Business opportunities abound in Mozambique

What comes to mind when Mozambique is mentioned? In most cases it is the negative stereotype – a bastion of devastating cyclones, civil war, poverty, famine and diseases. The public media has also been less benign to Mozambique in terms of coverage and it is worse when it comes to business opportunities.

So on October 9, 2019, our forum hit the road to Beira with the objective of assessing business opportunities for Zimbabweans. Little is known about Beira by Zimbabweans and yet the city is located less than 600km from Harare — more like the distance between Harare and Beitbridge.

Mozambique snapshot

 Gained independence from Portugal in 1975.

 Total population of 28 million according to the 2017 census.

 GDP per capita of US$415, 72.

 Main sources of foreign direct investment include South Africa, Belgium, Brazil, Portugal and Spain.

 The country has 10 provinces (Cabo Delgado, Gaza, Inhambane, Manica, Maputo, Nampula, Niassa, Sofala, Tete and Zambezia)

 Private land ownership is prohibited.

 Beira is the second largest seaport for international cargo transportation to Mozambique after Maputo.

 From 1977 to 1992, the country was plagued by a long and violent civil war between the opposition forces of Mozambican National Resistance (Renamo) and The Mozambique Liberation Front (Frelimo).

Economic and political context

Mozambique is endowed with ample arable land, water, energy, mineral resources and newly discovered natural gas offshore. The country’s economy is based largely on agriculture, but industry is growing, mainly food and beverages, chemical manufacturing, aluminium and petroleum production. The tourism sector is also expanding.

According to the World Bank, Mozambique’s main challenges include maintaining the macro-economic stability considering exposure to commodity price fluctuations and managing the post-general elections period. The re-establishment of confidence through improved economic governance and increased transparency, including the transparent handling of the hidden debt investigation. While economic conditions have improved, Mozambique remains on a subdued growth trajectory following the 2015 commodity price shock and 2016 hidden loans crisis. The devastating impact of tropical cyclones Idai and Kenneth on agricultural production and falling commodity prices, motivates mooted future growth prospects.

The government is also grappling with a new low-level so-called Islamic insurgency in parts of the gas-rich province of Cabo-Delgado located to the northernmost province.
Focus on Beira

The coastal city of Beira acts as a gateway for both the central interior portion of Mozambique as well as the land-locked nations of Zimbabwe, Zambia and Malawi. It is the capital city of Sofala province, where the Pungwe River meets the Indian Ocean, in the central region of Mozambique. It is the fourth largest city by population after Maputo, Matola and Nampula.

The area is prone to flooding and cyclones as witnessed by the 2000 floods which devastated Beira and the surrounding region, leaving millions homeless and severely damaging the local economy. In March 2019, Cyclone Idai also caused extreme devastation that affected a significant portion of the city of 530 604 residents.

Our findings
The first impression you get as soon as you enter Mozambique through the Machipanda Border Post is the unmistakable good tarred road. Stretching for 297 kilometres and for most parts, the road is straight making driving an enjoyable experience. The first province you will encounter is Manica and has rich agricultural land that has been converted to good use by mostly former white farmers from Zimbabwe. An oil pipeline and a railway line also connect Zimbabwe to Beira.

Beira is a mixed bag of poor infrastructure of run-down and neglected buildings and the other side of emerging areas with pockets of good infrastructure being re-established after years of neglect and abuse. There is evidence of the damaging Cyclone Idai with a couple of buildings having blown-off rooftops.

Opportunities

 Tourism: It is interesting to note that Beira used to be a popular holiday destination for white Zimbabweans before independence. We found that tourism is not taken seriously and yet has a lot of potential. For landlocked Zimbabwe, a couple of nice beach front areas offer great potential for tourism and support industries. If South Africa is managing to advertise holiday tours to Victoria Falls, the question is what is stopping Zimbabweans from doing the same with Beira? Of course, the sea water is not as clear and clean as Vilankulo to the south east of Mozambique, but opportunities abound for Zimbabweans to ”own” the sea coast. For visitors to Beira, make sure you don’t miss out the prime area of Oceania with some good restaurants and hotels. Nine kilometres from the centre of Beira north, along the beach road is the red and white lighthouse, and the shipwrecked Macuti. The palm lined Praia de Macuti is north of the lighthouse and is the most popular beach. The old part of the port contains the ship graveyard on the banks of the Pungwe River and is worth a visit.

 Zimbabwe business centres: South Africans have invested in shopping malls whenever they venture northwards across the continent. This business model has assisted them to push their products and services through retail shops and banks. In Mozambique they are using the same model in Maputo, Tete, Beira and other cities. Zimbabweans can borrow a leaf and set up their own centres. We found leading Zimbabwean brand products for sale in informal markets, but they were few quantities.

Enterprising Zimbabweans can set up business centres and mark their territory given the huge interest in our products in Beira and across the region.

 Export clearance opportunities: The city’s economy is anchored on the clearance of imports and exports. Our local companies need to explore opportunities in this area, especially packaging, warehousing and support opportunities. At the port, most shipments are done in shipping containers which limit abnormal shipments leaving Zimbabwe and other landlocked countries to turn to Durban in South Africa. Zimbabweans need to watch closely future expansion of the Beira Port as this can reduce the time and cost of transportation of goods to and from Durban.

 Farming and agro-processing: While the population of the city can be considered small, there are, however, opportunities for utilising the rich swampy lands for agricultural activities such as rice and crocodile farming. Tongaat Hullets is one successful international company involved in sugar production located in Dondo district, 54km from Beira. The good news is that Zimbabwean potatoes are also being exported to Beira,

 Small business opportunities: These include soft drinks manufacturing from the abundant coconuts, freezit making for the hot and humid climate and stone cladding as an alternative for building paints and salt processing.

There are, of course, more opportunities in the area provided one visits it and conducts a comprehensive market survey. For those interested in travelling to the city which is home away from home, make sure you get anti-malaria tablets or mosquito repellents. Motorists are also advised to be careful not to leave their vehicles unattended in Beira or can find vehicle mirrors and lights removed.

The traffic police in Chimoio can sometimes be bothersome asking for international driver’s licences from foreign drivers. There is also a daily bus service from Roardport bus terminal in Harare to Beira which leaves at 11:00am and arrives at 8:00pm in Beira.

Zimbabweans should take an interest in this city and explore opportunities like what the Chinese, South Africans and other African nationals are doing. We should not let the Portuguese language be a barrier to opportunities in the ”Heart of Mozambique”

Muito Obrigado

 Victor Muchemwa writes here in his personal capacity

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