28 November 2007
Maputo — The chairperson of the Confederation of Mozambican Business Associations (CTA), Salimo Abdula, on Wednesday called for consolidation of dialogue with the government "in the search for solutions to improve the business environment".
Speaking at the opening of the 10th annual conference of the Mozambican private sector, Abdula stressed that the top problem facing business, particularly in the light of the impending southern African free trade area, was access to credit, and the cost of this money.
The interest rates charged by commercial banks remained high, and persuading them to lend money in the first place was difficult.
The general impression of businesses, Abdula added, was that the restrictions that the central bank had imposed on loans in foreign currency two years "have made money more expensive".
This is because, despite the stability of the Mozambican currency, the metical, in recent years, the banks insist on charging much higher interest rates for loans in meticais than loans in US dollars.
The CTA, said Abdula, "is looking for solutions to the problems of financing that do not promote capital flight or money laundering, or lead to exchange risks".
He was pleased that in some quarters the call for easier credit has been answered. A deal has been reached between the Mozambican Federation of Road Transporters (FEMATRO), the Transport Ministry and the country's largest bank, the Millennium-BIM (International Bank of Mozambique) for funding the acquisition of vehicles on concessional terms.
But even this had taken years of discussion. In December 2003, the government had decided that five per cent of the tax on diesel should go towards projects in the transport sector" only now, four years later, Abdula noted, was this promise of support for private transport companies being honoured.
He warned that the regional integration of SADC (Southern African Development community) means that Mozambican companies will be competing with companies from other countries where money is cheaper. He suggested that the government should assist by setting up a Structural Fund to modernise Mozambican factories
Abdula said that the result of years of tax reform was a fiscal system, which even those who understood the new taxes, regarded as complex. He called for a simplification of the main taxes, and better training for tax officials on how to operate VAT (Value Added Tax).
VAT depends on a system of rebates, but businesses have long complained at delays in the Finance Ministry delivering the rebates. There had been improvements, Abdula admitted, "but VAT rebates remain a huge constraint on company cash flows".
Abdula attacked the introduction of a scanner at Maputo port.
This "non-intrusive inspection" of merchandise was not paid for by the customs service, but by the businesses using the port - even for goods only in transit, and regardless of whether their goods were actually scanned or not.
This innovation, Abdula said, "has contradicted the trend towards reduced costs in foreign trade operations".
He also denounced the new regulations imposed by the government on private security companies. These regulations, approved without any consultation, determine that, in all security companies, the majority of the shares must be owned by Mozambican citizens. All managers and directors of the companies must also be Mozambicans.
Foreign-owned companies were thus told that they had to completely change their structure. When they invested in Mozambique, the companies had not been informed that they might face this form of nationalisation.
Abdula warned that this government decree called into question the "acquired rights" of the companies and undermined the government's policy of attracting foreign investment.
Regional integration, Abdula continued, brought with it the need for rules or origin, health norms, and standards of certification. So far Mozambican institutions and laboratories had not met the high standards demanded: Mozambican companies found they had to hire specialist foreign institutions to certify the quality of foods for export.
"This certification is extremely expensive, which deprives the goods of competitiveness on the regional market", said Abdula.
The CTA therefore insisted that Mozambique's own National Norms and Quality Institute (INNOQ) must be strengthened.
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