State debts to companies continue to have a negative impact on the performance of the private sector. In this regard, the Confederation of Economic Associations (CTA) of Mozambique has asked the government to include in the State Budget (OE) a specific item for the annual payment of overdue invoices to suppliers, to the value of 3.1 billion meticals (50 million dollars).
‘In order to bring greater predictability and confidence to the private sector, we propose that a specific item be included in the State Budget for the payment of overdue invoices to suppliers of around 50 million dollars a year,’ urged the president of the CTA, Agostinho Vuma, during the opening of the 19th edition of the Annual Private Sector Conference (CASP).
He also defended the importance of ‘enforcing the removal of the requirement for provisional guarantees in public tenders, including the harmonisation of the respective procedures to prevent some ministries from continuing to insist on this requirement without a legal basis’.
In the same speech, the leader argued that there should be a support programme to increase the incorporation of national raw materials in the oil and soap industry, assuming that the country would save 18.9 billion meticals (300 million dollars) in imports.
‘This action would help reduce imports by around 300 million dollars, which could lead to more investment in the agricultural sector, resulting in additional sectoral growth of 6 per cent,’ he stressed.
Vuma also pointed to the constraints caused by the withdrawal, since the beginning of the year, of the exemption from Value Added Tax (VAT) on the two products [oil and soap], acknowledging that the dialogue to change the measure with the Ministries of Industry and Trade and the Economy and Finance has ‘been fruitful’.
‘Although VAT is a tax paid by the consumer, companies often lose competitiveness because this rate [tax percentage applied] makes their products more expensive. That’s why we believe there is room to set up a programme of incentives to replace the 80% or so of raw materials that are imported with products of local origin,’ he said.
He clarified that the strategy involves ‘renewing the tax incentive of VAT exemption on food oil and soap shipments’, but associating it with the ‘obligation for industries to increase the incorporation of local raw materials in their production process from the current 20 per cent to 60 per cent in two years’.
Generally speaking, Agostinho Vuma reiterated that the country is experiencing encouraging economic growth driven by positive reforms, ‘as evidenced by the recovery in business performance from 28 per cent in the first quarter to 30 per cent in the fourth quarter of 2023’.
‘This action would contribute to reducing imports by around 300 million dollars, which could lead to more investment in the agricultural sector, resulting in additional sectoral growth of 6 per cent’
‘At the same time, the macroeconomic environment index showed significant improvements, rising from 41 per cent in the first quarter to 47 per cent in the fourth quarter, still in 2023. These dynamic outlooks have seen steps that, although timid, continued to offer strong signs of hope and optimism throughout the first quarter of this year,’ he concluded.
This edition of CASP, organised by the Confederation of Economic Associations (CTA) in partnership with the government, aims to reflect ‘on the progress and challenges of the Package of Economic Acceleration Measures and to debate the conditions of the business environment in order to make the country more competitive’. Projects valued at 75.8 billion meticals (1.7 billion dollars) will also be discussed.
Taking place under the theme ‘Investments and Business in the Environment of Economic Acceleration Measures: Challenges and Opportunities’, the three-day event (15, 16 and 17 May) will be attended by 80 foreign businesspeople, more than 4,000 in-person participants and 20,000 virtual participants.
