In Mozambique, where the Portuguese colonial system is still evident in many aspects of the formal economy, one company found a niche market to assist investors who want to do business there.
Fernando Ribeiro is a marine biologist and managing director of Bioglobal Consulting in Maputo. The company helps investors interested in agriculture and aquaculture to set up business in Mozambique.
“Mozambique is primarily an agriculture-based economy,” Ribeiro said in an interview with AFKInsider. With the exception of sugar, agriculture isn’t commercialized on a large scale, “but there’s great potential for maize, cotton, sugar and soy.”
Land is one of the assets Mozambique has to offer, but a company can’t actually buy or own land there. That isn’t seen as a limitation, Ribeiro said. But it still requires an investment.
“I’ve had companies tell me Mozambique is not set up for this kind of investment,” Ribeiro said in an interview with AFKInsider.
Ribeiro helps companies from South Africa, the U.S. and other parts of the world with legal and technical services needed to do agriculture in Mozambique. These include incorporation, permitting, foreign investment and land application.
“Most corporations don’t want to do business in Mozambique until they’re far along the permitting process,” he said.
Sitting in a restaurant on Maputo’s buzzing Avenida Julius Nyerere on a Wednesday afternoon, it becomes obvious pretty fast the extent to which the informal economy rules in Mozambique. Street hawkers sell capulana (colorful fabrics) and key rings and hand-carved wooden bowls to tourists and Mozambicans, who buy as they walk. It’s a kind of mobile marketplace.
“It’s normal to buy on the street,” Ribeiro said. “Here, people stop at traffic lights (to do their shopping.)”
But if you’re a U.S. investor looking to grow soybeans in Mozambique, you can’t do it on the street.
In Mozambique, companies can’t actually own land, Ribeiro said. They can get a 50-year deed, extendable to 99 years. Individuals can own small pieces of land. Most of Mozambican land is nationalized.
“Big companies don’t see that as a limitation,” according to Ribeiro.
Ribeiro said he is seeing South African farmers looking increasingly to Mozambique
“Some of our clients obtained land concessions and found they’re paying 26 cents on the dollar compared to South Africa,” he said. “They tell me cost of land isn’t an issue. It’s security.”
In Mozambique, if you work the land, you have the right to occupy it, Ribeiro said. Of course, you have to consult the community that will be impacted by a land investment. “But if they see you’re adding value, they’ll approve it,” he said. “When a community agrees, they sign a memo of understanding. The developer provides something in return such as potable water — that’s a big thing — education and health, jobs, and roads that are accessible to local communities.”
Some companies have come to Mozambique looking for large-scale land after the European Union tried to reduce consumption of fossil fuels towards greener sources of petroleum.
“That creates a new business market for companies that can process bioethanol,” Ribeiro said.
Bioglobal assisted a company in developing bioethanol from sugar cane and sweet sorghum.
Land is attracting a number of companies to Mozambique. One of the problems with a developing country is lack of infrastructure. This means that acquiring land is a paper-based system. Documents must be built up. The same goes for relationships — and trust — built up between developers and government authorities.
Bioglobal has three shareholders. Ribeiro manages the company. For a foreign investor, the process of investing is not straightforward, he said. “You have to convince people that what you provide will be an asset to the community.”
