In Mozambique, Promoting Value Chains in Tourism and Agriculture is Starting to Pay Off

WASHINGTON, March 1, 2017—All signs seem to be pointing to strong economic progress in Mozambique: Economic growth averaged 7.9% per year between 1993 and 2014; foreign direct investment increased significantly between 2005 and 2013, peaking in 2013 at more than $6 billion; and  progress has been made in reducing poverty; the country’s poverty rate decreased from 68% to 52% between 1997 and 2009. The capital city, Maputo, has seen luxury hotels and skyscrapers starting to dot the skyline, as the government’s efforts to cater to tourists and foreign investors have borne fruit.

But for the rest of the country beyond Maputo, the story is more complex. While Maputo has reduced its poverty rate to 10% over the last decade, progress has not been as strong in other provinces. Life for people in many rural areas has seen little progress: Two provinces – Zambezia and Nampula – are home to 38% of the country’s population but account for almost half of its poor.

A recent World Bank Group project in Mozambique – the Competitiveness and Private Sector Development project – sought to energize economies outside Maputo province by promoting broad-based growth; by focusing investment on specific agricultural products; and by developing workers’ skills to expand employment opportunities in the promising tourism sector.

Through a $25 million credit, the six-year project that began in October 2009 achieved noteworthy progress in three distinct activities:

• It set up a matching-grant program that provided 847 grants for technical assistance and training to Micro and Small and Medium-Sized Enterprise (MSME) owners with an average value of US$4000 per grant;
• It promoted the tourism sector in Inhambane province by developing tourism-related skills (e.g. financial accounting, management) for more than 1,300 people (nearly 900 of whom were from the private sector) and trained subsistence-level horticulture farmers on how to get their products to market;
• It established the National Fruits Training Center in Nampula, where 695 residents were given practical training and development services in tropical-fruits business operation.

The Nampula center provided small-business owners with general training on business management, quality and logistics, and provided farmworkers and supervisors with product-specific training in the production of bananas, pineapples, mangoes and papayas. It also hosted a demonstration farm where local producers could observe modern farming techniques and apply them to their own plots.

“Without a sustained focus on developing specific sectors of the economy, the rural areas of Mozambique seemed destined for continued stagnation,” said David Bridgman, Practice Manager for the World Bank Group’s Trade & Competitiveness Global Practice in Africa. “By taking a concentrated approach in key sectors – agriculture and tourism – and in specific geographic areas that have potential in those sectors – Nampula and Inhambane – we felt the economy would be able to unleash some of its untapped potential.”

The MSME Matching Grant Program

Capacity remains a serious challenge for small businesses in Mozambique, and the project aimed to tackle this by utilizing grants that connected entrepreneurs with much-needed business services. The Government of Mozambique identified three high-priority groups for the grant program: manufacturing, women-owned businesses, and enterprises located outside the Province of Maputo.

The program reached 363 unique firms and supported 847 total grants with an average grant size of $4,000 – primarily for the purpose of improving such business practices as marketing, promotional materials, website development, and the training of employees. Half of the enterprises reached by the program were located outside of Maputo, and 27% were run by women. Enterprises in a variety of sectors, including services, hotels and tourism, industrial, ICT, and agro-processing received grants.

Businesses benefiting from the program saw, on average, a 23.5% greater increase in sales by revenue compared to the control group of MSMEs that did not benefit from the program. This outcome is above the target set of 10%.

“In the first phase, the project supported the design of publicity materials and catalogues and provided training on customer service,” said Cacilda Correira of the Bride and Groom Costume Store in Maputo Province. “In the second phase, the project supported my participation in attending trade fairs in Brazil and China. This led to expanding my women’s product line and introducing the men’s product line. With all this support, I feel that I was able to realize my dream for my business.”

Tourism in Inhambane

Despite the region’s natural beauty and appeal to value-conscious tourists, Inhambane lacked trained personnel to work in the tourism industry. The Competitiveness and Private Sector project contributed to overcoming this vocational-skills gap by training people through more than 40 courses and workshops in tourism-related skills. Cumulatively, the project trained more than 1,300 people and certified 800. Upon graduation from the program in November 2015, 74% of those certified went on to gain employment in the province’s labor market.

According to Mazen Bouri, World Bank Group Senior Financial Sector Specialist and project lead, “The training offered in Inhambane was of very high quality, and it prepared participants well for employment in the region’s labor market.” 

“The project supported training to our employees on management and financial accounting,” said Joao Sotho of the Massala Beach Resort in Gaza Province. “This led to increased productivity and efficiency.  Our gross margin improved substantially.”

The project also created an opportunity to link tourism with local agriculture and horticulture by training local subsistence farmers – primarily women – to use greenhouses to improve the quality and production of local produce. With improved produce, these local farmers were better equipped to supply the businesses that cater to tourists with fresh, local tropical fruits. That helped the farmers increase their household incomes, while strengthening their capacity to produce more fruits and vegetables with fewer losses. A total of 78 linkages were established between newly trained farmers and tourism-related business which helped subsistence level farmers bring their goods to market.

In addition, as a result of increased capacity, producers were also able to begin exporting their fruit to new markets abroad.

“The project support helped us obtain the necessary quality certification in order to export our fruit produce to Europe,” said Christoph Cicarelli of C&C Agro-Alimentar in Inhambane Province. “There were some additional costs attached with meeting the quality standards, but it was well worth it, given the increase in our sales and new markets that were opened.”

Nampula Fruits Center

The Nampula Fruits Training Center, established as part of the project as a public institute, aimed to offer experience-based training and development services in the tropical fruit industry. The Center has trained 695 participants, to date, through seminars and other training events.

Training offered by the Center helped battle malnutrition, with many of the trainees going on to plant their own farms based on what they learned at the Center. As a result of the training center, fruit available for family consumption is expected to increase from 50 tons to 150 tons per year (valued at US$40,000 and US$120,000).

In addition, specific training provided to 24 local producers is expected to result in US$3,900 in annual sales for a single producer – which amounts to US$325 per month, or about five times the established minimum wage (US$66 per month) for Mozambique’s agriculture sector.

With increasing interest from both the public and private sectors to invest in fruit production, it is expected that there will be more efforts to promote the expansion of this industry in other regions of the country. To prepare its labor force for these opportunities, the government is aiming to replicate this approach with additional training centers.

“The project helped me to brand my various products,” said Judite Celeste of WISSA Tipicamente Mocambicana in Nampula Province, “and this helped me overcome a major obstacle and allowed me to compete with imported products.”

“Mozambique has a great deal of untapped agricultural potential, but it is a country facing many complex challenges,” said Bouri. “This project was successful because it adopted an integrated approach – with applied training, community outreach, partnership with existing agribusiness investments, and adoption of technologies for the local context. It should also be emphasized that this is a long-term endeavor, and a continued partnership between the public and private sectors is essential to ensure the sustainability of the results attained.”