STRONG BELIEF

Mozambique 2016 | REAL ESTATE & CONSTRUCTION | VIP INTERVIEW

TBY talks to Sebastião Gaiolas, CEO and Member of the Board of Directors at Elevo Mozambique, on the significance of the market, working around the country, and the role of the EU in developing infrastructure.

What is the significance of Mozambique for Elevo's overall strategy?

Mozambique is the second most important market in Africa after Angola for our group. From a global perspective it is the third biggest market for us, not in terms of figures or numbers, but we are seeing year after year that our presence is growing here. Until last year we were doubling our turnover every year, and this year our growth will be between 30 and 40%.

How are you getting such impressive results during such a difficult period?

It is a matter of opportunities. We started to build in 2010 and each year since have been winning high-value contracts in a sector that is very competitive. Fortunately we managed to get three contracts for road construction, after concluding our first project of 75km in the north and now have 300km of roads contracted for development and more than 100,000sqm of buildings projects during for the 2014-16 period. This was important in our process of growing in terms of infrastructure and buildings. We needed to develop the capacity to be chosen by our clients and to get the confidence to win tenders. We are a company with a huge history of construction, more than 75 years' experience, and our goal is to perform well in the contracts that we have to the highest standards of quality, because we know that this market is competitive and exigent. There are established construction companies here from many different nations, including Portugal, South Africa, China, and Brazil. We really need to perform well because it is the only way we can continue.

What projects do you plan to focus on in Maputo?

We are now focused mostly on buildings construction. We are building offices, condominiums, houses, and industrial facilities, and we believe that here in Maputo we will continue to work on those types of projects. We plan to diversify our activity not only in terms of the types of projects, but also with different business models. There are opportunities for new project concepts to reach different markets, namely that of the Mozambican middle class, as we need to insist on good quality and balanced prices, or structural projects, to allow for the sustainable growth of the city and the province.

What projects are you developing outside Maputo and what provinces have the most potential for the near future?

Our anchors are Maputo/Matola, Pemba in Cabo Delgado, Milange and Mocuba in Zambezia, and Cuamba in Niassa, where we have a huge operation. Pemba is a business center that we started to build up at the end of 2014. There are important opportunities in the region, not only in terms of buildings but all kinds of infrastructure. Pemba is a strategic option for us. We have one construction site and one industrial site where we have installed a quarry and our own production of materials for that market. We are also working on an important project in the development of the Milange-Mocuba corridor, which was financed by the EU. This is a program that connects the Malawian border with Mozambique through Mocuba and links up with the port in Nacala. We are building about 150km of road. It is also an area that is regularly affected by flooding, so we are participating in emergency works by building bridges and ensuring that we have good infrastructure for the future. The EU is investing a lot in developing this corridor.

What does the EU bring to the table?

Usually in Mozambique the requirements for construction are exigent, since the institutions have good people and technicians, with strong experience. Projects like this one of the EU and the National Roads Administration (ANE) involve international financing and a mix of client, local authorities, engineers, and construction companies helping each other to achieve better standards of performance. On this project, the EU does not only want to finance the construction of the road; it wants to bring about the economic development of the region at large, solving the strategic needs of this important logistic corridor by rebuilding and repairing crucial bridges and areas affected by floods and contributing to the social development of people's lives. We believe that this project will have a huge positive impact on the country, the region, and the people now in the present and for the future. Both national and local authorities are involved in the decision-making process.

What is your assessment of the human capital situation in Mozambique?

We have over 1,100 people working with us. We feel content when we are contracting new people on a monthly basis, most of which are Mozambicans. Our challenge is to broker a progressive substitution in areas of high specialization, with Mozambicans gradually taking over the positions currently held by expatriates. We have a program, the Elevo Academy, in which we are trying to increase our training efforts for Mozambicans. It is difficult to keep workers in Mozambique, especially in the construction sector. We have to ensure that there is progression and balance in the conditions of the foreign employees and the locals. We are engaged in an internal process with our managers to prepare Mozambicans for these roles.

What are your targets, goals, and expectations for 2016?

It is important from a financial perspective to maintain our clients and to continue working on the projects we have started. Our main goal is to be successful in these projects, and to focus on the clients with which we are already working and the new ones we targeted. We believe that this will be a year of transition, with decisions and clarifications regarding the huge projects in the north being made. That will tell us more, as it will have a considerable effect on the course of the year if positive signs are given. We will not depend on it, however, because Mozambique has many potential investments in projects that will come online this year. We also need to face climate change, with floods and dry seasons that impact the country and people. Water management, dams, and water infrastructure can be new areas of focus. The opportunities are here all over the country, so we hope this can be a year of growing and consolidating our presence here in Mozambique. There are some challenges to overcome but we have the capacity go on.