Good People

To what extent is access to financing a major constraint on development in Mozambique?

Unfortunately, access to credit, especially for national entrepreneurs to fund their participation in megaprojects at different stages (upstream, medium stream, and downstream), is still difficult and the new discoveries of natural resources pose even greater challenges to national credit institutions taking into account their inadequate funding structure, being specialized in short-term lending operations. To mitigate this situation, the government has decided to establish Banco Nacional de Investimento (BNI), a national investment and development institution. In this capacity, BNI provides financial advisory services and finance infrastructure to all sectors of the economy, as well as their respective value chain using its balance sheet funds, or through a co-financing approach. As of December 2012, BNI is 100% owned by the Mozambican government. The main objective is to bridge the government’s development lines of credit to the private and public sectors.

How are you working with SMEs to assist with access to financing?

We prepare them for listing on the stock exchange. In Mozambique, the main source of funding for SMEs is the commercial banks, which is not recommendable for seed capital. Therefore, our role is to offer an alternative approach by helping them in IPO operations and taking a minority stake with exiting clauses. This financial arrangement improves SME risk profiles and makes them eligible to be listed in the second stock exchange window and bankable for commercial banks and other financial providers.

How can the government oversee the development of natural resources so as to ensure sustainable long-term economic development for Mozambique?

It can accomplish that by making sure all stakeholders are involved in every project, especially non-renewable resource projects, and this can be done by setting up friendly legislation and streamlining procedures for starting up and doing business. I am talking about improving the business environment, even considering the huge effort already made by the government in this respect, as investors can now register an SME in a single day.

What balance should be struck between physical infrastructure and the regulatory framework?

I think both are very significant. The regulatory framework doesn’t cost anything, so it should be prioritized. For physical infrastructure, it is possible, along with a good regulatory framework, to finance projects using the public-private partnership (PPP) method. With the private sector involved, it is possible to improve infrastructure such as roads and telecommunications, which are vital to boosting the competiveness of the Mozambican economy.

What does Mozambique’s foreign currency credit rating upgrade by Fitch signal about the economy?

It means that investors’ money in Mozambique is safe and that borrowers can raise external funding and get a lower spread. In this sense, it was a positive move to facilitate development and deepen the capital and foreign currency markets. It also sends a signal that the country’s macroeconomic management is holding, solidifying the country’s risk profile.

What is your outlook for the Mozambican economy in 2014?

The country has grown by around 7% annually for the past decade, and I expect the process to continue. Within five years, I expect GDP to have grown from $12 billion to about $30 billion and fourfold by 2030, taking into account the output of the current investment in mineral resources. This increase in the country’s GDP will consequently increase GDP per capita.