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Why is it (Very) Hard to Do Business in Mozambique?

Why is it (Very) Hard to Do Business in Mozambique?

  • João Gomes • Partner @ JASON Mozambique

This article is related to a question that I have been systematically asked over the last 9 years by international investors, trainees of negotiation programmes for executives and managers, as well as members of the group “She Raises the Bar and Negotiate “1 , and that with the advent of Mozambique’s entry into the African Continental Free Trade Area2 has gained enormous momentum.

In this article I invite my [email protected] to answer the following question: Why is it (very) difficult to negotiate in Mozambique?

Let us look at it successively:

  • Concept of negotiation.
  • The main dimensions of the “difficulty to negotiate” in Mozambique.
  • Conclusion.
  1. Concept of negotiation

In my opinion we are facing a negotiation when

  • Different parties (i.e. it takes at least 2 to “tango”) that,
  • With their own legitimacy, needs and motivations (i.e. with “negotiating interests”),
  • [Business interests] that are, most of the time, “conflicting” with each other,
  • In order to satisfy such ‘bargaining interests’, the parties resort to a ‘bargaining process’ (i.e. a ritual of mutual confidence-building that rules out, at least momentarily, the use of brute force, courts, or arbitrators),
  • [Negotiating process] whose primary purpose is the creative generation of options and the allocation of assets between the parties (i.e. “value creation”),
  • Process] that takes place both on the negotiating table (i.e. the face-to-face phase), and off the negotiating table (i.e. the preparatory, and post-agreement phases),
  • It is a process that often begins and ends within a very limited period of time.
  • In order to satisfy their ‘bargaining interests’ the parties will have to make ‘bargaining concessions’ (i.e. there is no bargaining without mutual concessions),
  • Concessions whose timing, quantity and quality depend on the parties’ bargaining strength (i.e. “bargaining power”),
  • [Negotiating power] whose greater effectiveness is based on the parties’ intelligent use (i.e. the negotiating strategy and tactics, organised in a negotiating plan) of negotiating levers,

-[Negotiating levers] which are not limited to and go far beyond price.

  1. The dimensions of the “difficulty to negotiate” in Mozambique

To my knowledge, there is no study on this topic in Mozambique. Thus, the information provided below is based only on my own intense observation, active participation in national and international trade negotiations, sharing of experiences in negotiation simulators integrated in executive and managerial training and programmes, and studies on negotiation in African countries – v.g. Nigeria3 and South Africa.4 5

Using Professor Salacuse’s framework6 , the many difficulties of negotiating in Mozambique that I have observed can be organised into two dimensions.

The scarcity of economic resources forces Mozambican negotiators to manifest a preference for the Win/Lose option, trying to grab as much of the value involved in a deal as possible, leaving the other side with very little

Dimension 1: Is the objective of the negotiation to get a contract, or to build a relationship?

The interest of a strong majority of Mozambican traders in building a relationship, rather than just winning a contract, fits with the local culture in which sellers are interested in getting a customer to come back, favouring regular customers to gain and reward their loyalty. However, five facts observed by me undermine this desideratum: i) the presence of a long chain of intermediaries in business; ii) the absence of “business owners”; iii) and the consequent use, and I would even say abuse, of representatives of the parties without a mandate to close contracts; iv) the absence of IPOs – Other Stakeholders; v) and the absence of experts and specialists in more complex issues.

The combination of these factors generates i) a high level of breach of confidentiality and distrust between the negotiators; ii) a low level of commitment from the absent “owners of the business”; iii) along with strong resistance from the IPOs who, not having been called into the negotiation, will later either compromise the closing of the deal or prove to be a major obstacle to its future implementation; iv) At the same time, the absence of experts during the negotiation forces the parties to formulate very general agreements; v) and postpone the solution of the most complex problems until the implementation phase, vi) thus exponentially increasing the risk of breach of contract.

There is greater concern with securing contracts than with contributing to long-lasting relationships.


Dimension 2: Is the negotiation orientation of the Win/Win or Win/Lose type?

The scarcity of economic resources forces Mozambican negotiators to prefer the Win/Lose option, trying to grab as much as possible of the value involved in a deal, leaving the other side with very little.

This fact is reinforced by another observation I have witnessed7 which is that it is rare to find negotiators with the necessary knowledge and experience in negotiation.

Studies8 confirm that negotiators without knowledge and experience adopt, as a rule, a Win/Lose negotiation orientation, which translates into: i) negotiating on a single issue (the price for instance); ii) exploring diverging negotiating interests rather than converging ones; iii) generating few and rigid options and alternatives (i.e. They are not creative; iv) disregard legal and regulatory aspects; v) take too many risks; vi) frequently enter into defence/attack spirals; vii) do not ask questions, and do not listen to answers; viii) appear uncomfortable and unconfident; ix) do not seek to “fine-tune” agreements in order to improve them; x) make excessive use of pauses, interruptions, and postponements in the “negotiation process”.

The combination of these factors generates i) high emotional tension inside and outside the “negotiating table”; ii) the excessive prolongation, I would even say, dragging out of negotiations in time; iii) the generation of sub-optimal agreements (i.e. value destruction); iv) thus exponentially increasing the risk of generating negotiation impasses and premature failure of negotiations and, as well as; v) increasing the probability of future non-repetition of deals.

In conclusion

According to my observations in this article, the (many) difficulties in negotiating in Mozambique are due cumulatively to i) the fact that the main objective of negotiations is to obtain contracts and not to build long term relationships; and ii) the fact that the predominant negotiating orientation is of the Win/Lose type.

This double combination generates, with excessive frequency, negotiation deadlocks that often culminate either in frustrated negotiations or in “failure to deliver” when it comes to executing contracts. In any case, through negotiations, value is destroyed rather than created!

See Also

Such a situation i) diminishes the status (internally and externally) of the defaulting party; ii) undermines confidence in the negotiation process; iii) casts doubt on the competence and negotiating capacity of the defaulting party; iv) and creates a negative “brand image” for Mozambican negotiators. In a word, it takes away “negotiating power” from the Mozambican negotiators, and at a time when they are about to enter the world’s largest economic space: the African Continental Free Trade Area.

1 A private Facebook group, currently with 1,200 members, whose aim is to share digital content on negotiation in order to inspire Women to hone their negotiating power.

2 MALISZEWSKA, Maryla et al “The African Continental Free Trade Area – Economic and Distributional Effects” – World Bank Group.

3 EPIE, Chantal “Nigerian Business Negotiators: Cultural Characteristics” Journal of African Business, Vol. 3, Issue 2, 2002.

4 KATZ, Lothar “The Negotiator’s Reference Guide to 50 Countries Around the World”, Amazon.com.

5 UNKNOWN, author “Forty-one lessons from the South African Negotiations”, Sabinet, African Journals.

6 SALACUSE, J. W. 1998. “Ten Ways that Culture Affects Negotiating Style: Some Survey Results”. Negotiation Journal Vol. 14, No. 3 (July): 221-240.

7 GOMES, João “Escolas de Negócios & Economia da Bolada”, article published in Economia & Mercado magazine, August 2021.

8 MRACKAM, Neil – Hutwaite Research Group.

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