20 December 2012

Mozambique: Private Transporters Want More Fare Rises

Maputo — Private transport operators are not satisfied with the recent fare rises for passenger transport in Maputo and the neighbouring city of Matola of between 20 and 40 per cent.

Under a deal reached with the Maputo and Matola municipal councils in mid-November, the fare charged by privately owned minibuses (known colloquially as “chapas”) for distances of up to 10 kilometres rose from five to seven meticais (from 17 to 24 US cents). For trips longer than ten kilometres, the fare rose from 7.5 to nine meticais.

Fares had not been revised since 2004, and, although the chapa owners benefit from subsidised diesel, the two city councils thought it appropriate to raise the fares so that they could cope with the costs of maintaining the vehicles. It was also hoped that, with higher fares, the chapas would stop the practice of shortening their routes. (Chapas are licensed for a particular route, but to make more money many drivers cut the routes in two, thus forced the passengers to pay twice).

But, according to a report from the Confederation of Business Associations (CTA), presented on Wednesday at a meeting of the Enlarged Consultative Council between the government and the private sector, the transport operators still think that chapa fares are too low.

“So the private sector is still not very attracted to invest in this sector”, said the report. It added that a CTA study indicated that the ideal fare to make the business profitable would be 23 meticais for a distance of 30 kilometres (however, the vast majority of journeys within the Greater Maputo area are much shorter than 30 kilometres).

Another concern expressed by the CTA concerns the effective exemption from VAT (Value Added Tax) in agriculture. The exemption exists on paper – but the CTA says this tax break is not benefiting operators because of excessive red tape, or lack of knowledge of the procedures.

A further fiscal benefit that only exists in theory is the 50 per cent reduction in the tax on diesel used in agriculture. The CTA says that only five companies in the entire country are benefiting from this.

These are companies that have their own fuel supply posts on their premises. All other companies acquire their fuel from the normal filling stations and do not benefit from any tax reduction.

CTA chairperson Rogerio Manuel told the government delegation, headed by Prime Minister Alberto Vaquina, that there was a risk of marginalising the Mozambican business class unless more support is given to small and medium enterprises (SMEs).

He said that the boom in foreign investment, particularly in the mining sector, brought with it the need for greater support for local SMEs. “Any country needs instruments to protect and support its business class”, he claimed.

Manuel said that the national economy would become much more competitive, if the costs of starting, running and closing businesses were reduced.

“The fact is that the Mozambican economy is emergent, and it needs deep and swift reforms in order to compete with more powerful economies in the region and the world”, he declared.

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