This article comes from two trade missions I took part in, organised by the United States of America Department of Commerce – Mozambique, to GASTECH (Houston) and MINExpo International 2024 (Las Vegas), in which I supported a Mozambican business group in choosing and engaging investors for a very important project in the area of mining logistics.
In this context, I challenge my readers to answer the following question: what is the profile of an Ideal Investor Partner (IIP)?
With i) the African Continental Free Trade Area (AfCFTA) transforming the continent’s economic landscape; ii) the abundance of natural resources; iii) the political commitment to growth and development, Mozambique is in a privileged position to connect with a market of 1 billion souls, attract foreign direct investment (FDI) and expand its exports.
However, to ensure that this opportunity is maximised, the choice of the ideal Investor-Partner ( IIP) is fundamental: much more than a financier, the IIP should bring expertise, strategic connections and a long-term vision, essential elements for the success of any venture.
But how do you identify this Ideal Investor Partner (IIP) and what are the risks of choosing the wrong partner?
Let’s explore together the main practical dimensions that, in my opinion, need to be part of the checklist for choosing your IBP(s).
In addition, I suggest reading an article I wrote in this column: ‘Partnerships Born in the CEO’.
1. Investment Capacity: Ensuring Financial Strength
The PII must have solid financial capacity and be able to make initial and future contributions. Analyse the financial statements, assess liquidity and solvency, payment history, credit rating, cash generation capacity, debt level and previous investment performance. Such activities are absolutely mandatory when choosing an IRP. Attending international conferences and exhibitions such as GASTECH, MINExpo International or the Africa Investment Forum are great ways to connect with investors who have this profile.
Participating in Chambers of Commerce and trade missions are great opportunities to find investors with international connections
On the other hand, a partner with low financial capacity can paralyse the project before it even begins. In agribusiness, for example, a lack of resources can jeopardise harvests, exports and international competitiveness.
2. Risk Profile: Calculated Boldness
Investing in Mozambique, an emerging market, requires a PII with an appetite for risk. Analyse the investments made by the potential partner in start-ups, emerging technologies or how it has behaved during periods of market volatility, whether it uses options, futures and other derivatives and the investment objectives: high return targets usually come with greater risk.
Development banks and venture capital networks, such as the African Venture Capital Association (AVCA), are excellent sources of investors with this tolerance.
On the other hand, a risk-averse partner may fail to make bold decisions, undermining the business’s ability to expand.
3. Experience in Key Sectors: Ready-to-Use Know-How
The investor’s experience in the sector in question is an invaluable asset. Participating in events such as the Africa Energy Forum (energy), GASTECH (natural gas), MINExpo International (mining) or the Africa Agri Investment Indaba (agribusiness) is key to finding partners with the necessary know-how.
However, investors without this knowledge run the risk of making wrong decisions that could jeopardise logistics operations, for example in tourism, or compromise the supply chain, as in agribusiness.
4. International Links: Opening Doors to the World
The ability to open doors in international markets is an essential competitive advantage. Chambers of Commerce, and participating in trade missions (as was my recent case at GASTECH and MINExpo Internacional) are great opportunities to find investors with these global connections.
However, an investor without an international network can limit business growth and reduce export potential, especially in sectors such as mineral fuels (coal and natural gas).
5. Sustainability and Social Responsibility: Valuing the Future
Today, sustainability is a global priority. Investors committed to environmentally responsible practices can be found in impact networks, such as the Global Impact Investing Network (GIIN), or at Environmental, Social, and Governance (ESG) conferences.
On the other hand, a lack of such commitment can damage the project’s reputation and attract resistance from local communities, environmental groups and the environmental regulator.
6. Innovation and Technology: Staying ahead of the curve
In an increasingly digital world, innovation is key to staying competitive. Events such as the Web Summit or the Africa Tech Summit are ideal for finding technology-focused investors.
On the other hand, a partner who doesn’t prioritise innovation can leave the business technologically obsolete, jeopardising growth.
7. Corporate Governance: Transparency and Trust
Solid governance is essential to guarantee stakeholder trust and compliance with regulations. Investors with a track record of good practice can be found on compliance forums or in organisations such as the International Finance Corporation (IFC).
On the other hand, a lack of good governance can jeopardise the project’s image, resulting in a loss of credibility and difficulties in operating ethically.
8. Long-term Vision: Sustainable Growth
Long-term vision, proven through the potential partner’s previous investment history, analysis of the investment strategy (note the prevalence of long-term objectives) and investments in emerging sectors are essential, especially in sectors such as renewable energy, agribusiness and tourism. Investors with this profile are usually found in pension funds and development banks.
On the other hand, a partner looking for quick profits can sacrifice the sustainability of the project, jeopardising its future expansion.
9. External Financing: Mobilising Capital
Large-scale projects, such as infrastructure, require large volumes of funding. Investors who can attract external capital are found in multilateral banks such as the World Bank, the Asian Development Bank and the European Bank for Reconstruction and Development.
On the other hand, the lack of such capacity definitely limits the start-up and/or growth of the project.
10. Reputation and Credibility: Trust is Everything
An investor’s reputation is a powerful tool. In this context, analyse the investor’s investment history, ask for references and testimonials from previous clients, take part in global business conferences and investor forums, so that you connect with highly credible partners.
On the other hand, an investor with a bad reputation can jeopardise future deals and limit access to key markets.
Identifying the ideal partner is a fundamental tool for business success
Conclusion: The Ideal Investor-Partner in Mozambique A good partnership goes far beyond money.
The profile of the Ideal Investor Partner (IIP) is one that combines capital, expertise, international connections and a vision aligned with sustainable growth. They understand the complexities of emerging markets, value sustainability and have the ability to collaborate with other stakeholders. Above all, such a partner brings a long-term vision, supporting continuous growth, which is crucial in sectors such as agribusiness, energy, tourism and technology.
With the right partner, Mozambican entrepreneurs can turn their ideas into successful businesses, expanding their international presence and ensuring that Mozambique becomes a competitive force on the global stage and particularly in the new African Continental Free Trade Area (AfCFTA).
Finding that Ideal Investor-Partner requires strategy and practical preparation (see the ten dimensions of the check-list I propose in this article), but the benefits of a good choice reverberate for years, boosting the country’s economic and social development.
¹. Mozambique is a member of the African Continental Free Trade Area. The Council of Ministers approved the Resolution on Mozambique’s Tariff Offer and the National Strategy for the Implementation of the Agreement creating the African Continental Free Trade Area. The deliberations were announced in a communiqué at the end of the 24th session of the Council of Ministers, held on 6 August 2024 in Maputo.
².See https://www.diarioeconomico.co.mz/2020/12/30/opiniao/parcerias-nascidas-no-ceo/
³.Examples of development banks with a strong appetite for projects in Africa: African Development Bank (AfDB); World Bank; European Investment Bank (EIB); Islamic Development Bank; French Development Agency (AFD).
