Speaking during the Conference on Financing Industry via Capital Markets and Development Banking, organized by the Industrial Association of Mozambique (AIMO) and held on Thursday, November 24, 2022, in Maputo, Salim Valá advocated that industrialization is a safe path to follow in Mozambique for rapid, inclusive and sustainable economic growth, contributing to job creation, reducing social inequalities and eradicating poverty.
Salim Valá recommended a firm and consistent bet on industrialization, arguing that “the country must have an economic growth strategy with inclusion, allowing for better insertion in the global context”.
“There are signs that show that, in the coming decades, the economic development of Mozambique will be led by the manufacturing industry, which is still underdeveloped. Let us see: of the 100 largest companies in the country, 14% are from the industrial sector; of the 11 listed companies, three are industries; the three industries listed on the stock exchange represent 90.2% of the stock market and 8.54% of the overall market capitalization; on other stock exchanges, the industrial sector is one of the main breeding grounds for companies to be listed,” he pointed out.
Citing academics such as Justin Lin (2011), Carlos Lopes (2020), and Ha-Joon Chang (2014), Salim Valá explained that “the main constraints affecting the manufacturing industry are related to poor infrastructure, low workforce levels, energy and water problems, weak business linkages in the value chain, difficult access to finance, and difficulties in competing with industries in more developed and industrialized countries.”
Although the domestic stock market is small in size, with little depth, it has already hosted several successful public offerings, cases of CDM (in 2001), CMH (in 2008) and HCB (in 2019), and more recently hosted the Tropigalia transaction (between October and November this year).
BVM currently has three stock markets available: the official listing market, for large companies and the State, the second market, for SMEs, and the third market, for incubation, transition and preparation for SMEs and startups. Of the total 11 listed companies, seven are on the MCO, one on the second market and three on the third market. The financial instruments available are stocks, bonds and commercial paper, and BVM is considering introducing new products and financial instruments in the year 2023.
BVM’s CEO underlined that “a country without a strong national industry will hardly be a developed and economically independent country, as it will be eternally stuck in the ‘commodities trap’ and vulnerable to the volatility of commodity prices in the international market.
Valá recognized that industrializing a country is not the task of a single sector or only of the Government, as “one must have a consistent, long-term vision and strategy, in which the combined and complementary efforts of the Government, the private sector, civil society, training and research institutions (academia), cooperation partners, financial institutions, in short, all the ‘living forces’ of society and the national economic system are articulated.
With regard to BVM, Salim Valá pointed out that “we are prepared to do our part in this effort and we recommend the Industrial Association of Mozambique (AIMO) to work with companies in the industrial sector to be better managed and governed, to have better economic and financial health, to be more transparent and not to be afraid to open their capital to other investors, in order to attract cheap financing and disperse the risk of investment.
“We believe that with the partnership crystallized through the memorandum of understanding signed with the president of AIMO, engineer Rogério Samo Gudo, BVM will have more companies from the industrial sector listed and using the capital market products, but also companies from the agribusiness, tourism, technology, and financial sectors, among others,” he said.
Concluding his speech, Salim Valá advocated that “we should not inflate our expectations regarding natural gas from Rovuma or other minerals and hydrocarbons. Transforming valuable natural resources in the country adds more value than having the resources and exporting them in a primary manner. And he concluded: “indeed, the promotion of industrialization is the most promising and pragmatic path for the rapid, comprehensive, inclusive and sustainable economic transformation of Mozambique”.
