The Confederation of Economic Associations (CTA) organised a workshop this Thursday, March 20, in partnership with the International Labour Organisation (ILO), on the theme of ‘State Purchases as an Anchor for Production and Industrialisation’. During the event, the CTA argued that state purchases can support the development of companies and called on the government to extend the VAT exemption period to five years.
On the occasion, CTA vice-president Maria da Conceição Abdula emphasised that public procurement is a strategic tool for boosting the country’s sustainable economic growth. ‘The government makes purchases of goods and services worth an average of more than 500 million dollars (32 billion meticals) a year. However, most of these products are imported, which exacerbates the balance of payments deficit,’ she said.
According to her, the study drawn up by the organisation she chairs maps out the opportunities and identifies the reforms needed to ensure greater participation by local companies in supplying the state. Among the main challenges identified are weaknesses in the regulatory framework, the need to improve support infrastructures and simplify bureaucratic processes.
In addition, the study suggests a continuous review of public procurement policy in order to adapt it to the reality of Mozambican companies, introducing specific incentives to strengthen them. Facilitating access to finance was also identified as a fundamental need to enable the growth and modernisation of Small and Medium-sized Enterprises (SMEs).
Among the key sectors that could benefit from the promotion of local content, the study highlights: construction materials, hospital medical materials, printing materials, food industry and agro-industry, non-metallic minerals, furniture, chemical industry, rubber and plastics.
The CTA vice-president emphasised the importance of supervision and auditing mechanisms to guarantee transparency and combat corruption in public procurement processes. ‘Implementing the study’s recommendations will contribute to a more inclusive and competitive business environment, promoting the development of a more robust economy that is less dependent on imports,’ she emphasised.
Private sector wants VAT exemption for five years
The impact of VAT on national production
In the context of promoting local content, she touched on the government’s recent decision to restrict the VAT exemption on oils, soaps and sugar. The private sector is proposing that the exemption be extended from one to five years, as a way of stimulating the national production chain and reducing dependence on imports.
The country currently has only 3.5 per cent of the raw material needed to produce cooking oil. With the VAT exemption and the integration of soya into the production chain, the price of cooking oil could fall from 245 meticals to 141 meticals, making it more affordable.
In addition, reducing dependence on imports of crude and oil for refining could allow imports to fall from 162,000 tonnes to 103,000 tonnes a year, generating savings of 65 million dollars (4.2 billion meticals). Soya production could grow by 123% in five years, from 51,000 tonnes to 360,000 tonnes, benefiting around 250,000 producers.
The measure will also have a cascading effect, boosting sectors such as agriculture (use of soya cake for animal feed), packaging, energy and transport.
Public spending as a tool for industrialisation
For his part, the director of the International Labour Organisation (ILO) for Zambia and Mozambique, Wellington Chibebe, stressed that public spending is not just a matter of fiscal management, but a strategic instrument for boosting industrialisation. ‘Public spending should aim not only to increase the level of employment in industry, but also to guarantee the inclusion of marginalised groups, such as women, young people and people with disabilities,’ he stressed.
Chibebe also stressed the importance of vocational training to empower the workforce and enable effective industrialisation. ‘The road to industrialisation and job creation through public spending is a shared journey. It requires the involvement of government, the private sector, civil society and communities,’ he concluded.
Government commitment to industrialisation
Representing the Ministry of Economy, the Secretary of State for Industry, Custódia Paunde, reaffirmed that promoting local content is a government priority, in line with the National Development Strategy (2025-2044) and the Industrial Policy and Strategy (2016-2025).
The National Programme to Industrialise Mozambique (PRONAI), one of the executive’s main initiatives, aims to increase national production, favouring the use of local raw materials and promoting business links between local producers and industry. PRONAI identifies strategic sectors such as education, infrastructure, health and innovation, encouraging local production of school materials, uniforms, desks, books and military uniforms.
Government reaffirms commitment to Local Content
The Secretary of State also highlighted the Law on Small and Medium-sized Enterprises (2024), which establishes rules to give preference to SMEs in public procurement. This legislation aims to increase the participation of national companies in supplying goods and services to the state, strengthening the national private sector.
The workshop concluded with a call for collaboration between the public and private sectors to implement effective local content policies. CTA, the government and international partners agree that Mozambique should replicate good practices from countries like Brazil and Norway, which have adopted successful strategies to strengthen national production.
The definition of clear metrics and targets, coupled with rigorous monitoring of the policies implemented, will be essential to guarantee sustainable and competitive economic growth. The meeting reinforced that the country’s industrialisation depends on creating a more inclusive, transparent business environment geared towards local production.
The event brought together members of the government, representatives of the private sector and international partners to discuss strategies for strengthening national production through public procurement.
Nário Sixpene
