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Local Content: Valuing What We Have as Good

Local Content: Valuing What We Have as Good

  • Leonor Assunção • Administrator, Insite

Two years after the beginning of the pandemic and, apparently, back to relative normality, the market dynamics are revived and hope is reborn. As if someone had pressed play after a long pause, the promises, the conferences, and the debates about the opportunities of a new phase, which we want to be a recovery for companies and for the national economy are back.

And, as could not be otherwise, the discussion about Local Content and the law that is taking a long time to be published (and that many still believe to be “the missing link” in the relationship with large investors); The debate about the protection that this law should confer to local companies, as if this was the key to success (without a consensus having yet been reached about what should be considered “local”); and the complaints about the difficulties (from financing to injustices) that Micro, Small and Medium Enterprises (MSMEs) face in embracing the promised opportunities.

Meanwhile, the theme of readiness and competitiveness of national MSMEs as a lever for a model of generation and maintenance of more robust business opportunities continues to pass quietly. The focus is back on what the Government, Non-Governmental Organizations (NGOs), Investors, Banks and other partners can do for MSMEs, instead of focusing, at least equally, on what MSMEs can do for themselves (and that’s no small thing!) in scaling up access to opportunities.

In 2019, at the 6th Mozambique Gas Conference, in his speech, the Honorable President of the Republic of Mozambique, Filipe Nyusi, said (as recorded in the conference summary), calling for an attitude of collective responsibility for success, that Local businesses should stop complaining and go after opportunities. We all know that the underlying obstacles are many. However, the appeal made encloses a proactive attitude, which was then and is today, all too urgent and relevant.

As the basis of Local Content is business, not social responsibility, there seems to be little hope that investors will lower the standards they are used to or be willing to take significantly higher risks in order to realize more opportunities for local MSMEs.

However, as we know, most local companies are effectively unable to compete with established companies with proven track records in meeting the international quality and safety standards imposed by investors. On the other hand, time is short and companies will hardly have time to prepare themselves fully in time to take advantage of the opportunities that arise and/or will arise as the market evolves. Thus, unless there is a radical change in attitude, local MSMEs may in fact never gain, or gain very little, from the opportunities brought by investors.

The race for opportunities in the context of local content is a marathon that requires effort, concentration and resilience.

While local content regulation is important in defining the legal framework in which opportunities will be generated and accessed, MSMEs need to develop and/or reinvent their business models, plans and/or operational strategies in order to increase and expand their activities and capabilities, and thus position themselves as local partners for the much sought-after investments.

Otherwise, even if the law plays its role, the opportunities won will end up being lost in the weaknesses that generate breach of contracts and strengthen the image of the local market’s inability to supply the needs of products and services required for the Investors’ operation.

From this perspective, MSMEs need to dignify themselves, valuing their good points – for example, the ability to understand the market, the local culture and language, which are fundamental for the management and stability of the operations that the investors intend to carry out, and the know-how to operate in their own business environment, which is demanding from the resilience point of view.

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While, proactively, they must assess and mitigate their weaknesses in the context of meeting the standards imposed by investors, investing in partnerships, training and other models that somehow allow the transfer of know-how, greater competitiveness and credibility on the ability to provide services or supply products hitherto imported; drinking from the experience of other markets; and seeking personalized support in order to achieve the effective improvement of their processes and, consequently, the operability and competitiveness of their businesses.

The race for opportunities in the context of local content is a marathon that requires effort, focus and resilience. There is no one-size-fits-all model – investors and MSMEs have different perspectives and each company has to follow its own path to position itself in a market intolerant of non-compliance with standards and demanding in the rigor, effectiveness and efficiency it demands from its suppliers. In this context, forming alliances is not a sign of weakness, but of humility, in the recognition of weaknesses, and of intelligence, in the perception of the benefits that the strengthening of capabilities can bring to the business and to market credibility.

As an entrepreneur, and manager of an SME in Mozambique for over ten years, I find it very difficult to believe that the law is the solution to all the problems of MSMEs in the context of Local Content. On the contrary, I believe that for opportunities to materialize and development to happen, all parties must play an active role and take the process seriously:

  • The state, taking responsibility for creating a legal framework that rewards competence and competitiveness and promotes fairness in the distribution of opportunities;
  • The investors, not allowing the expectations generated to be disappointed and guaranteeing, namely, credible and transparent procurement processes and appropriate monitoring and feedback on tenders and contracted services, in order to allow the evolution and continuous improvement of local companies.
  • The local MSMEs, assuming the commitment to review the organizational culture and to implement work habits and methodologies that allow them to be, effectively, more competitive, reliable and sustainable.
  • The development partners, promoting the aggregation of value, disseminating success cases and contributing to the dignification of local MSMEs.

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