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Market Linkages are Critical to Local SME Development

In August, CNBCAfrica.com weighed in on a popular topic within Mozambican media and policy-making circles with the article “How Mozambique Can Benefit More from Its Massive Gas Discovery”. Journalist Tendai Dube argued that building local business skills and growing the banking sector are essential measures to capitalizing on the country’s abundant natural resources. Yet, these two actions are not entirely sufficient. For example, here in Mozambique, many small and medium-sized enterprises (SMEs) may achieve the requisite capacity to compete for contracts but can still go unseen by large multinational companies.

Last month, the Building Markets Mozambique team participated in an event designed to break down this visibility barrier preventing SMEs from attracting new clients. FACIM, or the Agro-Livestock, Commercial and Industrial Fair (Feira Agro-Pecuaria, Comercial and Industrial de Moçambique, by its Portuguese name) is an internationally recognized week-long convention that brings together producers, suppliers and consumers to sell goods, share innovations, and create networks. This year marked the fair’s 51st anniversary and it welcomed nearly 3,000 participants from 31 countries. Organized by the Mozambican Ministry of Industry and Trade and IPEX (the Institute for Export Promotion), the event was a strong success and could easily be replicated for other high growth industries, including the extractive sector.

Building Markets Clients presenting products at FACIM; Photo courtesy of Developing Market Associates

Building Markets Clients presenting products at FACIM; Photo courtesy of Developing Market Associates.

Three of Building Markets’ clients participating in the fair were eager to capitalize on the opportunities presented by FACIM. Procampo, Lda, Machados Know How, and Soluções Rurais, Lda. all work within the agricultural sector. While this sector makes up 31.8% of the economy and employs 81% of the labor force, the annual percentage growth in value added by agriculture has been steadily falling since 2006. The fair provided a unique opportunity for the sector’s stakeholders to collectively look for solutions to reverse this trend.

Milva Boaventura, a Building Markets staff member, discusses upcoming trainings with potential clients at FACIM; Photo courtesy of Developing Market Associates

Milva Boaventura discusses Building Markets with potential clients at FACIM; Photo courtesy of Developing Market Associates.

Procampo sells technical agricultural equipment and provides customized support service throughout the country. Machados Know How carries out trainings for Agribusiness and Aviculture (poultry farming) entrepreneurs. Lastly, Soluções Rurais, Lda distributes vegetable seeds, fertilizers, irrigation equipment, and veterinary products through five geographic hubs. To a large-scale food processor, each of these SMEs could participate in various parts of a supply chain. They could represent a more affordable option to big companies who normally hire international businesses with steeper operating costs.

Building off the momentum built by FACIM, over the coming six months, our Mozambique team will host several sector specific linkages events designed to break down walls between international buyers and local suppliers. The next event will be hosted on October 27 for agricultural SMEs in Nampula. For information on upcoming events, continue to watch this space, or follow us on Facebook or Twitter.

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