The business environment of Mozambican manufacturing firms.

Author:Santos, Ricardo
Position:Policy Brief
 
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FINDINGS

Weak supply chains, both in quantity and quality, impose logistical challenges on Mozambican manufacturing firms.

The Mozambican regulatory and legal environment continue to be perceived as a hurdle.

Regulatory barriers hinder firm capacity to export.

Access to credit remains heavily constrained.

Nearly half of firms do not find a business association to represent them.

The 2017 Survey of Mozambican Manufacturing Firms builds on data collected in 2012 from surviving firms to trace how changing economic conditions have affected the development of firms over five years. The survey takes an in-depth look at the country's manufacturing sector, encompassing its economic performance, commercial relations and business networks, credit and finance, informality, workforce, as well as leadership characteristics.

Mozambique's economic performance from 2003 was, in general, promising. Since then, the country's real GDP per capita--measured in constant 2011 international US$ with purchase power parities (World Development Indicators)--has grown constantly and, mostly, at a very stable rate never below 3%. However, the growth dynamic began to lose momentum in 2014 and in 2016 it almost stalled. Faced with an external credit crunch and a strong currency devaluation in 2015, Mozambique's macroeconomic performance reached a crisis point, and remains under stress.

The business environment remains a challenge for Mozambican firms

The findings from the 2017 Survey of Mozambican Manufacturing Firms demonstrates how challenging the business environment is. Logistical, regulatory, and financial restraints imply that Mozambican firms are not being fully enabled to function and thrive.

Key insights about Mozambique's business environment, offered by the survey results, include:

* Mozambican firms report difficulties with their supply chains, both regarding the quantity of input and regularity of supply and its quality.

* The regulatory and legal environment is still perceived as a hurdle. This starts when formalizing the businesses themselves, with firms reporting lack of transparency and occasional acts of corruption in the registry. Challenges extend to regular operations. Business people report lack of transparency about norms and regulations, some of them potentially arbitrary, with which they are confronted when subject to inspections by public officers. Similarly, close to half of the managers and entrepreneurs fear that authorities will close their...

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