The Fertile Economy

How has growth of the gas and coal industries determined your sector focus in recent years?

As investment into the mining sector increases the port and transport infrastructure needs to keep pace with our competitors. We have therefore concentrated on the engineering opportunities at the port and petroleum downstream distribution infrastructure. There has been very little investment in this sector since the late 1960s, and in spite of Mozambican ports servicing six landlocked neighbors; we lacked LPG or bitumen terminals and adequate storage infrastructure. The entire Southern SADC Region depends on trucking from South Africa. We have, while upgrading and rehabilitating the Maputo Petroleum Terminal, introduced LPG and Bitumen Terminals, and are in the process of constructing storage facilities in association with Petromoc. We are doing the same in Beira port and propose subsequently to repeat it in Nacala port, too. This will help expand the domestic use of LPG, which is at present only available to around 5% of the population in northern Mozambique, thereby reducing dependence on wood charcoal for domestic cooking and its inherent environmental and health hazards.

Do you feel that the commercialization of agriculture has the potential to be a major driver of economic growth?

Around 70% of Mozambicans are rural subsistence farmers who do not produce in commercial volume; hence, they do not contribute to the formal economy. The challenge for the government is to educate these farmers, while creating and providing the infrastructure for commercial agriculture. This is so that within the medium term, rural Mozambicans become contributing members of the economy. Commercial agriculture has two important elements, the corporate sponsored large farms and the local entrepreneurial smallholdings. The large farms are important in providing initial investment to create the agricultural infrastructure and to employ the population on a large scale in economically productive activity, thus ensuring equitable growth. Then again, there has to be a balance between food crops, such as grain and beans, and cash crops like rubber, coffee, and oil seeds. Food crops are not commercially viable without government subsidy due to developed countries budgeting for a cheaper food bill for their large urban populations through agricultural subsidy.

What are Mozambique Holdings’ initiatives in the agricultural sector?

We have acquired 10,000 acres of land in Zambezia Province and are introducing rubber cultivation to Mozambique. After due diligence, we developed a nursery with technical assistance from Rubber Board of India to plant 2,000 plants as a pilot program two years ago. Since the progress of these plants is satisfactory, we have expanded the nursery and are planting a further 20,000 in 2014 and have budgeted to plant 1,000 acres over next five years. Since the process requires a large number of workers, we improved village conditions by providing an elementary school and a health center. We also employed all the able bodied villagers, numbering over 600 and created a 200 acre pigeon-pea farm, which is the common local crop that the villagers are skilled with. We will add further workers over time and teach them rubber-planting skills as we progress and introduce one or two more short-term crops, such as turmeric and ginger to balance the cash flows, since rubber is a long gestation crop. Thus, we plan to have an active work force of 3,000 people with a village community of 10,000 people around our farm within the medium term.

What makes Mozambique an attractive destination for international investment?

Mozambique has a land area twice that of Germany and a coastline of 2,400 kilometers with a population of just 20 million. It has vast arable land with ample water sources and stable ground water, offering vast agriculture and fishing opportunities. Mozambique’s mineral and energy potential are well documented, and the country was the largest tourist destination during colonial times. Moreover, Mozambicans have been exposed to foreign cultures due to the country’s long coastline. Mozambique is welcoming to overseas initiatives in entrepreneurship and technology. The government has also been actively promoting international investment to develop its resources and employ its people productively so that Mozambique can fulfill its potential and join the ranks of vibrant modern economies.

© The Business Year – March 2014