Mozambique 2013 | ECONOMY | VIP INTERVIEW

TBY talks to Lourenço Sambo, Director General of the Investment Promotion Centre (CPI), on encouraging and assisting FDI in Mozambique.

How has the Investment Promotion Centre (CPI) contributed to Mozambique's economic growth?

Even before the coal and gas boom, Mozambique was an attractive place for business thanks to the commitment of the government to the business community. CPI was set up in 1985 during the transition to a free market economy. Our business environment had further developed by 1993, so we updated the investment center to introduce a new model. The new strategy focused on growth. The World Bank predicted that Mozambique would not grow more than 4% during the global financial crisis in 2008, but we surpassed this prediction. The crisis did not affect business—the agricultural sector even expanded. After Mozambique was cleared of landmines in 2007, people who were living in neighboring countries started to return. The growth strategy was strongly supported by President Chissano and then by President Guebuza. Mozambique has also made a commitment to overcoming poverty. In this sense, CPI plays an important role in the country's economic growth. CPI facilitates business for different sectors. In addition to tourism and agribusiness, Mozambique has a need for experts in a variety of fields in order to build its human capital. We are working with Portugal and the UK in this regard. We are in the process of setting out a roadmap for the next 20 years, which will make us one of the leading countries in Africa.

Mozambique fell seven places in the World Bank's Doing Business rankings in 2012 to 139. How can you reassure investors that Mozambique will improve its business climate in 2013?

This is a big concern, and it is being taken extremely seriously across all levels of government. CPI has advised the government, in terms of investment, that we have to develop a united strategy for national promotion. The main strategy to improve the business environment is guided by Ministry of Industry and Trade. In terms of national promotion, we need to build a network to ensure all agencies are working together and coordinating strategy. Today, CPI is speaking the same language as the Ministry of Tourism and the Ministry of Agriculture's promotion directorates, INATUR and CEPAGRI, instead of competing with one another.

“Establishing links and broadening our network have always been high on CPI's agenda, and we have achieved impressive results."

How is CPI collaborating with partner agencies to promote investment in Mozambique?

CPI started with a roadshow in partnership with the Ministry of Energy. We represent CPI and the Ministry of Energy when we travel. From this we are able to direct investors more efficiently. We are working with investors from Brazil and Portugal to build a light rail to connect Matola and Maputo. This needs to be coordinated between the Ministry of Transport and the Ministry of Energy. We have developed numerous strategies, many of which remain to be implemented. CPI has presented its strategy to the Ministry of Planning and Development for the period from 2013 to 2030. In this plan we identified our priorities and strategic objectives for investment and economic cooperation. We plan to canvass the country to raise awareness of our programs and bring the key stakeholders together. The center is working to build an efficient network with coordination between all ministries and agencies. All international companies come through CPI. There is no way to do business in Mozambique without CPI. If companies go directly to the relevant ministry, they will be referred to CPI. Some companies have even gone straight to the president or prime minister, but these investors are also redirected to CPI.

What types of support does CPI offer to foreign investors?

CPI's critical role is facilitation. We travel abroad to inform investors about opportunities to invest in Mozambique. Once they arrive, we track their progress, and we even help investors when they arrive to get from the airport to the hotel. Our staff understands their needs and assists them in establishing businesses and making investments. If an investor wants to purchase land, lease property, set up a company, or hire services, we can assist. We help guide investors through customs and immigration procedures. CPI also issues letters of invitation for additional investors. The center has direct access at the highest levels—I am in direct contact with the ministers, and we are able to bring issues to them immediately. This is the benefit of strong ties between the private sector and government. We meet frequently, identify constraints to business and development, and find solutions. Our door is open all day to facilitate the needs of investors, free of charge.

What activities does CPI pursue in announcing investment opportunities to the international community?

CPI pursues independent platforms to market the country, which include hosting business missions in Mozambique and abroad. It also participates in collaborative efforts with organizations like the Confederation of Business Associations in Mozambique (CTA), the Institute for the Promotion of Exports (IPEX), the Mozambique Chamber of Commerce, and the Office of the President. President Guebuza always takes a CPI representative on business missions in order to promote partnerships with Mozambique. We work with each provincial governor to identify projects best suited for investment. We also travel with governors to promote opportunities within their province. The image of Africa needs to be cleaned up. All over the world people think that Africa is wild. If this perception continues then we will never achieve substantial and steady investment flows. Mozambique belongs to the Southern African Development Community (SADC). We have a steering committee that coordinates our economic activity and works to converge our markets; the Southern African economies need to harmonize their incentives and policies, so they don't compete with each other. There is no need for us to compete with Zimbabwe, for example. African culture means that you have to move together and use the network. Our challenge is to build a network that can help domestic and international companies and move together in Mozambique and abroad. We have companies from Mauritius, South Africa, and Malawi investing in Mozambique, as well as Mozambican companies investing in Angola. We are members of the Community of Portuguese Language Countries (CPLP) and the Commonwealth of Nations.

How does CPI promote links between local companies and multinational investors?

Establishing links and broadening our network have always been high on CPI's agenda, and we have achieved impressive results. One of our first successes was with Mozal, the largest aluminum producer in Mozambique, whose challenge was to enable local suppliers to be eligible to win contracts. We designed and implemented capacity building programs for many of the SMEs that now provide services to Mozal. We continue to work to enable local suppliers to bid for service contracts associated with mega-projects, especially in the mining industry. It is a formidable challenge but not impossible to overcome because there is a strong will for success.

Which sectors offer the most opportunity for priority investment in 2013?

We need to build up infrastructure and logistics; the transport network, trade companies, and industrial parks add value to the coal and gas sector. We are promoting that in every province; every province needs an industrial park. In Cabo Delgado, for example, we are working with Anadarko to create an industrial hub for gas. We also need to work up the value chain in the agricultural sector. The South African supermarket chain Pick n Pay is working with CPI to evaluate which products can be sourced inside Mozambique instead of the border town of Nelspruit. Currently, it ships fresh produce by plane to Cabo Delgado. This model is inefficient and wasteful, so it is working with the Ministry of Agriculture to source products that can be grown and delivered from the planned Nacala Corridor. Corridors are at the heart of the agricultural strategy to ensure produce can get to the markets. There are plenty of opportunities for agro-business, and food security is critical. Mozambique still needs processing plants, fertilizer companies, and investments in energy plants. The tourism sector is also rich with opportunities thanks to our beautiful beaches and fantastic wildlife.

What are your expectations for FDI in the medium term?

CPI has several applications for investment involving mega-projects. Anadarko has indicated that it plans to invest $8 billion in a gas logistics hub. Vale has also promised $8 billion to build infrastructure not only to aid the shipment of coal, but also to benefit the whole country. The railway through Zambezi will also stimulate the local economy. Another example is the successful Mozambique Development Corridor. This area used to be rural, and now there are many villages and a functioning economy and industrial development. The pro-savannah hub project totals $5 billion in investment. We expect to double the overall figure of FDI within five years. We are confident, despite the challenging business environment. Mozambique has more than 7% economic growth, but it is more important to talk about economic development. Construction, services, and mega projects will boost economic growth, but we need sustainable development, which will take 20 years. FDI is very important to bridge the gap, but we have to also build up the local capacity to invest. The key is joint ventures. We work with Mozambicans to invest here. We will follow the Namibian model, where it is a must to have a local partner.

© The Business Year - November 2012