GOOD PEOPLE

Mozambique 2014 | ECONOMY | VIP INTERVIEW

TBY talks to Adriano Maleiane, President of Banco Nacional de Investimento (BNI), on financing the country's development, FDI, and the national growth outlook.

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

Unfortunately, the 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 more 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 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 to be listed on the stock exchange. In Mozambique, the main source of funding SMEs comes through commercial banks, 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.

“The country has grown by around 7% annually for the past decade, and I think this process will continue."

What services and expertise can BNI provide for international investors coming into Mozambique?

For those investors without an office representative, BNI is ready to serve as their Project Management Officer (PMO) and facilitate money transfers using our world chain of correspondent banks, as well as provide a variety of corporate advisory services. Our knowledge of the market is extensive, enabling us to advise and provide reliable information.

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 recent foreign currency credit rating upgrade by Fitch signal about the economy?

It means that investors' money in Mozambique is safe and 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 think this process will continue. Within five years I expect that GDP will have grown from $12 billion to about $30 billion and four times 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.

As we are in an investment phase, is it possible that we will see 8% GDP growth in the coming years?

During an investment period, investors, inevitably, import more. After that period is done, in around 2018, those projects will start generating output. Afterwards, we can expect to see our GDP growing on that magnitude and improving our current transaction account.

Why Mozambique?

A potential investor in Portugal once raised the same question: give one reason why I should invest in Mozambique. I told him that there were too many reasons. For one, it is over 500 years since Vasco de Gama came to Mozambique and named it terra de boa gente, which means land of good people. If that was Vasco da Gama's perception at that time it is clear that the environment has improved substantially since then, and this is why we see many investors are coming and investing in Mozambique. The investment climate is solid and the people are waiting with open arms.

© The Business Year - November 2013