Jun. 29, 2015


 Jose Parayanken

Mozambique

Jose Parayanken

President, Mozambique Holdings Limited

TBY talks to Jose Parayanken, President of Mozambique Holdings Limited (MHL), on initiatives to fund infrastructure, and ensuring that key sectors best feed the broader economy.

BIO

Jose Parayanken was born in Kerala, India, and studied Biochemistry at Delhi University before acquiring his MBA. His career began at Exim Bank of India where he was in charge of African operations from 1984 to 1989. He later founded MHL in 1990, which currently has a capital base of $100 million and a staff of 1,500.

What is MHL's role in the improvement of Mozambique's transport and logistics infrastructure through the operations of Anfrena?

MHL, through Anfrena, has been collecting road tax from foreign-registered vehicles entering Mozambique at all border posts, on behalf of the National Road Authority (ANE) and Fundos de Estradas. The funds are utilized by ANE for the maintenance of national highways. Anfrena promoted the idea of road maintenance being paid for by road users, rather than out of the national budget, and hence the conversion of arterial roads into toll roads with maintenance realized through toll road concessions. Thus, limited government resources can be better channeled to new road infrastructure, rather than maintenance.

What are your strategies to increase the penetration of water systems throughout the country with Afrodrill?

Providing adequate drinking water infrastructure was essential for the implementation of the government's post-civil war rural socio-economic development plan. More than scarcity of resources, successful implementation of the project in rural areas was a challenge since relevant companies were ill-equipped for rural areas. We saw an opportunity to establish our presence in those areas and integrate into the rural services supply chain. Afrodrill was created to cater to such requirements with permanent self-reliant base camps in key centers. Today Afrodrill is an essential element of the National Rural Water Development Program in planning and implementation, and accounts for over 50% of the program.

How would you describe your rubber cultivation project and similar MHL ventures in agriculture?

Since we have a strong rural presence through Afrodrill, expanding into agriculture was a naturally synergistic diversification. We acquired 10,000 acres of land in Lugela, Zambezia, and involved the Rubber Board of India to pioneer rubber cultivation in Mozambique. We have cleared and prepared an area of 1,000 acres and put in place an irrigation system and developed a nursery for 100,000 plants annually with the help of Jain irrigation of India. To balance cash flows, we are also experimenting with commercial cultivation of black pepper, turmeric, and ginger, and are developing a nursery based on tissue culture even though these crops are new to Mozambique, hence considered high risk. We are optimistic that it will open up new avenues for Mozambican farmers with high yielding crops and we can provide the technology and infrastructure.

Which industries present the greatest potential for company growth and what are your strategies to achieve this?

We perceive considerable potential in the engineering sector. Mozambique is moving fast into resources development, and port, road, and real-estate infrastructure has to keep pace. There are few Mozambique-based EPC contractors engaged in port terminal construction and petroleum downstream distribution infrastructure. We have created knowhow and skill levels and our team has already rehabilitated and expanded the handling capacity of the Matola Fuel Terminal from 1 million tons annually to 8 million tons. We have introduced LPG and bitumen terminals to Maputo and Beira Ports for the first time, to import LPG and bitumen via sea rather than through trucking from South Africa. We constructed pipelines and fuel storage tanks for Petromoc in Beira, the fuel terminal and storage tanks for Vale in Moatize, as well as LPG and bitumen storage tanks and heated pipeline in Maputo and Beira. Overall, we foresee a bright future for our engineering and EPC contracting operations in Mozambique's port and petroleum downstream infrastructure sector.

How is the business climate, and what of foreign interest?

The government of Mozambique, through the Center for Promotion of Investments has streamlined the compliance formalities for investors and government systems, which are by and large investor friendly. Since the country has vast resources in agriculture, fisheries, mining, tourism, and the services sector yet to be exploited, business opportunities exist in resources development for corporate and individual investors. Investors from Portugal, Brazil, and Asia are already taking this opportunity.

What is your 10-year outlook for Mozambique?

The coming decade will be critical for the development of Mozambique, since it is imperative for increased revenue from accelerated domestic output to reduce dependence on external contribution to its expenditure budget. Hence, the national plan for resource development and bringing more of the population into formal economic activity, as well as domestic production, has to be on track with adequate investment and human resources to ensure its success. Systems and people are in place to ensure success.

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