In the last few months of 2024, Mozambique witnessed unprecedented socio-political tension, which resulted in the deterioration of the business environment and the destruction of several private enterprises. After this turbulent period, a new government took office on 15 January with promises of reforms for the private sector, with a special focus on Micro, Small and Medium-sized Enterprises (MSMEs).
In order to better understand the impact of these events and outline the outlook for the coming period, DE contacted the Association of Small and Medium-Sized Enterprises (APME), which pointed to the damage caused by the demonstrations, but highlighted positive expectations with the arrival of the new government, expecting it to reduce bureaucracy and taxes, as well as being closer to the central government.
The vice-president of APME, Pedro Silva, began by explaining to DE that the assessment of companies’ performance during the demonstrations is ’extremely negative. The organisation is carrying out a study among SMEs, to be published soon, on the real impact of the post-election tension. However, the Confederation of Economic Associations (CTA) has already released data indicating that more than 500 companies were vandalised and destroyed, causing major damage to the economy,’ he said, adding: ’Many jobs were compromised, thus increasing the unemployment rate, especially among young people. This situation challenges APME and its partners to devise a programme to assist and support SMEs in their recovery.’
He reiterated that, with the demonstrations that degenerated into violence and looting of public and private institutions, SMEs were hit hard, causing national and international trade to be paralysed, preventing the import and export of raw materials and products. ‘There was a significant reduction in supplies and sales, with effects that are still being felt,’ he said.
On the new Executive’s measures
One of the measures announced by the new Mozambican President, Daniel Chapo, was the debureaucratisation of public institutions to improve the business environment. Pedro Silva commented on this initiative: ‘We are very optimistic about reducing bureaucracy. We believe that this measure could improve customer service, reduce waiting times and increase the efficiency of the civil service. As we know, the time it takes to obtain a licence for an activity is excessively long. Entrepreneurs often end up giving up because of the time it takes to formalise their activity.’
As for the new government, Pedro Silva emphasised that expectations are high, given the challenges faced by SMEs. ‘We hope that this Executive will provide a favourable environment for SME growth, implement a local content policy that stimulates industrialisation and create financial solutions tailored to SME needs. Furthermore, we want this government to become a true partner of the private sector and, in particular, of APME,’ he said.
Pedro Silva
The association assured that it will be available to maintain a permanent dialogue with the government and to bring the concerns of SMEs to the table in order to find the best solutions together.
On access to finance
APME welcomes the role of financial institutions in supporting SMEs during the demonstrations. ‘However, there are still significant challenges in accessing finance. The issue of interest rates is one of our main concerns, as they end up suffocating companies, when in fact they should be a solution, especially in supporting their cash flow,’ the source emphasised.
APME is carrying out a study among SMEs, soon to be published, on the real impact of the post-election tension.However, the Confederation of Economic Associations (CTA) has already released data indicating that more than 500 companies have been vandalised and destroyed, causing major damage to the economy
He also said that the association is developing a programme in collaboration with financial institutions, with the aim of creating financing mechanisms adapted to the reality of SMEs, namely low-interest loans.
Strategies to strengthen SMEs
APME argues that more should be invested in training entrepreneurs, promoting partnerships with higher education institutions and professional training centres to qualify SME managers. In addition, there is a need to encourage young and female entrepreneurship, creating incentive programmes and subsidies to stimulate innovation and economic diversification in the country.
APME and CTA
The association believes that with these measures, SMEs will have greater stability and will contribute more actively to the national economy, boosting job creation and strengthening local industry.
In order to guarantee the proper functioning of SMEs, the association advocates the implementation of the following reforms and initiatives: revision of the legal framework that regulates and categorises SMEs in the country; revision of the tax burden and customs tariff; revision of the compulsory reserves imposed by the Bank of Mozambique; approval of a National Local Content Policy; revision of the Procurement Law, guaranteeing comfortable preference margins for national SMEs; reduction of waiting times and fees for licensing specialised activities; combating unfair competition and informality; and broadening the tax base, so as to prevent small taxpayers from continuing to be suffocated by arbitrary measures.
Text: Nário Sixpene
