TENDAI MASAWI

Mozambique 2020 | AGRICULTURE | VIP INTERVIEW

TBY talks to Tendai Masawi, Managing Director of Tongaat Hulett Mozambique, on the domestic market, exports, and primary objectives for the coming year.

What is your contribution to development in Mozambique?

Tongaat Hulett Mozambique plays an extremely important economic and social role in Mozambique. Our two sugar factories in Mafambisse and Xinavane have a combined installed capacity of 340,000 tons of sugar, equal to 60% of the potential production in Mozambique. In terms of jobs, we have close to 10,000 employees, which provide for around 50,000 people in their families. In fact, we are the largest private employer in the country. Through strategic sourcing for communities, we always ensure we procure from local Mozambicans when it comes to services. We also contribute socially in terms of educating local communities, providing drinking water, and supporting recreational activities and sports. We have also been able to assist in building three bridges for roadways. During the COVID-19 emergency, we teamed up with the Ministry of Health to establish isolation centers in the two hospitals near our operations and provide beds and equipment. We also bought around 50,000 face masks and 80,000 liters of ethanol to make sanitizers, all of which we have distributed between employees and the surrounding districts where we operate.

What are your expectations for the renewal of investments in your sugar plants in 2020?

At the start of 2020, the head of our management team decided to give impetus to resuscitate business in Mozambique. The main focus with the investment was the restructuring of the business, or rightsizing, as we refer to it. Our aim is to match the business to the best industry practices in the sugar sector and ensure that the cost of production is competitive with Brazilian products, which is the world's leader. We looked at how to improve the yield on the production side, thus boosting operational efficiency. We pledged to process 365,000 tons of cane for the production of 38,000 tons of sugar in Mafambisse Mills, Sofala Province, and 1,5 Million tons of cane for production total of 175,000 tons of sugar, being 60,000 of refined and 115,000 tons of raw sugar in Xinavane Sugar Mill, Maputo Province. These measures will bring significant financial improvement in terms of our performance and return us to be competitive on the market.

What are your main markets for the Mozambique operations?

We have three markets. One is the domestic consumer market, where we see great potential for growth. Sugar per capita consumption in Mozambique is still low, at 8kg per year, compared to 36kg in South Africa or 24kg in Zimbabwe, but the prospects of macroeconomic growth will inevitably push an increase in the consumption of products. From this perspective, Mozambique is a key market that will become increasingly important for the strategy of our group as a whole. This is the market for day-to-day consumption, and we want to protect it by ensuring that the sugar we produce for mass consumers is vitamin fortified, so to enhance the nutritional value for the public and community. The second is the industrial consumers, predominantly composed of beverage companies. They used to import refined beverage sugar at a bottler level quality, but we have installed and commissioned a brand-new refinery to serve this industry; we can refine up to 90,000 tons of sugar annually, and in 2020 we will do up to 60,000 tons. Finally, we have the export market. We do have quotas under the US tariff quotas, so we export into designated markets, as well as East Africa.

What improvements does Mozambique's agroindustry need to boost production and exports?

Mozambique has a great deal of export potential, but in order to fully leverage it, there are two things the country should do. First, we want to see a reduction in the bureaucracy around the process of exporting. Second, we advocate for more subsidies and incentives to promote the industry; these are key, if we look at the success of India or Brazil. As a member of the Association of Sugar Producers of Mozambique, we have presented these issues to CTA, and we want to involve the government in productive discussions.

Looking at 2020 and the future, what are the main objectives?

With regard to 2020, our main goal is to survive the economic and health impact of COVID-19, just like all other economic sector. In the long term, we are looking at diversification; sugar is not only about making one product. We are in talks with investors about the possibility of installing an ethanol plant in Mozambique. There is still no such plant here, but there is one in Malawi and one in Zimbabwe. We can use byproducts such as carbon dioxide at an ethanol plant, and can tap into the automobile industry by providing blend fuel, which is widely used in Malawi and Zimbabwe. We need to look at an all-inclusive, integrated production line long term, where we use all the available resources that we produce and minimize as much utilization of foreign currency. That will boost employment, create forex, and grow the industry.