This Thursday, 22 February, the Confederation of Economic Associations (CTA) held the 15th edition of the Economic Briefing, which covered the performance of national companies in the fourth quarter of 2023 as well as the outlook from an economic point of view.
On the occasion, the president of the CTA, Agostinho Vuma, revealed that the trend in the Business Robustness Index (IRE) for the fourth quarter of 2023 was a slight improvement of 1 percentage point, standing at 30 per cent, compared to 29 per cent in the previous quarter.
“This business performance, although higher than in the previous quarter, is quite fragile. There are several reasons for this. Firstly, the fourth quarter corresponds to the end of the agricultural marketing season and the corresponding start of preparations for the new season. There were also continuing constraints on agricultural commercialisation, such as the logistical issues involved in accessing the phytosanitary certificate, the high level of interest rates and the reduction in demand for goods and services from the state,” he noted.
The source pointed to some of the factors that continue to contribute to the sector’s poor performance, highlighting the financial burden on banks.
“From 11 January 2022 until the end of 2023, the MIMO rate stood at 17.25%, which, combined with a rise in the mandatory reserve ratio to 39%, led to an increase in companies’ indebtedness to banks. Market liquidity fell by 23.6 per cent in 2023 compared to 2022, as a result of the increase in the mandatory reserves coefficient, both in domestic currency from 10.50 per cent to 39 per cent, and in foreign currency from 11.50 per cent to 39 per cent from 2022 to 2023,” said Agostinho Vuma.
With the Bank of Mozambique’s new decision to reduce the monetary policy interest rate (MIMO) by 0.75 percentage points, i.e. from 17.25 per cent to 16.50 per cent, which will have an impact on the financial system’s Prime Rate in the coming months, the organisation hopes that there will be a relief in bank charges and an expansion in the possibilities for SMEs to access credit.
As for the macroeconomic environment, the CTA explains that “it has improved, with the respective macroeconomic index rising from 42 per cent in the third quarter of 2023 to 47 per cent in the fourth quarter of the same year. This improvement reflects the reduction in the inflation rate and the continued stability of the exchange rate.”
In terms of employment, the representative of the country’s entrepreneurs explained that the situation remains fragile, as there is still a tendency for new jobs to be sustained by part-time or temporary hires, with the rate of new hires falling to 30.6 per cent. “This trend can be justified by the reduction in demand for labour to serve the agricultural sector,” the source explained.
On the issue of kidnappings, which are affecting the improvement of the country’s business environment, the CTA suggests revising the legislation – namely by increasing the penalties and not allowing bail for this type of crime – the creation of a Security Consultative Commission (which will, among other things, be responsible for monitoring the investigation of kidnappings), the operationalisation of the Anti-Kidnapping Unit and the adoption of technological means such as video surveillance.
It should be noted that the debate held on Thursday (22) was based on the country’s current economic situation, which is influenced by external and internal factors, such as the Russian-Ukrainian and Israeli-Palestinian wars, the insecurity in Cabo Delgado province and the occurrence of kidnappings.
