Mozambique 2016 | INDUSTRY | INTERVIEW

TBY talks to Dr. Joel Samo Gudo, President and CEO of Ka Matsolo Investments and shareholder and Director of Escopil International, on diversification, the potential of agriculture, and public-private partnerships.

 Dr. Joel Samo Gudo
Dr. Joel Samo Gudo went to medical school at Eduardo Mondlane University in 1990 and started his career as a doctor in the blood transfusion field in 1997. He was the director of the Maputo Central Hospital Blood Bank, a national referral blood transfusion service before working as the national blood transfusion program manager. In 2001 he went back to university to do a master’s degree in public health. In 2007 he left the public sector to work in the public sector. Currently, he focuses on public health research and holds management positions in several local private companies where he has shares.

How is Escopil's business divided across different sectors?

The company is divided along its engineering and industrial activities and its IT operations. We are not a specialized company that only covers automation or focuses on just one area of engineering. We carry out electrical and mechanical maintenance and other types of activities related to maintenance, mainly in aluminum plants and the coal-mining segment. We also provide technologies for certain services like driving licenses. We are also pioneers in introducing the mobile ID technology in voter registration processes in Mozambique.

What are some of Escopil's upcoming projects?

In 2015 we founded Ka Matsolo Investments, a 100% Mozambican company to help the government implement its strategy of poverty reduction. This entity is meant to identify grey areas in the market that could trigger development in certain areas of industry that could help the development of industrial projects in the country. For example, in Maputo province, where the biggest industrial park in the country is located, there is a shortage of SMEs that can link big industries with the local market. The government has identified SMEs as its main strategy to tackle poverty in the country. Ka Matsolo Investments is developing a small industrial park where SMEs will have the opportunity to implement their projects in an integrated manner where clients—big industries or local companies—will have a one-stop shop for technology, services, and products. This is just one project of many to be identified and implemented in 2016.

Diversification is an important subject on President Filipe Nyusi's agenda. What sectors should be looked at in the near future?

Speaking as not only a Mozambican but also an African, I believe agriculture is the most important sector. People need to eat, so it will always be important. You do not need very highly skilled people and agriculture can be an industry that provides a large number of jobs. Natural resources such as oil, gas, diamonds, and gold are resources with limited lifespans. We know the oil and gas sector, for example, will not last forever, but it offers us an opportunity to invest in other areas that are more sustainable.

How do you envision the role of public-private partnerships (PPP) in Mozambique's development?

Many African governments are not strong enough to implement these major infrastructure projects alone, and there is no country that has the complete set of skills needed to do so. We have to work together and share the workload between the state and private entities to develop the skills and resources and ensure that the economy benefits and grows. The relationship will always be there, and although the concept of PPPs is new in Mozambique, it will develop and become stronger over time. Challenges remain, but so far it is working and the challenges are related to the rapid growth rate of these projects. We have experience in other countries where, due to the need for investment and reliable financing models, the only option is PPPs. This will ensure that the investments that are put in place can be paid back and the projects can be run in a sustainable manner.

What are your expectations for the year ahead?

The biggest factor is peace. If Mozambique can manage to maintain peace then its potential is unlimited. There are so many opportunities here, and all of the necessary ingredients are present. Our main projects are in the oil and gas sector, and this will serve as a major driver in the economy. One area that concerns me is the government's policies on healthcare. Officially, we are talking about 66% health service coverage in the country, and since many African countries are now talking about universal coverage, this suggests that we are far behind. As a country we need to start discussing this issue to understand the challenges and possible solutions the government and private sectors can provide.

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Wise Words

Aluminum Shower

BHP Billiton has decided to focus on five business lines, and is withdrawing from aluminum. How will this impact the company?In August 2014 BHP Billiton announced its plans to demerge its aluminum, manganese, and nickel and silver businesses along with some of its coal assets. Subject to board and shareholder approval, there would be a new company operating these assets under the name of South32, and Mozal will become quite a significant part of it. South32 will operate in five countries and be staffed by approximately 24,000 people. The business will then transition from a commodity-based structure into a regional-based entity, and Mozal will report to the African regional office located in Johannesburg. The new company will have a dedicated board and management team with a significant representation at the Johannesburg office, which will be greatly beneficial for Mozal.How would you describe the evolution of Mozal's contribution to GDP?Since the company was established in 2001, Mozal has continued to play a prominent role, contributing around 7% to GDP. We recently won an award from President Guebuza in recognition of this contribution. Currently, Mozal produces just below 570,000 tons per annum of primary aluminum ingot, with production entirely destined for export, mainly to Europe, the primary market for Mozal's metal output.What are your plans to support the domestic use of aluminum?There has been a spiking development in Mozambique's downstream industry. There was no other local market established until the development of Midal. We began delivering to Midal in October 2014 and once they ramp up their operations, we will be delivering 50,000 tons of metal per annum. Businesses can now be established downstream of Midal, creating an increased diversity of products in the downstream industry, while a unique service industry will also develop around Midal. I expect our relationship with Midal to be long term and sustainable for many years to come. The sizeable tonnage of aluminum that company will be receiving from us will be a major catalyst for the downstream industry.How would you categorize the significance of Mozal in other sectors?Mozal has played a significant role in infrastructure development, with road-access projects and a new port facility. For example, Mozal imports more than one million tons of alumina per annum through the port, which is then brought to the site by trucks. We also transport the entirety of our final product through the port, which is a considerable contribution to the transport industry.In addition to that, we continue to perform road maintenance even though it was not a part of our initial undertaking. We also direct around $2 million per annum toward our community work, some of which has gone into the construction of schools. To date we have built nine primary schools, a secondary school, a technical school, and a maintainer-training center.What challenges do you foresee over the next ten years for Mozal?One major challenge will be electricity supply. We have managed to cope with this so far by working closely with ESKOM and focusing on our productivity and operational efficiency to get more out of the available infrastructure. We have made good progress and have implemented a system we call Maximum Technical Capability. The other challenge is with commodity prices. This has been a challenge over the recent period, although Mozal has been effective with regards to cost cutting, as we have been able to focus extensively on efficiency. We also pay considerable attention to skills. All of the potential development in the country and the exploitation of its resources will result in a great need for a skilled workforce, which will present a challenge for the entire industry. 6

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