Demand and Opportunity Assessment and Analysis: Linkages in Mozambique Commissioned by Building Markets with ACIS Final Report prepared by Genesis Analytics and ICC Made possible through the generous support of the Skoll Foundation 31 January 2013 I C C Document Reference: Building Markets, Linkages, Final report Date: 31 January 2013 Contact Information Genesis Analytics (Pty) Ltd Office 3, 50 Sixth Road Hyde Park, 2196, Johannesburg South Africa Post to: PO Box 413431, Craighall, 2024 Johannesburg, South Africa Tel: +2711 994 7000 Fax: +2711 994 7099 www.genesis-analytics.com Authors Genesis Analytics ICC Contact Person Caitlin Smit [email protected] ii Table of Contents EXECUTIVE SUMMARY ................................................................................ 1 1. INTRODUCTION ...................................................................................... 7 1.1. Background to the study ........................................................................... 7 1.2. Methodology ............................................................................................. 8 1.3. Structure of the report ............................................................................. 10 2. MOZAMBICAN CONTEXT ..................................................................... 10 2.1. Growth profile .......................................................................................... 11 2.2. High priority investments in the extractives sector .................................. 13 2.3. Private sector profile ............................................................................... 15 2.4. Local Content Policy and Regulatory Framework ................................... 15 3. DEMAND OVERVIEW ............................................................................ 17 3.1. Demand drivers ....................................................................................... 17 3.2. Attitudes of buyers to local sourcing ....................................................... 19 4. KEY DEMAND SECTORS ..................................................................... 21 4.1. Overview of the extractives sector .......................................................... 21 4.2. Coal ...................................................................................................... 23 4.3. Natural gas .............................................................................................. 29 4.4. Mineral sands .......................................................................................... 34 4.5. Construction ............................................................................................ 35 4.6. Industry and manufacturing .................................................................... 44 4.7. Retail ...................................................................................................... 48 4.8. Travel and tourism .................................................................................. 51 4.9. International Development ...................................................................... 54 4.10. Overlap of demand ................................................................................. 62 5. SUPPLY .................................................................................................. 66 5.1. Map of supply .......................................................................................... 67 5.2. Key goods sectors .................................................................................. 70 5.3. Key services sectors ............................................................................... 72 5.4. Key constraints facing suppliers ............................................................. 72 iii 6. CONCLUSIONS ..................................................................................... 75 7. RECOMMENDATIONS .......................................................................... 78 8. APPENDIX I – STUDY PARTICIPANTS ................................................ 81 8.1. Demand side ........................................................................................... 81 8.2. Supply side ............................................................................................. 83 9. APPENDIX II - LINKAGES PROGRAMMES IN MOZAMBIQUE ........... 84 List of Figures Figure 1: Real GDP growth in Mozambique .......................................................................... 11 Figure 2: Contribution to GDP per sector .............................................................................. 12 Figure 3: Geographic distribution of a selection of planned investments in Mozambique ..... 18 Figure 4: Timeline of a selection of major investments in the extractives sector ................... 22 Figure 5: Extractives industry supply chain ........................................................................... 27 Figure 6: Indicative O&G supply chain opportunities associated with the project life cycle and procurement tiers ................................................................................................................... 32 Figure 7: Infrastructure and construction major investment pipeline ..................................... 37 Figure 8: Construction and infrastructure projects to support the natural resource industry in Mozambique: the value of planned and on-going projects, USD million ............................... 38 Figure 9: Stakeholder map and indicative value-chain .......................................................... 41 Figure 10: Understanding the industry - the project cycle ..................................................... 41 Figure 11: Timing of industry & manufacturing investments .................................................. 47 Figure 12: Main tourist attractions in Mozambique ................................................................ 52 Figure 13: Donor and UN Agencies' disbursements (2007-2013) ......................................... 55 Figure 14: Total donor disbursements 2007-2013 ................................................................. 56 Figure 15: Total UN agency disbursements 2007-2013 ........................................................ 56 Figure 16: Forecast commitments of selected key players (2014-2017) - USD millions ....... 57 Figure 17: Total Disbursements & Total Commitments ......................................................... 59 Figure 18: Number of projects per province .......................................................................... 60 Figure 19: Value of disbursements per province ................................................................... 60 Figure 20: SME frequency by size and sector, within sample collected ................................ 67 Figure 21: SME frequency by province and sector ................................................................ 69 Figure 22: Map of SME database by province ...................................................................... 70 Figure 23: Number of manufacturing firms by size and subsector ........................................ 71 Figure 24: Number of manufacturing firms by sector and province ....................................... 72 Figure 25: Cost and knowledge factors influencing innovation ............................................. 75 Figure 26: MozLink Partners ................................................................................................. 86 iv List of Tables Table 1: Demand-side findings per sector ............................................................................... 2 Table 2: Government of Mozambique's SME classifications ................................................... 8 Table 3: List of current extractives megaprojects in Mozambique ......................................... 14 Table 4: List of Mozambique potential or developmental megaprojects in Mozambique ...... 14 Table 5: Goods and services demanded locally by Coal industry ......................................... 23 Table 6: Current coal projects in Mozambique ...................................................................... 24 Table 7: Goods and services demanded locally by natural gas sector ................................. 29 Table 8: Exploration rights in Rovuma Basin ......................................................................... 30 Table 9: Basic goods and service set asides for local contractors in the upstream Oil and Gas Industry .......................................................................................................................... 32 Table 10: Goods and services demanded locally by mineral sands industry ........................ 34 Table 11: Goods and service demanded locally by the construction sector .......................... 36 Table 12: Construction and infrastructure projects in Mozambique ..................................... 38 Table 13: Companies prominent in major investment projects .............................................. 40 Table 14: Top ten construction companies registered in Mozambique ................................. 40 Table 15: Goods and services demanded locally by Industry & manufacturing industry ...... 44 Table 16: Goods and services demanded locally by the retail sector ................................... 49 Table 17: Goods and services demanded locally by the travel and tourism sector ............... 51 Table 18: Stakeholders in tourism supply chain .................................................................... 53 Table 19: