Maputo — Despite promising macro-economic figures, many of Mozambique's companies are in crisis, the Governor of the Bank of Mozambique, Adriano Maleiane, admitted on Friday.
Giving his annual summary of the financial year, Maleiane said that companies dependent on exports were hit by the fall in the world market prices for several of Mozambique's main exports, such as sugar, aluminium, copra, cotton and prawns.
There was also "a near general decapitalisation of companies which reduces their ability to contract new bank loans".
Operational costs had soared and weighed heavily on the companies, and the lethargy of the judicial system also penalised companies, who found it expensive and slow to resolve contractual disputes and other conflicts through the courts.
Companies felt these problems despite signs that the growth in Gross Domestic Product (GDP) this year will be around 12 per cent, and inflation will be relatively low, at between seven and eight per cent. Furthermore, since July the Mozambican currency, the metical, had been remarkably stable against the US dollar.
Maleiane attacked the country's commercial banks for failing to drop their interest rates in line with the fall in inflation.
The main interest rate used by the central bank itself has fallen from 35.04 per cent in September 2001 to 26.5 per cent now.
Yet the commercial banks had not followed suit. (Commercial banks are, in general, still charging their clients over 30 per cent on loans.) He warned that high interest rates lead to an increase in non-performing loans. And if the bankers squeeze their clients too much, companies collapse and the banks never get their money bank.
"Low interest rates stimulate private investment", said Maleiane, "and can contribute to reducing the weight of bad debt.
Today non-performing loans account for about 23 per cent of the total banking credit portfolio".
But Maleiane also criticised companies for trying to fleece the public through high prices. "No company can be successful if its competitors in neighbouring countries sell the same product at a quarter of the price", he exclaimed. "That way you only sell to people who are badly informed. Next time they will be better informed, and will buy where the price is cheapest".
The governor attacked price hikes during the festive season.
"At the end of the year, companies all over the world drop their prices, and increase the amount they produce", he said. "In Mozambique, we do the opposite - we increase the prices and drop the quantity. So we only sell to those who have no choice. And after 1 January, we don't sell anything".
Maleiane called on companies to reduce their costs "so as to make the prices of Mozambican products more competitive". They should also design strategies for their companies which they could use when negotiating for bank loans.
"We need to strengthen internal economic integration alongside regional or continental integration", he said. "If we don't have a programme with a clear direction and objective, we will have continual difficulties in identifying the real constraints, and will probably think that the only problem is access to bank credit. Money is important, but it is not everything - we need a clear strategy".
Maleiane said that monetary policy for 2003 would be aimed at complying with the government target for a growth rate of at least seven per cent, and an inflation rate of also seven per cent. To meet these targets, the central bank planned to hold expansion of the money supply to 18 per cent (which compares with an expansion of around 20 per cent this year).
