Connecting the factors that enable Mozambique’s growth to technology investments can transform the lives of its population. It was with this social impact in mind that the “Economic Linkages for Diversification” project was created.
This initiative, carried out in collaboration with the Ministry of Economy and Finance of Mozambique, with funding from the World Bank, will support the country’s digital transformation efforts through a loan agreement of approximately US$100 million.
The objective is to strengthen the performance of Micro, Small, and Medium Enterprises (MSMEs) in Mozambique through economic linkages. The project prioritizes the provinces of Cabo Delgado, Tete, and Nampula. It aims to promote the capacity, quality, financing, and access to markets for Mozambican MSMEs.
This training will be provided to consumption linkages beneficiaries, reaching over time more than 9,000 businesses.
Continue reading to better understand the social impact these technology investments will bring to the country.
Less than 5% of businesses use digital solutions
Mozambique’s socio-economic landscape presents significant challenges. Regarding the family context, only one in every three people has access to potable water, one in every ten has access to sanitation, and one in every four has access to electricity. Of the 189 nations listed in the Human Development Index, Mozambique ranks 180th (2019).
It is also important to consider that, in Mozambique, the informal sector still represents the majority of businesses in the country. These are mostly small farmers and family businesses. It is estimated that about 89% of businesses are informal and they represent 30.9% of the national GDP. Informal micro-businesses, compared to formal ones, sell about 14 times less and have 17 times lower profits. Moreover, they are two to three times less productive.
Another challenge in Mozambique is the low educational level of the population. In some cases, there are job opportunities, but difficulties in finding qualified candidates. Less than 5% of managers working in Maputo, the capital of Mozambique, have education above high school. In Beira, one of the largest cities in the country, this proportion reaches nearly 10%. In Nampula, it is below 1%. The education level of workers in informal businesses is also limited.
Therefore, business connectivity remains quite limited. Less than 5% of businesses in Mozambique use any form of digital solution for their commercial activities. In Beira, only 3% of businesses have access to a computer, and less than 2% use the internet for business purposes.
SME Framework: Digital Expansion and Business Sustainability
The goal of the “Economic Linkages for Diversification” project, which will promote significant technology investments in Mozambique, is to generate social impact by strengthening the role of micro, small, and medium-sized businesses in the country, establishing better conditions for their various economic and commercial relationships. Ultimately, this could reflect in an improvement in the socio-economic situation of the population.
Today, small, medium, and large businesses face challenges related to connectivity, economic inequality, and gender disparities. In this sense, access to technology and connectivity can impact further professional development. The plan is that, over the years, this will also reflect in job creation and improvement in consumption conditions for the population, strengthening the efforts to reduce poverty.
Additionally, the “Economic Linkages for Diversification” project is aligned with the World Bank’s Digital Economy for Africa (DE4A) initiative, which aims to ensure that all individuals, businesses, and governments in Africa are digitally enabled by 2030. This way, DE4A enables technology investments to generate positive social impact on development and the use of platforms and tools that promote economic linkages between businesses and public administration.
One of the key stages of the “Economic Linkages for Diversification” project is providing consultancy for the design of a framework for a database of micro, small, and medium-sized businesses in the country: the SME Data Framework.
In this scenario, investments in technology enable the expansion of capacities and sustainability for small, medium, and large businesses in Mozambique, making them more competitive. This generates social impact by creating job opportunities, opening doors for more people to improve their family incomes. Digital enhancement will also allow businesses to have a better online presence, optimizing economic linkages made remotely and paving the way for foreign investments.
