast to tourism, which
creates many jobs. Leisure
tourism, meanwhile, is not
confined to the beaches, but
also entails safari and wildlife
experiences. We are opening
many more national parks,
some of which are doing rath-
er well. The world is changing
its perception of safaris: they
are no longer just about just
spotting the Big Five, as peo-
ple are coming to see local
flora and fauna in general.
What is your assessment of
human resource quality in the
tourism sector? What should
be improved?
We have two elements: mar-
keting and human resource
development, as we need to
train more local staff in tour-
ism and hospitality manage-
ment skills. Toward this goal,
we collaborate with several
training schools and uni-
versities. We run short-term
courses around the country,
in eight provinces. In 2014,
we were able to train more
than 990 people. We are keen
to establish a Kapulana Hotel
schools. At the moment, we
have small hotels called Hotel
Kapulana, and are switching
to Kapulana Hotel Schools
to train staff. In small villag-
es, finding accommodation
is not easy. Instead of having
10-14 rooms, the Kapulana
Hotel School has 46 to 50
rooms, with a more attractive
architectural design. We have
based our human resources
strategy on the performance
of these hotel schools for the
next four to six years, with the
goal of placing 2,000 to 3,000
professionals per annum in
the tourism market.
What are the most urgent in-
frastructure and transportation
projects?
I hope to see the development
of marinas along the coast
that could catalyze develop-
ments in the cruise business,
as we have 2,700km of coast-
line. We are working on this
at the moment with a number
of European and American
cruise companies. Unfortu-
nately, the lingering threat of
Somali pirates dampens the
process. Another area I would
like to see improvement in is
the road network, for conve-
nient access to beaches and
islands. The third required
improvement is the construc-
tion of additional Kapulana
Hotel Schools. And moreover,
if you want to see mobility in
Mozambique, you need to in-
vest in transport.
BIO
Hiuane Abacar was born
in Ilha de Moambique.
He studied in Mozambique
at the Instituto
Superior de Relaes
Internacionais, and also
studied International
Marketing in Germany at
Export-Akademie Baden-
Wurttenberg. He has been
General Director of INATUR
since 2013. Previously, he
was Economic Counselor in
the UK from 2008 to 2013.
He has also been National
Director for Tourism
Promotion in Mozambique
for 10 years.

POTENTIALLY
BIG CHEESE
With MICE tourism Despite its proximity to one of the worlds pre-
accounting for the mium tourism destinations, South Africa, Mo-
zambique remains in the process of develop-
bulk of Mozambiques ing its tourism offering. And having adopted a
tourist arrivals, value chain approach to maximize its returns,
PowerPoint and coffee MICE Tourism (Meetings, Incentives, Con-
breaks have become ferences and Exhibitions), is today a growing
business. A cornucopia of wildlife and 2,700km
a vital contributor to of coastline doesnt hurt the proposition either.
sector development. The World Tourism Organization (UNWTO)
report Global Report on the Meetings Industry
(2014) underlined the fundamentally signifi-
cant advantages for a nation establishing itself
as a MICE destination. Accordingly, meetings
in themselves represent a prime business op-
portunity with a knock-on effect on other local
businesses.
MICE tourism, then, promotes investment,
trade, communications, and technology, also
bringing education and professional devel-
opment to the local community, creating em-
ployment and retaining the workforce. More-
over, as a clean industry it fosters values of
environmental sustainability and quality, even
though, and perhaps because MICE tourists
are at the high end of the visitor spectrum. And
as well as building the local community profile,
they disseminate information about the host
nation abroad.
Quessanias J. Matsombe, President of Fed-
eraao Moambicana de Turismo e Hotelar-
ia (FEMOTUR) identifies the need to narrow
down the focus, despite the wider tourism po-
tential the nation offers in order to establish a
robust base. While the potential is there we
need to select two or four representative po-
tential tourism destinations and work to pro-
mote those as has been done elsewhere, say,
with Cancn in Mexico, or Varadero in Cuba.
At the moment, we are still failing to do this,
and are underselling ourselves by attempting
to market the entire country as a whole.
USAID report Tourism Competitiveness
In Light Of a Natural Resource Boom (2014)
identifies the corporate travel value chain as
underpinning the Mozambican tourism indus-
try, in terms of visitor numbers, commercial
volume and potential growth. The main desti-
nation for business and corporate travel is Ma-
puto, with Pemba, Tete and Beira emerging as
important secondary centers. Yet in evaluat-
Tourism THEBUSINESSYEAR 163
MICE TOURISM FOCUS
ing this segments value chain the report iden-
tifies certain obstacles to development. One in
particular is that hotels and other tourism facil-
ities often face a prohibitively high transaction
cost when importing requisite goods, to which
may be added high taxation, and a dearth of,
reliable local suppliers, and high variability
in import processing and delivery times [while]
hotels also report very high costs of self-gener-
ated electricity, poor quality water, and diffi-
culty with documenting non-taxable expenses.
Put together, these factors undermine opera-
tional competitiveness of hotels in Maputo.
ENTER THE DRAGON
The abovementioned difficulties notwith-
standing, conference centers have been erect-
ed to capitalize on team-building jaunts from
South African businesses. The Joaquim Chis-
sano International Conference Centre (JCICC)
is located on the coast in Maputo City. Among
its amenities is its 1,000 capacity Grand Plena-
ry Hall. It also offers a prime stepping stone for
pre- and post-conference tours. Chinese inves-
tors have been keen to tap into Mozambiques
budding economy, building a 2,000 capacity
multifunctional conference center. Chinese
group Anhui Foreign Economic Construction
Corp (AFECC) is set to add a landmark com-
ponent to the countrys tourism infrastructure
on an estimated investment of $250 million, in
a public-private partnership (PPP) funded by
Chinese investors. The scheme includes a five-
star hotel with 290 rooms, and, significantly, a
2,000 capacity conference center and function
room set for completion in 2015. Moreover, it
is adjacent to the existing Joaquim Chissano
International Conference Centre, in the capital
city of Maputo. This will be the groups 3rd ho-
tel in Mozambique.
The final word goes to Noor Momade, the
owner of Cotur, who informed TBY that the
fact that most events in Maputo are confer-
ences, meetings, and business tourism ac-
counts for the 95% capacity booking level of
most hotels, dominating the sector. And with a
growing range of facilities on offer to the busi-
ness traveler, and a stepped-up aviation sec-
tor, Mozambique stands over time to attract
further business from Durban, and further
afield.
164 THEBUSINESSYEAR MOZAMBIQUE 2015
FORUM GROWTH STRATEGIES
BEM-VINDO!
RUI MONTEIRO
Managing Partner,
TurConsult
P W
eople havent given up
completely on leisure
tourism, but the time-
frames have differed. Obviously,
business tourism is more of a
short- to mid-term investment
and leisure tourism is a lon-
ger-term investment. With the
opening of the Nacala Airport,
we are going to be in a position
to be able to compete with other
global destinations. Obvious-
ly, we need the infrastructure,
but I think the most important
thing is to be able to compete
with global destinations in
terms of times of flights. Also,
the opening of new airports and
the bringing in of new airlines,
which has been happening in
the last few years, is also going
to open up the. We depend a
lot on Europe, but when Naca-
la Airport opens up, I believe
Emirates is going to fly to Naca-
la. That opens up a huge market,
so not only Europe, but also the
Middle East and Far East. That is
something that we need to max-
imize and exploit. We work with
closely with INATUR in terms of
marketing. The issue is that it
is expensive to market Mozam-
bique because the country is an
expensive destination to reach.
NATALIE TENZER-
SILVA
Director, Dana Tours
e are promoting Mo-
zambique as a desti-
nation in itself, rather
than merely an add-on. Mozam-
bique has enough to occupy the
visitor for two to three weeks
without adding it to a tour to
Botswana, Namibia, or South
Africa. Mozambique has so
much to offer that is refreshingly
different. Our safaris offer an ex-
cursion into Gorongosa Nation-
al Park where the visitor will not
see more than 20 other game
vehicles, as the territory is whol-
ly untouched, and therefore
provides a new way of seeing
Africa. Tanzania and Botswana
are established destinations that
we can never compete with, so
instead we aim for the unique.
We are looking to expand our
offerings in beach and island
areas, because people here on
business occasionally stay for
up to three weeks, and want to
leave Maputo without having
to deal with visas to Kruger Na-
tional Park, or taking expensive
flights north. There is enough to
do around here over a weekend,
and we are trying to develop
these products and packages to
cater to that potential.
MICE and business tourism remain key
segments within the industry, while the
development of the leisure segment will rely on
considerable investment.
GEORGE ASKEW
Director, Mozambique
Adviser
P T
redominately the pro-
file of an average tour-
ist is business people
looking for investment opportu-
nities, then families who spend
two to four weeks at the beach
or island resorts, and adventure
travelers. These visitors are gen-
erally between 28 to 50 years of
age. Most of our visitors are bud-
get orientated and self-catering,
particularly South Africans,
who visit Mozambique during
holiday seasons. The country
needs to be more introspective
in assessing areas in which we
are still lacking. As our leisure
tourism is too seasonal, and as
we have great potential we look
to develop domestic tourism.
Often some hotels and resorts
shut down in between these
periods. Mozambicans could
visit during low season, but this
requires strong tour operators
with a large capacity, without
which it is difficult to offer lower
prices even in the low season. If
you empower the tour operators
to have this capacity beyond
the high season, it would make
sense for them to direct their
bus fleets to promote domestic
tourism excursions.
NOOR MOMADE
Owner, Cotur
ourism remains ex-
pensive and we lack
the competition
among multiple airlines re-
quired to handle domestic
flights. Most events in Mapu-
to are conferences, meetings,
and business tourism, which is
why hotels are at 95% capaci-
ty booking. Thus, while we do
have considerable potential for
leisure tourism, the MICE and
business travel segments cur-
rently dominate the sector. The
government must take up the
challenge of promoting the im-
age of the country, and we will
certainly assist with whatever
steps are considered necessary.
Mostly though, we need to in-
vest in infrastructure, roads, and
health issues, without which
investors are reluctant to make
a commitment. Normally, tour
operators in Mozambique do
not have more than six or seven
employees, but we have 30 peo-
ple working at our current head
office alone, and furthermore
in our other offices. We are also
finalizing our new premises in
the citys premium destination,
Kenneth Kaunda Avenue. Cur-
rently, the quality of human re-
sources in Mozambiques hos-
pitality industry is lacking. We
have to invest heavily in training
to address these problems.
 THEBUSINESSYEAR 165

170 172 173

Joo Machado, Managing Rui Brando, Managing Partner The best hotels and places to
Partner at Deloitte Moambique, of BPartner, on the companys stay when in Mozambique, from
on integrating with the market business center model, and safari lodges and chalets to five-
and changes to FDI. support for entrepreneurship. star luxury resorts.

Executive Guide
REVIEW DOING BUSINESS

OPPORTUNITIES
Domestic and Development-Financed In-
vestment is also flowing to sectors of above av-
erage growth, particularly in construction & civil

FOR INVESTORS
works (11.3%) and transport & communications
(11.2%). The banking sector is the most profit-
able in Southern and Eastern Africa, averaging a
27.4% return on equity over the past five years.
The investment outlook is expected to im-
prove still further thanks to increased global

M
Mozambique is ozambique has experienced con- prices of commodities that have hitherto held
one of the most sistent growth over the past two some decisions back, as well as the start of gas
decades and -is one of Africas five production in the northern fields of the Rovuma
important investment fastest growing countries, with GDP basin, expected in 2019.
destinations in Africa. growth expected to remain at 7-9% per annum
As the economy over the next 5 years. NEW OIL AND GAS REGULATORY
expands, it is all the Over the past 4-5 years Mozambique has re- FRAMEWORK
corded a 506% compounded annual growth in The new oil and gas law in force since August
more important FDI to more than $6 billion in 2013. While gas 18th 2014, establishes that companies must be
to understand the and coal are spearheading FDI inflows, in real- registered in Mozambique (through a subsidi-
tax and regulatory ity both sectors are largely in the construction or ary or branch) in order to qualify for an explora-
early operational phase involving many inputs tion license or an interest under an exploration
frameworks in place. from companies in infrastructure, manufactur- and Production Concession Contract (EPCC).
ing, logistics and transport, commerce and ser- The Petroleum Law also stipulates the:
vice sectors. And while market opportunities are Mandatory partnership with the national pe-
multiplying for investors in these sectors, they troleum companyENHin all petroleum op-
require local presence, and a deep understand- erations;
ing of the challenges and risks involved. Mandatory registration of oil and gas compa-
nies on the Mozambique Stock Exchange;
Allocation of 25% of oil and gas to the Mozam-
Foreign Direct Investment, net +506% bican market;
USD millions, 2006-2013 Rules on the compensation and re-location of
5,626
6,175 local communities in the concession areas;
Rules for hiring, training and inclusion of Mo-
zambican employees in the management po-
3,561
sitions.
+68%
1,020
On the other hand, the Private Public Partner-
865
108 153
428 592 ship (PPP) Law, which regulation was approved
in July 4 2012, new EPCCs have to be consistent
2005 2006 2007 2008 2009 2010 2011 2012 2013
with the PPP Law. The PPP law provides:
Term of contracts: up to 30 years
Assignment: any party to a concession con-
tract in order to cede its contractual position
(partially or in its entirety) has to request writ-
ten pre-approval from the Mozambican State
Local participation is required (either of Mo-
Gas 57%
zambican individuals or companies): 5% to
Coal 32% 20% of the shares via a listing on the local
stock market. EPCCs executed before entry
 ransports and Communication 4%
T
into force of the PPP Law are not obliged to
Real Estate 2% comply with this. However, the government
Agriculture & Livestock 2% reserves the right not to renew an EPCC, if the
partners in the project have not included Mo-
Financial Services 2%
zambican participation.
Other 1% The operator is required to provide benefits
166 THEBUSINESSYEAR
INVESTMENT
BRIEFING
Currency Metical (MZM
or MT locally)
Foreign exchange control
Incoming capital must
be registered with the Bank
of Mozambique. Foreign
currency-designated
accounts may be opened
and funds retained.
Accounting Principles/
Financial Statements
Mozambique GAAP
is based on the French
system. Commercial
banks adopted IFRS as
of 2007 and other large
companies may have done
so as of 2010, although
many foreign-controlled
entities already use IFRS.
Only multinationals and
companies incorporated
under the foreign
investment law or
controlled by a foreign
entity require an annual
audit.
Principal business
entities These are the
public company (SA),
private limited company
(Lda), joint venture though
incorporated or not
incorporated consortiums
and branch of a foreign
company.
MOZAMBIQUE 2015
(training, resettlement, environmental, so-
cial responsibility) and a minimum financial
return/ benefit not lower than 35% of the an-
nual profit for the government (this includes
corporate income tax due, at 32% of profit).
Signature bonus is to be between 0.5% and
5% of the value of the assets. This implies that
there will be signature bonuses for future EP-
CCs (though how the value of new licenses
will be determined is not clear).
Concession fixed fees between 2% and 5% of
the fair value of assets. Again, it is unclear how
these are to be determined in the case of an
EPCC.
Extraordinary benefits arising from a sale of
an EPCC should be shared with the State. It is
not clear whether this means via taxes or some
additional mechanism.
Despite the use of the term concession to
describe the arrangements entered into with
oil and gas companies, the Mozambique fiscal
regime for upstream projects is based on a pro-
duction sharing mechanism with income and
other taxes. In addition to the states share of
production the other elements of fiscal take are:
Bonuses;
Petroleum production tax (PPT analogous
to royalty);
Income tax;
Customs duties, VAT, payroll taxes, etc.
In addition to general taxes, production bonus-
es are specified in the EPCC model, which are
due on commencement of commercial pro-
duction and when various levels of production
are achieved.
The Specific Taxation Regime for Petroleum
Operations approved by Law 27/2014 of 23
September establishes that PPT is due (in cash
or in kind) when petroleum is produced and
delivered to the local entity defined by the gov-
ernment. This is a liability of the Operator to be
discharged before the calculation of produc-
tion sharing. The current rate of PPT is 10% for
crude oil and 6% for gas.
In an effort to kick-start investment in the
upstream sector significant tax incentives were
offered by the government up to 2007. The cur-
rent tax regime applicable to oil and gas has re-
stricted tax incentives.
Penal Code
Under the newly approved Penal Code the sale
of land in Mozambique is typified as a crime
that can lead to a prison term.
TAX SYSTEM 2015
Corporate Taxation
Residence A company is resident if its head
office or place of effective management or con-
trol is in Mozambique, or if the business is reg-
istered in Mozambique.
Basis A resident company is taxed on its
worldwide income. A non-resident company is
subject to tax only on its Mozambique-source
income.
Taxable income All income and gains are in-
cluded in taxable income. Expenses considered
indispensable in the generation of income or
gains subject to tax are deductible.
Gains resulting from a direct or indirect trans-
fer between non-residents of capital shares or
other interests and participatory rights involv-
ing assets located in Mozambique are deemed
to be obtained in Mozambique (i.e. as Mozam-
bique-source income), regardless of where the
sale takes place and whether the transfer is gra-
tuitous, or for consideration.
Interest payments and other forms of remu-
neration on loans granted by shareholders to the
company are not deductible tax costs to the ex-
tent they exceed MAIBOR (12 months), plus 2%.
Mining and oil and gas companies and hold-
ers of mineral and oil rights granted under the
law of mines and oil must assess taxable in-
come and maintain related accounting records
separately, which means that each mining title
and concession agreement must have a specif-
ic/individual tax registration number.
Taxation of dividends Dividends are subject
to a 20% withholding tax (10% for shares listed
on the Mozambique stock exchange) unless
they qualify for the participation exemption
(see below). Foreign-source dividends are tax-
able at the company tax rate.
Capital gains Capital gains or losses are includ-
ed in ordinary income and taxed at the company
rate. Capital gains derived from the sale of shares
of a resident company by a non-resident without
a permanent establishment in Mozambique are
fully taxed at 32%.
Losses Tax losses may be carried forward for five
years. The carryback of losses is not permitted.
Losses incurred by a mining or oil compa-
ny in a particular mine or area of concession
agreement may not be offset by gains derived
in another mine, or area.
Rate The standard company or branch tax
rate is 32%, although a penalty rate of 35% may
be charged on unsubstantiated payments.
Surtax No
Alternative minimum tax An AMT applies to
very small entities (i.e. those with turnover less
than MT 2,500,000, or approximately $80,000).
Foreign tax credi A tax credit is available for
foreign taxes paid. Mozambique applies the
ordinary foreign tax credit as a unilateral meth-
od for the avoidance of double taxation of in-
come obtained abroad by resident companies
and permanent establishments of nonresident
companies. Unused credits may be carried for-
ward for up to five years.
Participation exemption No withhold-
ing tax is levied on dividends paid to a Mo-
zambique company that has held 20% or
more of the shares in an associated com-
pany in Mozambique for at least two years.
Holding company regime No
Incentives Incentives, including tax credits
and the reduction or exemption of corporate
tax, are available under the Fiscal Benefits Code.
Companies that invest in Rapid Development
Zones and Industrial Free Zones, in agriculture,

mining, oil, tourism and industrial and services
projects also may benefit from incentives that
vary by location, the number of employees and
whether the products are exported.
Withholding Tax
Dividends Dividends paid to residents and
nonresidents are subject to a 20% withholding
tax (10% for shares listed on the Mozambique
stock exchange) unless (for non-residents) the
rate is reduced under a tax treaty.
Interest Interest paid to residents and
non-residents is subject to a 20% withholding
tax unless (for non-residents) the rate is re-
duced under a tax treaty. A 0% rate applies to
interest paid to a registered Mozambique fi-
nancial institution. Interest on treasury bonds
and debt securities listed on the stock exchange
and interest for liquidity swaps between banks,
with or without collateral, is taxed at 20%.
Royalties Royalties paid to residents and
non-residents are subject to a 20% withhold-
ing tax unless (for non-residents) the rate is re-
duced under a tax treaty.
Technical service fees Technical service fees
paid to a non-resident are subject to a 20%
withholding tax, unless the rate is reduced un-
der a tax treaty.
Branch Remittance Tax No
Other Payments made to non-residents for
the following services are subject to a 10% with-
holding tax: (1) telecommunications services,
international transport services and the as-
sembly and installation of telecommunications
equipment; (2) services related to construction
and rehabilitation of productive infrastruc-
tures, transport and distribution of electricity
in rural areas, under the scope of public proj-
ects of rural electrification; (3) services from
charters of marine vessels to conduct fishing
and cabotage activities; and (4) services re-
lating to the maintenance of freight aircraft.
Other Taxes On Corporations
Real property tax An annual municipal tax
is assessed at up to 0.4% (for a residence) and
0.7% (for offices) of the value of urban property.
Social security The employer pays 4% of staff
emoluments, with no upper limit.
Stamp duty Stamp duty at 0.4% applies to
share transfers and 0.2% applies to transfers
of buildings. Land transfers (which are always
leaseholds) are exempt from stamp duty.
Transfer ta A transfer tax of 2%, normally paid
by the transferee, is charged on the transfer
of title to a building. The rate is 10% when the
buyer is resident in a jurisdiction with a more
beneficial tax regime.
Mining Taxes
Rent Tax (Imposto sobre a Renda de Recurso
Mineiro RendimentoIRRM As of January
1st 2015 there is a direct tax on the net cash flow
of a mining project, from the moment in which
these developments exceed a rate of return of
18%, before taxes. The tax is due by mineral ti-
tleholders and is applicable to mining projects
Executive Guide THEBUSINESSYEAR 167
that have accrued net revenues (cash gains)
during a fiscal year.
Surface Tax Surface tax is calculated on the
basis of the number of hectares of the area un-
der license, or by mining title in the case of min-
eral water.
Mining Production Tax The tax rates vary
from 1.5 to 8% depending on the mineral and
the tax is applied on the value of the product
extracted.
Petroleum Taxes
Petroleum Production Tax As of January 1,
2015 a taxable transaction occurs when oil and/
or gas is extracted in Mozambican territory. The
applicable rates are 10% for crude oil and 6%
for natural gas based on the value of such pe-
troleum. There is a reduction of 50% of this tax
when the production of oil and gas is destined
for use by local industry.
The Oil and Gas Law also provides for special
rules on the taxation of revenue.
Other An economic activity tax is charged
on businesses in municipal areas, but the
costs vary according to location, type and
size of business, and is not significant .
Anti-Avoidance Rules
Transfer pricing The arms length principle
applies to transactions between related parties.
For payments to companies in low tax jurisdic-
tions, the authorities will need to be satisfied
that the payment was genuine and reasonable. A
special relationship is deemed to exist between
two entities when one has the power to directly
or indirectly exercise significant influence on the
management decisions of another.
Thin capitalization The deduction of inter-
company interest may be limited where the
indebtedness to a nonresident related party is
more than twice the equity. The same debt equi-
ty ratio is applied for mining and oil companies
regardless of whether the parties are related and
if the indebtedness is with a non-resident, or not.
Disclosure requirements Banks are required
to report any suspicion of money laundering
activities.
Administration And Compliance
Tax year The tax year is the calendar year. A
tax period other than the calendar year will be
allowed only when an entity is more than 50%
owned by an entity that has adopted a different
tax period.
Consolidated returns Consolidated returns
are not permitted; each company in a group
must file a separate return for tax purposes.
The tax and accounting returns of companies
that are holders of mineral and oil rights grant-
ed under the law of mines and oil (namely, an-
nual income returns, tax and accounting infor-
mation return, registration and amendment or
cancellation of taxpayer registration) must be
completed separately for each mining title or
concession agreement.
Filing requirements Companies must make
three provisional payments of corporate tax in
168 THEBUSINESSYEAR
DELOITTE WAS
CONSIDERED
#1 OF THE BIG
4 ACCOUNTING
FIRMS IN 2014
Number of Employees
Around the World
Revenue
Growth Rate
Number of Partners
The content of this article
is intended to provide
a general guide to the
subject matter. Specialist
advice should be sought
about your specific
circumstances.
TBY would like to thank
Deloitte for compiling this
analysis.
MOZAMBIQUE 2015
May, July and September. The total amount of
the payment should be 80% of the result of the
tax assessed less the amount of tax withheld by
third parties in the previous year. Other special
provisional corporate tax payments may be due
in June, August and October if the result of the
following formula is positive: 0.5% x turnover
(with a minimum limit of MT 30,000 and a max-
imum limit of MT 100,000), less the provisional
payment made in the previous year.
The annual tax return and the balance of tax
due must be submitted by 31 May, with sup-
porting documents filed by the end of June.
Penalties There are penalties for late filing,
nonpayment of tax and failure to disclose re-
cords. Penalties range from approximately
$100 to $33,000. Interest is charged on late pay-
ments. Prison terms for tax fraud may be up to
eight years and up to two years for negligence.
Rulings General rulings on the interpre-
tation of the tax law, or advance rulings on
the taxation of specific transactions may be
obtained from the tax authorities. The rul-
ings are binding on the authorities with re-
spect to the disclosed facts of the transaction.
Personal Taxation
Basis A resident individual is subject to tax on
worldwide income, with unilateral relief avail-
able for any foreign tax paid. A nonresident is
taxable only on Mozambique-source income.
Residence An individual is resident for tax pur-
poses if he/she resides in the country for more
than 180 days in a tax year, or has a permanent
residence in Mozambique on 31 December.
Filing status Only persons with income must
file an annual return and, if both spouses have
income, each individual must separately submit
his/her own tax return and be subject to a sepa-
rate tax rate. Dependents may be included in the
declaration of only one taxpayer.
Taxable income The income of an individual
is taxed under separate schedules for employ-
ment, trade and business, capital gains, real es-
tate and other income. Employment income is
broadly defined and includes benefits or advan-
tages received from the employer.
Capital gains The capital gains tax depends
on the length of time shares were held by a res-
ident individual. 100% of capital gains derived
by an individual from the sale of shares held for
less than 12 months are taxed (increased from
75%); shares held between 12 and 14 months are
taxed on 85% (increased from 60%); shares held
between 24 and 60 months are taxed on 65%
(increased from 40%); and shares held for more
than 60 months are taxed on 55% (increased
from 30%).
Capital gains resulting from a direct or indi-
rect transfer by a non-resident of capital shares
involving assets located in Mozambique are
taxable in full, regardless of the holding period
and regardless of whether the transfer is gratu-
itous, or for cost.
Deductions and allowances Personal and de-
pendent allowances are available.
Rates Employment income is taxed un-
der the PAYE system. Monthly with-
holding tax is a final tax and the high-
est marginal rate is 32%, which applies to
monthly income approximating $4,825.
Other Taxes On Individuals
Stamp duty Stamp duty at 0.4% applies to
share transfers and 0.2% applies to transfers
of buildings. Land transfers (which are always
leaseholds) are exempt from stamp duty.
Real property tax An annual municipal tax
is assessed at up to 0.4% (for a residence) and
0.7% (for offices) of the value of urban property.
Inheritance/estate tax Estate duty/donations
tax is payable by the beneficiary/recipient. The
rate ranges from 2% to 10%, depending on the
amount and the relationship between the do-
nor and the recipient.
Social security The employee pays
3% of emoluments, with no upper limit.
Administration and Compliance
Tax year Calendar year
Filing and payment Taxpayers receiving in-
come only from employment are still required
to submit an annual income tax return, al-
though income from employment will not be
aggregated with other categories of personal
income for annual taxation purposes.
The return is due by 31 March for taxpayers
who received only income from employment
and 30 April for others. Final tax payment is due
by 30 June for income from entrepreneurial ac-
tivities and 31 May for other income.
Penalties There are penalties for late filing,
nonpayment of tax and failure to disclose re-
cords. Penalties range from approximately
$100 to $33,000. Interest is charged on late pay-
ments. Prison terms for tax fraud may be up to
eight years and up to two years for negligence.
Value Added Tax
Taxable transactions VAT is chargeable on
the supply of goods and services in Mozam-
bique, and on imports.
Rates The standard rate is 17%. Banking, fi-
nancial and certain health, education and
philanthropic services are exempt. Services re-
lated to drilling, research and construction of
infrastructure in the context of mining and oil
activities during the exploration phase and the
export of goods and services are zero-rated.
Registration A unique tax number must be
obtained and a declaration filed at the time ac-
tivities are commenced.
Filing and payment A monthly VAT return
must be filed by the last day of the following
month.
Source of Tax Law
Corporate Income Tax Code; Personal Income
Tax Code; Value Added Tax Code; Fiscal
Benefits Code.
Tax Authorities
Mozambique Tax Authority (Autoridade
Tributria de Moambique).
 Executive Guide THEBUSINESSYEAR 169

Investors-Hand In Hand With Our 2) Public and Donor Sectors,

Team MONITOR DELOITTES 3) Energy and Resources (Oil, Gas, Mining and
It is essential to obtain the best support in your Power) and
business ventures and Deloitte in Africa is the
SERVICE OFFERINGS, 4) Infrastructure and Capital Projects.
leading professional services firm providing a TAILORED TO THE
full range of business advisory services. INTRICACIES OF Monitor Deloitte has a differentiated ap-
Founded in London in 1845 by William THE MOZAMBICAN proach to consulting in Mozambique. Instead
Welch Deloitte, Deloitte is now the worlds of flying consultants in from overseas, like oth-
largest professional services firm. Present in MARKETS, ARE LISTED er strategy firms do, we have created a team
150 countries throoughout the world it em- BELOW. where knowledge is built and managed locally
ploys around 200,000 people and generated so that capacity stays in country and not fly
US$34.2 billion in revenue in 2013-14. Deloitte away as projects conclude. Since we are based
brings world-class capabilities and deep lo- STRATEGY here we are always available to listen to our
cal expertise to help clients succeed wherever clients and understand their needs, we are not
they operate. Market Entry confined to specific project timelines.
Deloitte offers assurance and advisory ser- Instead of temporarily hiring independent
vices including strategy, corporate finance, Feasibility Analysis consultants on a project-by-project basis like
management consulting, technology, risk ad- development companies do we have built a lo-
Strategy Formulation
visory, tax, outsourcing and audit. Deloitte has cal team of consultants with permanent con-
the largest number of clients amongst the New Strategic Modelling tracts and have up-skilled them with focused
York Stock Exchange (NYSE) and Londons training in multiple geographies in Africa,
Stock Exchange (LSE). Portfolio Optimization Asia, Europe and North America.
Deloitte provides integrated and holistic Monitor Deloitte also provides a unique ap-
solutions to companies, governments and Strategic & Public-Private proach to private sector development rooted
Non-Government Organizations. It serves as a Partnerships
one point of call for any operation a successful
organization must conduct, from a market en- Investment Strategy Financial Services Public and Donor
try strategy to a financial transformation. Industry Sectors
After 20 years in Mozambique and having
developed a portfolio of 200 clients across all
industries and a staff compliment of 100 em- FINANCIAL

De Adv
ployees, Deloitte has now introduced its Pre- ADVISORY

or l
vis cia

ve iso
y
mier Strategy Practice in the country: Monitor

lop ry
Ad nan
Deloitte. Mozambique has become the first

me
Corporate Finance

Fi
African country for Monitor Deloittes expan-

sion. It is also the first leading Strategy brand
to be permanently based in the country.
Monitor Deloitte results from the success-
ful integration of the Monitor Group into
Deloittes consulting structure. Monitor De- Mergers & Acquisitions
loitte applies leading strategic frameworks to
the most complex problems, including those
originally developed by Harvard Strategy Pro-
fessor Michael Porter (founder of the Monitor
Group) such as the Competitive Strategy, Val-
ue Chain Analysis and the Competitive Advan-
tage of Nations.
Monitor Deloitte brings a unique value prop-
osition to clients seeking to win in Mozam-
bique: The best intellectual pedigree, the stron-
gest business competences and unrivalled
local knowledge of Mozambiques industries.
Monitor Deloitte is built around three core
competences in Mozambique: Strategy, Fi-
nancial Advisory and Development Advisory.
The combination of these competencies with
a local research base rich in industry insights
converts informational advantages into com-
petitive advantages empowering our clients to
identify and mitigate risks that are inherent to
Mozambique.
Monitor Deloitte focuses on servicing four
industry groups
1) Financial Services,
nt
Valuations Strategy
Cost Reduction
Infrastructure Energy &
and Capital Projects Resources
Project Finance
Due Diligence
in the application of pure corporate strategy
Finance Transformation and management standards to development
challenges so as to increase the sustainability,
effectiveness and efficiency in areas such as
donor-funded initiatives, public enterprises
DEVELOPMENT and public sector, drawing from real-life busi-
ADVISORY ness acumen gathered with the worlds most
successful companies in our priority indus-
tries.
SME Competitiveness Since its inception in Mozambique, Monitor
Deloitte has developed market entry strategies
Access to Finance
for investors from three continents, conducted
Market Linkages feasibility analyses for new financial institu-
tions, facilitated strategy formulation process-
Fund Management es for oil and gas companies, provided advice
on SME competitiveness, designed market
Social Impact linkages programmes for companies in the ex-
tractives and agri-business sectors, assisted in
Performance Audit and assessing the value chain and social impact of
Management innovative business models for local commu-
nities, provided advice on the usage of mobile
Economic Appraisal &
technologies to deliver social grant payments,
Value for Money as well as facilitated public enterprise and
public sector financing strategies.
170 THEBUSINESSYEAR
INTERVIEW
BIO
Joo Machado was
appointed Country
Managing Partner in
Maputo, Mozambique in
2014. Joo has also been
leading Consulting in
Mozambique for Deloitte
Africa since April 2013.
He joined Deloitte in 1999
in Portugal and has over
15 years of experience
as a consultant, having
worked in the Portuguese,
Angolan and Mozambican
markets. He has worked on
a variety of leadership roles
covering areas of strategic
and operational consulting,
organizational design,
human capital and business
transformation.
MOZAMBIQUE 2015
market
VALUE
TBY talks to Joo Machado, Managing Partner
at Deloitte Moambique, on integrating with the
the Mozambican market and changes to FDI in
the coming years.
What are the peculiarities of the Mozambican mar-
ket and the most common concerns of a foreign
company interested in entering the country?
When entering any market the most important
aspect is access to local knowledge, detailed in-
formation and quality advice so as to correctly
assess the potential for success of a venture into
the country and limit risk. There are a number
of sources that can be tackled for that purpose,
such as international financial institutions,
commercial banks and professional services
firms. Although business culture is somehow
difficult, with a different legal system, Mozam-
bique is quite a secure and investor friendly en-
vironment, as long as the proper homework der review. We also foresee that the tax benefits
is done and the Mozambicans are not taken for
granted.
How would you assess the current level of foreign
interest in the country and what needs to be done,
by the public and private sectors, to create new in-
centives and improve the environment for foreign
investors?
The level of investment continues to reach
new records for the Southern Africa region. I
believe that from a Mozambican perspective
the incentives have to be broad based and not
only for foreign investors. The first indicator in
terms of whether a country is ready for foreign
investment is thriving local businesses that are
adding value to the economy. Mozambique has
to honor the contracts it has made in the past
in order to incentivize foreign investment, but
more than that, it has to level the playing field in
such a way that national and foreign business
can compete with integrity, thereby becoming
a global example. The rules have to be complied
with by all, and must be the same for all. If this
is adhered to, everyone benefits, be they foreign
or national interests.
What regulatory changes are we likely to see over
the medium term in Mozambique?
The regulations Mozambique is expected to ap-
prove over the coming months include the first
Transfer Pricing regulation, which will permit
the creation of greater value companies resi-
dent in Mozambique in inter-firm commercial
relations. The value added tax code is also un-
that today exist for foreign and national inves-
tors will gradually subside and probably create
an environment conducive to reviewing the
tax rates for all. Our corporate tax rate at 32%
and VAT at 17% are quite high for the region.
Probably the new tax reform will help the for-
mal, until the informal sector of the economy is
gradually absorbed by the formal and tax pay-
ing economy.
How would you describe the role of SMEs in Mo-
zambique and how can Deloitte assist the
development of a more efficient SMEs structure?
Of the total number of companies operating
in Mozambique 98% are SMEs, although they
merely contribute 20% of GDP. SMEs are the
backbone of the Mozambican economy and
are far more labour intensive than large com-
panies. SMEs employ most of the working pop-
ulation in the country, creating self-employ-

ment and third-party employment, and are the
only source of endogenous growth, which is
the most robust form of sustainable long-term
growth for the economy. Even in turbulent
times, when commodity prices decline, or po-
litical risks increase and FDI falls, SMEs remain
in business.
Additionally, SME production reduces the
need for imports, whereby Mozambican income
stays in the country to stimulate the supply side
(more production) instead of going abroad.
However, SMEs face a tougher business en-
vironment than micro and large enterprises as:
- They do not qualify for some of the tax and
regulatory provisions of the micro enterprises,
despite creating more employment;
- They do not get the exemptions and benefits
of mega-projects;
- They are more vulnerable to red tape than
large corporations as they lack the financial and
networking capacity to fast-track administra-
tive processes.
At Deloitte we understand the inner work-
ings of SMEs as we serve a large base of clients
in this segment across all our business areas
from auditing, accounting, tax and strategy, to
operations, innovation, technology, human re-
sources and financial advisory.
We help our clients consolidate their opera-
tions, become more competitive and efficient,
and grow their business, generating profit and
creating more employment.
We also facilitate investment into these com-
panies as we have a wide global network and
contacts with international companies.
How would you describe Deloittes role in the soci-
oeconomic development of the country?
We believe we add considerable value locally
both from a business and human capital per-
spective. We serve a variety of companies, from
market entrants to small companies, large mul-
tinationals and public companies.
Deloitte, as the largest professional services
firm in the world, understands how to make
SMEs more competitive vis--vis regional and
international enterprises.
Over the past few years we have been serv-
ing SMEs in Mozambique through linkages and
supplier development programmes with do-
nors and business associations, capacity build-
Executive Guide THEBUSINESSYEAR 171
IN NUMBERS ing activities, improving value chains and iden-
tifying markets, preparing bankable business
Deloitte plans for SMEs and supporting our SME clients
Moambique access finance.
By helping SMEs to become more compet-
itive and generate more value they will con-
tribute with more taxes to the government and
Corporate tax rate generate greater employment opportunities for
32%
Mozambicans. In this manner the government
becomes less aid-dependent and Mozambi-
cans enjoy greater economic sovereignty than
when relying on financial hand-outs from
other countries.
By linking enterprises from different sectors
(as we deal with SMEs from all sectors: finan-
VAT cial, natural resources, infrastructure, etc.) we
17%
also create space for business opportunity
and collaboration. For example, we assist SMEs
with bankable business plans so they can con-
vert their business ideas into financing from fi-
nancial institutions.
As recipients and custodians of a wealth of
business information we also act as a market
SMEs account for development force for the country, advising the
98%
Government and Business Associations on how
to reduce the incidence of market failures, in-
formational asymmetries and other constraints
of Mozambican than inhibit local (endogenous) economic
businesses, but growth.
contribute just As a global company we practice global qual-
ity standards, which are much needed by SMEs
20%
of GDP
to be able to serve large corporations in the ex-
tractive and industry sectors (and therefore re-
alize market opportunities).
We also employ a large labour base of Mo-
zambicans95% of our workforce is local
and invest in their development. The skills and
knowledge that our professionals gain from
Deloitte gives them the ability to be successful
in any business environment and face any busi-
ness challenge.
We believe that our contribution is signifi-
cant in developing successful entrepreneurs
and providing the market a solid and skilled
workforce.
What is your 10-year outlook on Deloitte in Mo-
zambique?
Deloitte will become the undisputed leader in
quality professional services in Mozambique,
as we are in the rest of the world.
172 THEBUSINESSYEAR MOZAMBIQUE 2015
INTERVIEW
at your
SERVICE
TBY talks to Rui Brando, Managing Partner
of BPartner, on the companys business center
model, its client portfolio, and government
support for entrepreneurship.
Where in Mozambique are your
business centers located, and
what services do you offer?
At this stage we have facilities
in Pemba and Beira as well as
at five different locations in
Maputo.
We are also looking to enter
Nacala, Tete, and Nampula
within the next two years due
to the expected growth driven
potential of major gas finds
there. In terms of services,
we offer a complete package
for an office including recep-
tion, internet, and furniture.
The concept is that we offer
a plug-in office, meaning
that the client arrives and can
get to work right away, which
decreases risk. For example,
a new client in Mozambique
might grow briskly at first, yet
have a project that does not
ultimately succeed. If the cli-
ent were to choose a more tra-
ditional solution, it would not
be as easy as it would have in-
volved a longer-term commit-
ment. Our price policy, then,
is based on competing with
the traditional solution. We
also make it easier because we
have the services and manage
the entire office, whereby it is
easier for a client to deal with
one invoice, instead of many.
How many clients do you work
with at the moment?
We have around 120 clients
in total. We have a number of
business centers that are cur-
rently at capacity, while space
remains in others. In Maputo
we are at about 80% capacity.
What is the profile of your cli-
ents?
Usually, we have internation-
al companies that are starting
operations in Mozambique,
although we also accom-
modate three chambers of
commerce. Portugal, Kenya,
Nigeria, Dubai, Japan, and
Brazil are some of the most
common nationalities that
we cater to. It is slower for lo-
cal companies, the main rea-
son being the limited number
of local companies starting
out in Mozambique. We have
made a considerable effort to
increase the number of lo-
cal startups at our business
centers through partnerships
with the Ministry of Science
and Technology and IPEME.
How would you characterize
BPartners role in facilitating
business networking in the
country?
It is all about service, and we
have frequently organized
networking opportunities
through what we like to call
Business Strengths with
Drinks events. Over the past
two years we have invited
several known Mozambican
business figures to address
our events, and meanwhile,
networking naturally occurs
within business centers.
prevailing rates this remains
Business
Centers
in Pemba, Beira,
and Maputo
What are some of the main
characteristics that set you
apart from your competitors?
Our greatest advantage is our
provision of national rep-
resentation. A client of ours
can use our private offices in
Beira if expanding from Ma-
puto and has several meet-
ing rooms available for use.
There are also work stations,
or even a private office, which
can be used for a specific pe-
riod of time. That is definitely
an advantage for us, because
in Mozambique having a re-
lational market means being
present. When pursuing a
client in Pemba, one of the
first things they will ask you
is where your local office is
located.
What can the government do
to support entrepreneurship in
this new era?
One of the greatest weak-
nesses for startups in Mo-
zambique is financethis is
not an issue for an interna-
tional company and obtain-
ing financing from outside
Mozambique at a rate of 3%.
But a Mozambican compa-
ny can only obtain financ-
ing from within the country
itself at a high rate of 21%.
If you have a good project,
there are a lot of commercial
banks available, but due to
a weakness.
What are the main advantages
of a virtual office?
A virtual office means that
you do not have a designated
office space. We provide ev-
erything from a secretary to a
meeting room, and depend-
ing on the package, you have
certain hours of work station
time, or a private office if re-
quired. Some people do a
large portion of their work be-
yond the office. For instance
a salesman who does not
need an office all of the time,
because he is out visiting cli-
ents everyday may on occa-
sion need to receive clients,
or use a meeting room.
BIO
Rui Brando was born in
Porto, where he studied
Business Management
at Universidade Catlica
Portuguesa. He moved
to Mozambique nine
years ago and worked for
seven years in the feeding
sector until he created
BPartner. He had previously
worked in Portugal for the
multinational company
Compass as Operations
Manager in the catering
industry. During the last
14 years he has been
involved in the creation
and development of nine
start-ups in Portugal and
Mozambique.
 Executive Guide
1 WHEN IN MOZAMBIQUE...
WHERE
TO STAY
MAPUTO
01 Polana Serena Hotel
Avenida Julius Nyerere, 1380
T +258 21 24 1700
www.serenahotels.com
Rooms 142 rooms and suites.
Guest services Private residents
lounge, Maisha Health Club and
Spa, business center, hair and
beauty salon, gift shops, travel
desk, and a secure parking area.
3 Dining Four restaurants and bars.
02 Avenida Hotel
Avenida Julius Nyerere, 627
T +258 21 48 4400
www.tdhotels.com
Rooms 143 rooms and 15 suites.
Guest services Health club
and spa, hairdresser, outdoor
swimming pool, airport shuttle,
eight meeting rooms, and internet
access. Dining Mira Mar Bar,
Piano Bar and Restaurant.
03 Hotel Cardoso
Avenida Martires de Mueda 707
T +258 21 49 1071
www.lonrhohotels.com
Rooms 130 rooms and four
suites. Guest services
Business services, internet,
swimming pool, and gym.
Dining International dishes.
THEBUSINESSYEAR 173
04 Southern Sun
Avenida de Marginal
T +258 21 49 5050
www.tsogosunhotels.com
Rooms 158 spacious rooms.
Guest services Internet, pool,
business center, boardrooms,
gym, air conditioning, beauty
salon, car rental, day spa, dry
cleaning, hairdresser, and safes.
Dining Buffet breakfast, la
carte, buffet dinners, light meals.
05 Radisson Blu
Avenida Marginal, 141
T +258 21 24 2400
www.radissonblu.com
Rooms 154 rooms and 20 luxury
suites. Guest services Wellness
center, outdoor swimming pool,
express checkout, three-hour
express laundry, and internet.
Dining Filini Bar, Oceano
Bar, and Palmeira Lounge.
06 VIP Grand Maputo
Avenida 25 de Setembro, no 692
T +258 21 35 1000
www.viphotels.com
Rooms 196 rooms and 12
suites. Guest services Six
conference rooms, congress
center, auditorium, and meeting
rooms. Dining A number of dining
options are available close by.
2
174 THEBUSINESSYEAR MOZAMBIQUE 2015

TETE
07 Park Inn by Radisson

Estrada Zambia, Bairro

Chingodzi, Matundo
T +258 25 22 7900
www.parkinn.com/hotel-tete

Rooms 117 spacious rooms.

Guest services Meeting room,
internet, gym, swimming pool, 24- 5
hour front desk, air conditioning,
wheelchair accessible rooms, BEIRA
and parking. Dining RBG Bar
and Grill, Tete restaurant. 11 Hotel Tivoli

Avenida Bagamoio, 363

T +258 23 32 0300
www.tdhotels.com
PEMBA
Rooms 74 rooms. Guest
08 Pemba Beach Hotel & Spa services Multipurpose room,
Avenida Marginal 5470 banquet service, 24-hour business
T +258 21 30 1618 area, business services, internet,
www.pembabeachresort.com shuttle service, car rental,
and laundry services. Dining
Rooms 102 rooms. Guest Buffet and la carte service.
services Air conditioning, en-
suite bathroom, mini-bar, satellite
TV, direct dial telephone, safe,
internet, conference room, board 7 9
room, fitness center, and spa.
Dining Quirimbas Restaurant,
Niassa Bar, and Clube Naval.

09 Barra Lodge &

Flamingo Bay
T +271 1 023 9901
www.barraresorts.com

Rooms 102 rooms, beach

chalets, and cottages. Guest
services Conference facilities,
audio visual equipment, catering,
activity room, swimming pool,
and a craft market. Dining
Restaurant and Beach Bar. 10

INHAMBANE
10 Hotel Casa Do Capitao

1 Maguiguana Balane
T +258 29 32 1408/9
www.hotelcasadocapitao.com

Rooms 19 double rooms, five

en-suite self-catering units
and one presidential suite.
Guest services Conference
facilities, satellite TV, internet,
air conditioning, room service,
and mini bars. Dining In-house
restaurant with traditional dishes.

HELPFUL HINTS
visa
hello
While the official language of
Mozambique is Portuguese,
English is common in the capital
and in touristic areas.
Everyone in the corporate world
has twoif not threemobile
phones. Make sure you get all
those numbers.
Drink bottled water and use clean
water when washing fresh fruit
and vegetables or consuming ice.
Credit and debit cards are
commonly used and widely
accepted in Maputo.
Malaria remains a concern,
particularly in the north.
Everything in Mozambique without
a price tag is open to bargaining.
Executive Guide
$ EUROPCAR +258 82 300 2410
$ mozambique/maputo
If your country has a Mozambican
embassy you need to apply for a
visa in advance. Otherwise, you
can buy one at the airport, but be
sure to carry cash.
passport
..........
Foreign nationals should carry
their passport or a notarized copy
at all times to avoid fines.
MZN
The national currency is the
Mozambican metical (MZN). It is
not possible to exchange meticals
outside of Mozambique. Currency
exchanges close at 6 pm, but ATMs
are widely available.
THEBUSINESSYEAR 175
Useful Contacts
EMERGENCY SERVICES
FIRE 198
POLICE 119
AMBULANCE 117
ANTI-CORRUPTION HOTLINE
+258 82 965 7804
24-HOUR INTERNATIONAL
EMERGENCY NUMBER
+258 82 012 3455
CAR RENTAL
www.europcar.com/location/
AVIS +258 21 46 5497
www.avis.com/car-rental/location/
AFR/MZ
CAR PREMIUM +258 82 122 6213
www.sixt.com/car-rental/mozambique
SIXT +258 21 46 5250
www.sixt.com/car-rental/mozambique
AIRLINES
ETHIOPIAN AIRLINES
+258 84 867 2917
www.ethiopianairlines.com/en/
destinations/mozambique
KENYA AIRWAYS +258 21 49 5483
www.kenya-airways.com
LAM AIRLINES +258 21 46 8800
www.lam.co.mz/
QATAR AIRWAYS +258 21 32 0622
www.qatarairways.com/mz/pt/
homepage.page
SOUTH AFRICAN AIRWAYS
+258 84 488 9700
www.flysaa.com/mz/en/
TAP PORTUGAL +258 21 30 3927
www.flytap.com/Mocambique/pt/
Homepage
MINISTRIES, STATE
COMMITTEES &
AGENCIES
www.portaldogoverno.gov.mz
GOVERNMENT SERVICES
+258 21 46 7048
TRADE SERVICES MOZAMBIQUE
+258 21 40 7870
INVESTMENT PROMOTION
CENTRE (CPI) +258 13 13 310
MINISTRY FOR COORDINATION OF
ENVIRONMENTAL ACTION
+258 21 49 2403
MINISTRY OF AGRICULTURE
+258 21 46 0011
MINISTRY OF DEFENSE
+258 21 49 2081
MINISTRY OF ENERGY
+258 21 30 3265
176 THEBUSINESSYEAR
Proof of yellow fever vaccination
is not officially required on entry
to the country, but it can be
required when entering at borders
or smaller ports.
If you are hassled or asked for
a bribe report the incident to the
anti-corruption hotline: +258 82
965 7804 or +258 21 31 06.
Take your summer clothes;
Mozambiques climate is tropical
and very warm or hot almost
year-round.
MOZAMBIQUE 2015
Most electrical sockets are
European two-pin.
If you want to travel around rent
a 4x4. You will need it to drive
through the dunes to beautiful
beaches.
If you like spicy food ask
anywhere for Piri-Piri, a hot chili
sauce used to accompany almost
any meal.
Taxis are not metered; so make
sure you bargain before you get
in. MZN150 ($4.50) is a fair price
for a journey between two points
in Maputo.
If you like to dance try kizomba,
the most popular and intimate
dancing style in the country.
Every business visitor new to
the country should visit the
CPI (Centro de Promoo de
Investimentos) to get advice.
MINISTRY OF FISHERIES
+258 21 30 0961
MINISTRY OF FOREIGN AFFAIRS
& COOPERATION
+258 21 32 7000
MINISTRY OF HEALTH
+258 21 42 7131
MINISTRY OF INDUSTRY &
COMMERCE +258 21 35 2600
MINISTRY OF MINERAL
RESOURCES +258 21 31 4843
MINISTRY OF PLANNING &
DEVELOPMENT +258 21 49 0006
MINISTRY OF SCIENCE &
TECHNOLOGY +258 21 35 2800
MINISTRY OF TOURISM
+258 21 30 6210
EMBASSIES
AUSTRALIA +258 01 32 2780
mozhonoraryconsul@gmail.com
AUSTRIA +258 21 32 3214
maputo@ada.gv.at
BELGIUM +258 21 49 2009
info@embassyofmozambique.be
BRAZIL 258 21 48 4800
ebrasil@tdm.co.mz
CANADA +258 21 49 2623
mputo@international.gc.ca
CHINA +258 21 49 1560
chinaemb_mz@mfa.gov.cn
DENMARK +258 21 48 0000
mpmamb@um.dk
FINLAND +258 21 49 0578
sanomat.map@formin.fi
FRANCE +258 21 48 4600
ambafrancemz@tvcabo.co.mz
GERMANY +258 21 48 2700
info@maputo.diplo.de
INDIA +258 14 92 437
hicomind@tvcabo.co.mz
ITALY +258 14 92 229
visti.maputo@esteri.it
POLAND +258 21 32 9111
consulado_rp@wp.pl
PORTUGAL +258 21 49 0150
embaixada@embpormaputo.org.mz
NETHERLANDS, THE
+258 21 48 4200
map@minbuza.nl
REPUBLIC OF IRELAND
+258 01 491 440
maputoembassy@dfa.ie
SPAIN +258 14 92 025
emb.maputo@maec.es
US +258 21 492 797
maputoirc@state.gov
UK +258 21 356 000
bhcgeneral@gmail.com
A once in a generation
opportunity
Africas largest ProjectThe Mozambique LNG Projectwill directly
benefit the people of Mozambique for many generations to come.

ITS MOZAMBIQUES TURN

Massive discoveries of natural gas have the potential to transform Mozambique, enabling it to become one
of the largest exporters of liquefied natural gas (LNG) in the world.

What is LNG?
LNG, or liquefied natural gas, is natural gas converted into a liquid by cooling. This process reduces
its volume and enables natural gas to be transported around the world to customers seeking
cleaner-energy alternatives.

TRANSFORMING MOZAMBIQUE FOR THE FUTURE

A recent report by Standard Bank finds the Mozambique LNG Project will boost employment,
expand air, ports and road infrastructure, improve water and electrical infrastructure and
expand access to education and health services in local communities.

lng Generate Better Services Throughout Communites

exports
Jobs Clean Water Electricity Health Services Education Improved Lifestyle

Potential BENEFITS by 2035

15,000 Direct jobs cleaner energy
from MOZAMBIQUE TO THE WORLD
685,000 Indirect jobs
U.S. $39 Billion toeconomy
Mozambican
mbican
y

transport
infrastructure including air, roads and
d ports

opportunities Gas LNG LNG

for small- and medium-size businesses

Offshore Development Onshore Liquefaction Shipping Global Buyers
Source: Mozambique LNG: Macroeconomic Study by Standard Bank

www.mzlng.com info@mzlng.com