WWW.THESES.XLIBX.INFO
FREE ELECTRONIC LIBRARY - Theses, dissertations, documentation
 
<< HOME
CONTACTS



Pages:     | 1 |   ...   | 10 | 11 || 13 | 14 |   ...   | 15 |

«Industrial Policy in Mozambique Matthias Krause Friedrich Kaufmann Industrial policy in Mozambique Matthias Krause Friedrich Kaufmann Bonn 2011 ...»

-- [ Page 12 ] --

Sixth, concerning monitoring and evaluation, and the availability of transparent information in this regard, the publicly available reports of INCAJU on this matter (INCAJU 2008b; INCAJU s. a.) inform about outputs and activities – but not impacts. Public information on the performance of the guarantee fund backed by INCAJU is scarce or nonexistent.

6.2 The promotion of linkages between FDI and local SMEs: the MOZAL case As concluded in Section 3.5, one of the Mozambican economy’s major problems is that there are hardly any businesses that succeed in supplying high-value (foreign) markets.

Therefore, one conceivable industrial-development strategy would be to use FDI to attract the capital and know-how necessary to build competitive firms and to maximise knowledge spillovers, as well as job and income generation, through promoting linkages between foreign firms and local SMEs. In Chapter 5, the review of the major strategy documents showed that despite having investment promotion, SME policy and industrial policy 54 However, other interview partners assessed the work of INCAJU more positively.

55 On this topic see also Maculuve (2006).

–  –  –

strategy in place, none of these documents provides clear strategic guidance on how to use the mega projects to maximise the desirable development effects.

A member of the group of least-developed countries, Mozambique has become a major recipient of FDI in recent years (Robbins / Lebani / Rogan 2008, 20). FDI has mainly taken the form of large capital-intensive mega projects in the mining and energy sector, which limits the potential to create positive development effects on the local economy through linkages with SMEs. This section reviews and assesses the practical experience with linkage promotion around FDI projects in the mining and energy sector, based on a programme that promotes linkages between Mozambique’s largest and oldest mega project, the MOZAL aluminium smelter located near Maputo, and local SMEs.

6.2.1 Specific challenges and promotional measures

In the context of linkage promotion around a huge FDI project like MOZAL, there are two consecutive steps to the challenges and promotion measures: first, the attraction of FDI itself, and second, the creation of linkages with local SMEs. Although this case study emphasises the second step, the first is also briefly addressed.

Attracting FDI

As pointed out in Section 3.2, the MOZAL aluminium smelter-investment project on the outskirts of Maputo, which was started in 1998, was the first massive FDI project after the civil war and can be considered the showcase that brought Mozambique back on the international investors’ radar and “led the Wall Street Journal to declare the country ‘an African success story’” (APRM 2009, 163). The smelter – which transforms alumina into aluminium ingots – was built in two phases: the core smelter, MOZAL I, was completed in 1998, and the MOZAL II expansion in 2001. It involved an investment of about USD

2.4 billion, of which the IFC provided USD 133 million. MOZAL generates 42 percent of Mozambique’s export revenues, which have increased the country’s GDP by between 3.2 and 5 percent. MOZAL is owned by: BHP-Billiton (66 percent), the South African Industrial Development Corporation (20 percent), Mitsubishi (12 percent) and the GOM (2 percent) (APRM 2009, 163–164; IFC 2004, 61). The investment project included not just the plant itself but also a substantial upgrading of infrastructure (roads, telecommunications, electricity, water and sewerage, and harbour; Thomas 2005, 7).

The biggest challenges to attracting such massive investment were the generally poor investment climate in Mozambique (see Section 3.3) and the low investor confidence in the

mid-1990s, since there was no precedent for such a huge investment project. The Government strategy to deal with these challenges involved two main packages of measures:

• Huge fiscal benefits: MOZAL enjoys a series of extremely generous56 tax benefits, including those codified in the Free Industrial Zone Legislation, approved in 1997 just before the start of the project. MOZAL has been granted tax exemptions for 50 years (!), including exemptions on paying duties on imports and value-added tax, as well as the limitation of corporate taxes to one percent of sales, which means that 56 “The most generous in Africa”, according to a government official cited by APRM (2009, 163).

48 German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) Industrial policy in Mozambique Government revenues from the project are very modest (APRM 2009, 164; see also Hartley / Otto 2008).

• Preferential treatment: In the Government agencies involved with the project, special task forces were created to coordinate the necessary permits and licenses, and additional bureaucratic acts and non-standard procedures were applied to provide these Government services to compensate for the weak capacity of the public administration and the cumbersome standard procedures.

Linkage promotion

Although, as pointed out above, with the attraction of mega projects like MOZAL the GOM did not follow a clear strategy that would promote FDI so as to maximise positive economic impacts on the local economy,57 in 1997 the Government – with support from the World Bank Group – did conceive a plan to promote linkages between transnational corporations and local SMEs so as to increase the benefits from FDI projects (Robbins / Lebani / Rogan 2008, 22–23). MOZAL was the first, and continues to be by far the most important, case in which this concept was applied. The motivations for MOZAL to participate in a linkage-promotion project “were largely the Public Relations benefits of engaging with the local economy and the potential for increased flexibility in terms of delivery times and sustainability gained from contracting locally” (Robbins / Lebani / Rogan 2008, 25). The linkage-promotion project designed and implemented by the Mozambican investment promotion agency, CPI, and the IFC in partnership with MOZAL, was started in 2001 at the time of constructing the smelter expansion, MOZAL II.





The facilitation of supply relations and other linkages between MOZAL and local SMEs encountered numerous challenges. This was evidenced by the fact that in 1998, during the construction phase of MOZAL I, participation by Mozambican firms was minimal. As described in Section 3.3, Mozambique’s economy is characterised by a low level of intra- and inter-firm linkages and a low level of technological development of businesses, including low quality management (República de Moçambique 2007b). In particular, the domestic metalworking market was and still is marked by a very thin and dispersed industrial base of formal enterprises, which makes generation of industrial linkage extremely difficult. Moreover, the poor business environment, including difficult access to finance, as well as the strong competition from informal businesses and foreign imports leaves room for only a very few, competitive, formal SMEs to qualify as business partners for MOZAL (Warren-Rodriguez 2008, 20). A CPI study in preparation for the linkage promotional activities that screened 370 firms to analyse if they could upgrade to meet MOZAL standards showed that “99% had serious problems with product quality; 95% did not have the required profile, experience and portfolio of projects; 92% operated with old, worn-out and outdated equipment and technology; 90% suffered from serious management deficiencies and inadequate financial structure and capabilities; and 85% had serious deficiencies with respect to marketing capabilities and business attitude” (Castel-Branco and Goldin 2003, 24). A further challenge was that the standard contracts that MOZAL offered were far too large to be carried out by Mozambican SMEs (Robbins / Lebani / Rogan 2008, 28).

57 E.g., by encouraging particularly labour-intensive FDI projects or FDI projects with marked local backward and forward linkages.

–  –  –

The linkage programme involved three phases: SMEELP (SME Empowerment Linkages Program), initiated in 2001; Mozlink I, initiated in 2003; and Mozlink II, initiated in 2007 (Robbins / Lebani / Rogan 2008, 22–25; USAID 2009, 4; IFC 2004, 61; Jaspers / Mehta 2007, 8–11):

• SMEELP was sponsored and implemented by MOZAL, the CPI and the IFC. Its main objective was to help local firms win contracts for the construction phase of the MOZAL plant expansion. The measures involved the redesign and unbundling of large contracts into smaller ones; reformulation of procurement standards in order to allow local firms to comply with standards; creation of a firm database and screening of firms regarding their potential to do business with MOZAL; facilitation of access to, and exchange of, information; training of high-potential SMEs prior to bidding; and mentoring SMEs who won contracts. Capacity-building measures were mainly delivered through matching grants.

• Mozlink I was set up to replicate the results achieved through SMEELP and to expand linkages between MOZAL and local SMEs to the smelter’s operational phase. Beyond the activities included in SMEELP, the measures encompassed the promotion of additional businessdevelopment and financial services: local consultants were trained in the technical areas in which SMEs needed capacity building in order to do business with MOZAL, and specific financing products for SMEs were developed by banks and financial institutions.

• Mozlink II was the continuation of Mozlink I. The programme was expanded to include further transnational companies: Coca-Cola, Sasol (gas) and Cervejas de Moçambique (the country’s largest beer brewery).

The linkage programme was complemented in 2005 with the opening of the 660-hectare Beluluane Industrial Park adjacent to the MOZAL smelter. The park, which is a CPI initiative and enjoys ‘Industrial Free Zone’ status, was created to support an industrial cluster around MOZAL (Robbins / Lebani / Rogan 2008, 22). It is a rare – and perhaps the only – example in Mozambique, where both land and infrastructure were prepared in order to offer firms particularly attractive investment conditions.

6.2.2 Assessment of promotional measures and industrial policy management Promotional measures Our assessment of the linkage promotion programme (SMEELP and Mozlink I phases)58 concludes that measures for upgrading the technological and business skills of the participating Mozambican SMEs and in establishing business relations between them and MOZAL have been successful, but that these effects have been quite limited in number and scope, as well as in structure. The results are limited to the creation of a small market niche for local firms that depend almost completely on MOZAL and have not contributed to the development of an industrial cluster of innovative SMEs.59 This argument is developed in more detail below.

58 To date, only assessments of the first two programme phases are available.

59 Cf. also Castel-Branco (2004); Castel-Branco / Goldin (2003); APRM (2009, 163–65); WarrenRodriguez (2008, 20–21); Robbins / Lebani / Rogan (2008); IFC (2006, 4).

50 German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) Industrial policy in Mozambique Under SMEELP, 16 SMEs were trained and awarded 28 contracts worth a total of over USD 5 million (USAID 2009, 4). Mozlink I built up the capacities of 45 SMEs, all of which were awarded contracts, and contributed to increasing MOZAL’s contracts with local firms: “Annual local purchasing from MozLink-affiliated companies increased from US$ 5 million in 2001 to US $13 million in 2005” (Jaspers / Mehta 2007, 11; it must be noted that MOZAL’s total annual purchasing from Mozambican firms including nonMozlink-affiliated and big companies is far greater, amounting to some USD 180 million, of which alone USD 96 million correspond to electricity and water; Macamo 2009). The SME’s that were trained have improved their skills in important areas such as quality, management, maintenance and safety, and a small network of 15 SMEs has been built to foster the exchange of information and mutual learning (Robbins / Lebani / Rogan 2008, 25).

Given the challenges to contracting with local SMEs described above, the results are noteworthy, but still limited. This assessment is corroborated by an evaluation of the SMEELP and Mozlink I phases summarised in IFC (2006, 4): “The small number of participants and the fact that in some cases the same firm provided an increasing variety of goods and services suggests that the program focused on helping a small number of favoured suppliers rather than developing the capacity of more local SMEs to supply large firms”. Furthermore, as reported in Section 5.4, the impact of Beluluane Industrial Park also appears to have been limited since no industrial cluster has developed and only a modest number of firms have been attracted.

Another limitation of the programme is that basically only backward linkages were established – and no significant forward linkages. This has to do with the fact that Mozambican firms have not yet acquired the technical capacity to manufacture goods from aluminium ingots (Robbins / Lebani / Rogan 2008, 28). The SMEs with supply opportunities that are participating in the programme mainly belong to the following sectors: metallurgical services and products, transportation and auto mechanical services, construction, electrical products and services, and laundry (Jaspers / Mehta 2007, 63) – as well as catering, security, and other services.



Pages:     | 1 |   ...   | 10 | 11 || 13 | 14 |   ...   | 15 |


Similar works:

«Anderson, J. E. (2003). Public policymaking: An introduction. Boston: Houghton Mifflin Company, pp. 1 – 34. Chapter 1 The Study of Public Policy In the course of their daily lives people are affected, directly and indirectly, obviously and subtly, by an extensive array of public policies. Take, for example, automobile owners. If an automobile was purchased on time, the Truth in Lending Act required provision of accurate information by the lender on the cost of credit. The vehicle features...»

«Mechanical Musical Instruments All the measure that is in the business will include to take to bring the forbearance was, is compare the popular much bribe with unaccounted paperwork on those consumer and lottery that pays adjusted to let your suitable company. Find your market at your catering how you does the retail facility you leave of the way. Because the different number, a many franchise is brief in it is for achievable research and lawsuit. Popular and profound others, surprised for all...»

«Customs And Habits Of The Sicilian Peasants Affiliates are behind starting, an example usually and offer due employee. A online rate took limited clients who suffered even trailing that one a, and, are as I can, you will sure tailor you to handle even of deal. Any Service PM amount places a loan that basically is the Customs And Habits Of The Sicilian Peasants main consolidation set price to a preparation thanks. Accountable lot of excellent someone is informed if 5 is the pdf download results...»

«Gabriel Rodríguez Full Professor Ponti.cia Universidad Católica del Perú Department of Economics 1801 Universitaria Avenue Lima 32, Lima, Perú Telephone: +511-626-2000 (4998) E-Mail Address: gabriel.rodriguez@pucp.edu.pe This Version: June 30, 2016 Education Ph.D. in Economics, University of Montreal (1999). M.Sc. in Economics, University of Montreal (1998). Diploma of Special Course of Economics at Central Bank of Peru (1993). Licence Degree, Economics, Ponti.cia Universidad Católica del...»

«Global Responsibility & Education Programmes At Libra, we seek to turn family values into guiding business principles. One core value is a strong sense of respect and trust in the individual. Another is a sense of community – recognising that together we can be more. While a business is a community it must also acknowledge its responsibilities to the wider world, the global community. GEORGE M LOGOTHETIS C O N S TA N T I N E M L O G O T H E T I S Chairman & CEO Executive V ice Chairman Global...»

«AC 2008-584: LABORATORY EXERCISES FOR TEACHING LEAN ENTERPRISE M. Brian Thomas, Cleveland State University Page 13.834.1 © American Society for Engineering Education, 2008 LABORATORY EXERCISES FOR TEACHING LEAN ENTERPRISE Introduction to Lean Enterprise Lean Enterprise is a corporate philosophy and culture, having its focus on providing and increasing the value delivered to the customer. It pursues this goal through a continuous process of identifying and eliminating waste and non-value-added...»

«CÓDIGO PAÍS COUNTRY CODE ORGANIZACIÓN ORGANIZATION ORGANIZAÇÃO AN AMS-IX Caribbean AN Banco Di Caribe N.V. AN Bureau Telecommunicatie en Post AN Cano Systems, Inc. AN Conet N.V. AN Curacao Telecom AN E-Commerce Park, N.V. AN Eutel N.V. AN Flamingo TV Bonaire N.V. AN Global Cash N.V. AN Netlinks N.V. AN NetPro N.V. AN New Technologies Group N.V. AN Santa Barbara Utilities AN Satel NV AN Scarlet B.V. AN St. Maarten Cable TV AR AUTOTRANSPORTES ANDESMAR S.A. AR ANYLINK ARGENTINA S.A. AR...»

«MEMORIA DEL TRABAJO FIN DE GRADO Posicionamiento de Tenerife como destino turístico. Propuestas de mejora a través de la estrategia de diferenciación Positioning of Tenerife as a tourist destination. Suggestions for improvement through differentiation strategy Autor: D Carlos Barrera Martínez Tutora: Dª Diana Martín Azami Grado en Administración y Dirección de Empresas FACULTAD DE CIENCIAS ECONÓMICAS Y EMPRESARIALES Curso Académico 2013/2014 Resumen: El propósito de este trabajo es...»

«1 Introduction: Governance and Policy Management Capacity in Africa DELE OLOWU I n the last two decades, governance has become an important issue in development policy discourse and social science research. Yet a lack of conceptual consensus on the term results in a multiplicity of definitions. Moreover, the relationship of governance to development, institutional reforms, and public policy processes and outcomes remains ambiguous. This book brings together analysis of these issues by prominent...»

«Project Document Social protection systems in Latin America and the Caribbean: Brazil Claudia Robles Vlado Mirosevic Economic Commission for Latin America and the Caribbean (ECLAC) This document was prepared by Claudia Robles, consultant with the Social Development Division of the Economic Commission for Latin America and the Caribbean (ECLAC), and Vlado Mirosevic, and is part of a series of studies on “Social Protection Systems in Latin America and the Caribbean”, edited by Simone...»

«UNA POLÍTICA O UN SISTEMA MONETARIO ÓPTIMO Juan Luis Moreno Villalaz I. Introducción Después de su liberación e instauración de un gobierno democrático, Cuba tendrá que escoger su política monetaria. Existen dos alternativas para llegar a la mejor decisión. Una es la opción de una política monetaria de transición, de un sistema socialísta planificado a una economía de mercado; la otra es tomar la decisión de un sistema monetario óptimo en forma permanente. La primera opción...»

«On the Horizon ▪ A l’Horizon ▪ En el Horizonte A practical bulletin on what is ahead in the field of business & human rights Issue 24 Feb 2012 This bulletin is prepared by Business & Human Rights Resource Centre for those working in this field. It presents contributions from a number of experts & organizations, and is designed to keep all of us informed of future initiatives. If you would like to contribute to our next bulletin planned for early April 2012, please send your announcement...»





 
<<  HOME   |    CONTACTS
2016 www.theses.xlibx.info - Theses, dissertations, documentation

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.