Supporting the Policy Environment for Economic Development

Role of the State in Business in Mozambique

For the past twenty years, Mozambique has been going through series of economic and socio-political transformations, gaining momentum now, with the boom in the extractive resources industry. As the natural resource sector assumes the driving force of economic growth, the Mozambican state’s engagement in business appears to be changing. While on one hand, the number of state owned enterprises (SOE) managed by IGEPE (Institute for the Management of State Holdings) is being reduced, the state is expanding its engagement in business activities in new areas, notably in the oil, mining and gas sectors. Within this context, there is a need for greater clarity and a public discussion on the role of the state in shaping and engaging in the business environment. Against this background, the private sector umbrella organization, CTA in collaboration with the USAID Support Program for Economic and Enterprise Development (SPEED), have commissioned this study to contribute to the discourse and generate a basis from which further understanding can follow on the state’s engagement in business.

The state engages in the business environment as a policy maker, regulator, promoter and facilitator as well as an owner of state owned enterprises. The focus of this report is the state’s role as an owner of enterprises. The report investigates the historical, regulatory and institutional framework and the trends of state ownership in Mozambique; and it provides a comparative perspective on state owned enterprises in resource rich countries.

Early finding from this assessment indicate that with the natural resource boom in Mozambique, the state is, as in many other countries, attentive in capturing significant stakes of business in the minerals, oil and gas industry. The government of Mozambique is expanding its presence (going back?) in business activities. For instance in the oil and gas sector, the ENH and its subsidiaries are growing: ENH Logistics, CMH, CMG and others to come. This strategy of creating subsidiaries to intervene in various subsectors of the oil and gas industry is questioned by the business community. Perhaps because of a lack of a country strategy outlining the state’s engagement in business and in the extractive sector. The report points out that a clear strategy would provide greater transparency for the private sector and the general public at large.

In a similar fashion, the EMATUM affair have also propelled the debate on how the state elite have gained an increasing appetite for using their position to further their own business interests. Political elite members have business interests which interfere and distort institutional and policy arrangements in the country, resulting in unfair competitiveness. Considering the discoveries of considerable natural resource reserves in Mozambique, the report explores a couple of models for state owned enterprises in other natural resource rich countries. Preliminary recommendations include a more detailed research into specific sectors and topics concerning the state’s engagement in business. This would also entail the development of a proposal to establish a state ownership policy, a study of the role and responsibilities of the state actors in the natural resource sector, an assessment of the state’s engagement in agri-business and an assessment to investigate public procurement practices in the natural resource sector.

In 2015 SPEED analyzed the role of the state in agriculture and the results are presented below.

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