AIMO is an association representing industrial companies, founded in 1989 by businessmen representing leading companies, who wanted industry to come together to improve business conditions in Mozambique.
Currently, it has more than 300 members, most of them being industrialists of all sizes (small, medium and large), such as Vale Moçambique, Mozal, Cervejas de Moçambique, Sumol+Compal, etc.
It also has non-industrial members, but which are active in this segment, such as some banks and service companies, including consultancies. It has members in all provinces, and in various areas of activity (electromechanics, construction, production of building materials, drinks, food, wood, among others.)
Its main objectives are to stimulate an increase in national industrial production, productivity and competitiveness; to promote a solid, united and cohesive industrial sector with the extractive industry, agro-industry and manufacturing as key sub-sectors; to develop synergies with other sectors of the economy, particularly with the agrarian and extractive sector; to promote the diversification of production; and to promote the adding of value to national raw materials.
With a relatively broader view of the challenges and opportunities of the national industrial sector, the Chairman of the Board of Directors of this organisation, Rogério Samo Gudo, is very optimistic about the results of the National Industrialisation Programme (PRONAI), since he sees in it a turning point towards the reorganisation of production. But he regrets the fact that Mozambique is still “very far” from satisfactory levels of competitiveness.
How is the industrial sector doing? To what extent has it or has it not resisted the negative effects of the new coronavirus pandemic?
As you can imagine, all sectors have experienced negative impacts. It is obvious that the industrial area, which also encompasses the food processing area, has not had as great an impact as the other areas, but we are having constraints related to reduced market demand. But the greatest of all the difficulties is global and concerns the deficient supply of materials for the operation of the industries.
That is, there is a stock rupture in the world, which was caused by limitations in the mobility of people. We have major deficiencies in the reception of industrial parts and this hinders equipment maintenance processes and production. In addition, we have a constant problem which is access to money. The cost of money is very high, especially in the circumstances in which we live. Industries need special financing to be able to recover stability. All this makes it difficult for the sector to meet its obligations, whether with banks, suppliers or the tax authorities.
You say that the industrial sector is also affected by the instability in South Africa?
Yes, indeed. First there was the crisis of vandalism during the demonstrations, and then came the crisis of the metal-mechanic industry union that interrupted the supply of stock equipment to this segment in Mozambique.
And now we have power problems, with constant cuts. So it’s not only covid-19 that has a negative impact. There are a number of other aspects that hinder our ability to turn around day-to-day problems. Even so, industrialists are firm, committed and pleased to understand that the Government also has the same vision, which, by the way, is conveyed in the recently launched National Industrialisation Programme (PRONAI), which is a platform that will further facilitate the Country’s industrialisation process. We have been in activities with the Government and with other partners and we have developed initiatives with the communities to ensure that the discussions at PRONAI level may enable progress in the industrial sector.
Speaking of the PRONAI, we note the fact that the Country is operating simultaneously with two policy instruments for industrial development: the PRONAI itself, launched last August, and the Industrialisation Policy and Strategy 2016-2025. Is this not symptomatic that something is failing at the level of the very design of priorities?
PRONAI is a legal framework that contains plans and strategies. But we feel that we still need to revise some lines, so it is not yet closed. Therefore, the merit of PRONAI is that it calls for the intervention of all actors, leaving no one out. In other words, it is concerned with identifying all the main actors in the industrialisation process, because it has the particularity of involving a huge chain of actors. Look: it all starts with the primary actors, who are the ones who extract resources from the land or grow food. If they do not do this, there will be no industrialisation process. But it should be noted that the processes do not end with the intervention of the manufacturing industry, since then comes Trade, and then Services, including financial Services, which are transversal. So, framing all these actors within industrial processes is the merit of PRONAI. This is where we have the vision of what we need to extract, transform and how we should export resources, which in principle means adding value to raw materials to attract additional wealth to the Country. These were the discussions we had in the process of preparing the PRONAI, because it no longer makes sense for a country such as Mozambique, in the midst of the digital age and of an information society, to continue to choose traditional methods of doing industry, promoting the growth of other countries through the export of all the capacity we have to solve our problems.
What about the Industrialisation Policy and Strategy 2016-2025, what is the point of this instrument if the PRONAI takes on the role of industrialisation script?
It is a well-structured document, but it is out of touch. It needs to be updated and adjusted to the moment we are going through. From 2016, the year it came into force, to 2021, six years have passed and this document has remained static. For example, in the list of priority industries, the pharmaceutical industry is fundamental, but it is not provided for in this document. Today, the covid-19 pandemic has shown that it is important for any country to install a pharmaceutical industry, which has even been stimulated: we already produce protective material such as alcohol gel, some medicines and even hospital equipment. It is such a priority that it does not make sense for us to continue importing these products, since they are extremely basic elements that respond even to the challenges of population pressure, and are therefore an opportunity that should not be ignored. In addition, we have been victims of climate change, so our industry has to provide construction materials that are resilient. We have to work hard in this industry segment so that we address these concerns. Basically, there are several issues that need to be updated in the new context.
But one of the big weaknesses is also access to finance and the development of internal capacity in terms of research and innovation. How will it be possible to build a strong industrial sector if no feasible rules are defined in this regard?
Mozambique competes with the economies of the region, and the first one we compare ourselves with is South Africa. Obviously when we talk about access to finance, compared to the economies around us, we see that we are extremely uncompetitive. Our rates are extremely high, we don’t have proper mechanisms to finance the industry and this is a big dilemma for the sector. But we must also not forget that we have the aggravating factor that we have a much higher tax burden than our neighbours. These factors take away our competitiveness, because we still depend to a large extent on imported products. We have to start somewhere and I see in PRONAI an instrument that may address this thought, bringing, as I said, all the actors, including science and technology to find a model that may take us from the level we are at, which is very low. When we had the centrally planned economy it was easy to decide what should be done on these kinds of objectives. Today, with the market economy, any operator, including the State itself, can decide that it wants to buy outside. So, even if there is a willingness to invest on the part of the private sector, if the other partners lack the will, that investment will not bear fruit. In other words, even if money were cheap, if there is no political will at the level of tax policy and macroeconomic policy conducive to stimulating private industrial investment, it will be very difficult for us to achieve this.
private industrial investment, it will be very difficult for us to process what we produce. It will always be easier and cheaper to buy from outside. This is to say that there is a lot of work that must be done internally for the competitiveness of our industry.
One of the aspects that jumps out at me in the matter of facilitating private investment is the installation of the Industrial Free Trade Zones (IFZ), a strategy for which the Government has been committed for some years now. Is it working?
It is one of the right ideas. The IFTZs create the appropriate ecosystem for industrial production (energy, roads, water, among other appropriate means, including the proximity of ports for the flow of production). They are, in fact, extremely important. For example, we, AIMO, have been working in the Beluluane special zone, sending our members to settle there. But at the same time, we feel that the potential of these areas at national level is still under-exploited, which means that although much has already been done, there is still a lot of work ahead to capitalise on these initiatives.
Another issue is the need to revitalise the industries that we once had (Mabor, Vidreira, etc.), which is very difficult, just look at the numerous attempts that have been made to do so. Is this yet another symptom of our fragility? What is the plan?
The barriers are in the market. They are in our competitiveness. The primary conditions for investments to move on their own are not satisfactory. I believe that the opportunities for Mozambique are immense, because of its geographical position and its population who, even if they are not very well prepared, are very willing to learn. It is possible to do a lot of things in Mozambique.
That said, what is the future for national industry, in an environment marked by very rapid technological change that we are somehow trying to keep up with?
We have to bring a new perspective on how to do industry. We cannot try to revitalise industry by doing it the same way we did it in the past. We have to study the current context, which is one of synergies. Mozambique may have adequate conditions to produce a certain process for a product, but we have to research until we find that product.
For example, nowadays there is a lot of talk about vehicles with electric components and here we have raw material that can be used for the production of batteries. Instead of thinking about exporting, we can think and compose just one process of the battery and be known in the world as people who supply that specific product.
As for Mabor, for example, there are already several industries around the world that produce tyres and have perfected themselves in such a way that we will not be able to obtain the technology or investments to be at the level of those industries. Another issue is that we have many industries working below their capacity and we want them to continue to do the same things. Nowadays, any young person can be an industrialist. All you have to do is have a computer, have a product or market it through social networks. You can order your product in a particular industry and craft your brand and expand. It is this new mindset that young people need to develop. For example, in the shoe industry it may be dispensable for the young person to set up a shoe factory. He will only need to design the model, make the brand and seek partnership with a factory that will open the production line of his brand.
The industry today is changing and we have to look at what is happening in the world. This is the new industry we have to create. Of young people who don’t need to spend many years studying engineering because they are creative. They are in an information society. It is possible for Mozambique to be part of this game and our partners have to understand this new wayof being.
