Research, strategy and investment advisory firm, Frontier Advisory, hosted an informative session on November 12, 2014, in which it discussed the challenges and opportunities present in Mozambique where the discovery of a resource boom has sparked great global interest in the country’s future growth potential.
This session was attended by local delegates, ministers and speakers as well as guest speakers from Mozambique who shed light on what we can expect from the country in future and how South Africa can grab hold of the opportunities realising in Mozambique.
Considering the vital role that supply chain and logistics management will play in the realisation of resource extraction and economic upliftment for Mozambique, Frontier Advisory invited Dovetail Business Development Director, Shermandra Singh, to attend a one on one interview session with SABC anchor Frances Herd.
State of Logistics in Mozambique
“The state of logistics infrastructure around Africa is mostly poor and is a big challenge hindering growth and development in Mozambique,” Singh noted in response to Herd’s question regarding supply chain challenges in the country.
“Only 27% of existing road infrastructure from the capital of Malawi to Nacala is in a good condition. Coupled with seasonal floods in Mozambique, which lead to many central regions being cut off from neighboring operations, the road infrastructure is filled with potholes and needs to be upgraded for future demand.”
Owing to these infrastructure challenges, transport cost becomes the second biggest expenditure in some of these regions, Singh explained, adding that distance also presents a challenge to efficient transport operations in Mozambique with only one main access road stretching from the South to the North of Mozambique and an absence of railways leading out of Maputo to the far Northern towns, further rendering transport operations tedious and costly.
Singh noted that, with regard to ports, much development is projected. However, Mozambique comprises many shallow waters, risking ships to run aground when entering or exiting ports at the wrong time. “The port of Nacala in Mozambique is the only national deep water port in Southern Africa,” he stressed.
Another challenge present in Mozambique’s port infrastructure is the time it takes to move containers. “In some cases, it can take up to four times longer moving imported cargo out of Beira when compared to Durban,” Singh explained, highlighting that these are all challenges stressing the need for greater efficiency and reduced costs in Mozambique’s transport operations.
Import and Export in Mozambique
With regard to import and export Singh noted that, should foreign investment enable Mozambique to tackle its infrastructure challenges, the country could greatly increase its export and import potential. Currently, much refined petroleum, vehicles and telecoms are a big source of imports with exports being primarily dominated by aluminum, coal and cotton.
The most accessible region in Mozambique for imports and exports is the Maputo corridor, which Singh stressed is a model of access. “The Maputo corridor enables access in and between countries such as South Africa, Swaziland and Zimbabwe. There is also a link into OR Tambo, Johannesburg, which serves as a global gateway into the rest of the world. This deems the Maputo corridor a true transport corridor as it provides, rail road, customs, border posts as well as ports and harbors.”
He pointed out that some companies, such as United Africa Federline, are using Mozambique’s inland infrastructure challenges to their advantage by setting up shipping routes from ports, such as Beira and Nacala, down to Durban and offer shipping as a more reliable and cheaper alternative to road transport.
“In December last year another company called CMA started offering a similar service covering more ports down to Durban, which proves the need and success for more affordable transport options in Mozambique,” Singh pointed out.
IT – an Enabler for Logistics Prosperity
When asked what role technology will play in the realisation of logistics development in Mozambique, Singh noted that technology can enable collaboration between logistics companies, government departments, border posts and end clients.”
The key to logistics development is making all operational processes more efficient, focused and cost driven and creating visibility across supply chain channels. Collaboration is crucial when goods are shipped and transported cross border and visibility can only be enabled through technology, Singh concluded.