Saturday, June 15, 2024

Elthon Chemane: “The partnership between ACLM and Access Bank will boost the production of locally sourced goods and services”

Access Bank Mozambique and the Local Content Association of Mozambique (ACLM) signed a Memorandum of Understanding with the aim of developing and strengthening initiatives that promote sustainable economic growth and the prosperity of Mozambican companies.

On the occasion, Profile spoke to Elthon Chemane, President of ACLM. Check out the full interview.

Profile Mozambique: This signing of the memorandum of understanding between the Local Content Association of Mozambique (ACLM) and Access Bank, which aims to provide a line of financing for Small and Medium Enterprises (SMEs) within the scope of local content in Mozambique, what is ACLM’s responsibility in this program?

Elthon Chemane: ACLM, as well as being a non-profit organization, acts as an essential tool to support the private sector in various ways, including investment megaprojects, operators, economic agents, banking institutions and other sectors.

Based on our knowledge and experience, our aim is to get banks to bring supply and demand closer together. Although commercial banks are interested in and willing to support small and medium-sized enterprises (SMEs), they are often unaware of the specific risks of doing business in the Oil & Gas industry. Although they have a theoretical basis, they lack a practical understanding of the reality of these companies in Mozambique.

ACLM collaborates closely with Access Bank, an institution that has extensive international experience in supporting ecosystems of diverse value chains and opportunities in the extractive industry. Through this partnership, ACLM acts to technically manage the asymmetry of information between companies with the potential to obtain contracts and banks. We work to make processes more flexible, ensuring that banks release the necessary financial resources from the start of the bureaucratic procedures until they are made available.

Given the dynamics of the Oil & Gas industry and the delay in getting projects off the ground in Mozambique, it is crucial that banks understand the need for flexibility and proactive support. Once projects are underway, it will be necessary to act quickly. Therefore, banks need to position themselves alongside companies, rather than maintaining a traditional commercial banking approach, to ensure success in this sector.

In short, ACLM not only supports the private sector, but also facilitates the connection between local companies and financial institutions, promoting an environment more adapted to the specific needs of the Oil & Gas industry in Mozambique.

PM: And how is the country doing at the moment in terms of introducing local content to megaprojects?

EC: The term “local content” has become an attractive and widely used expression, but it lacks precise definitions, resulting in many divergent perspectives. In addition, the discussion about local content has become politicized, even though it should be a technical issue decided at a political level. This politicization generates confusing narratives that make it difficult for companies to clearly understand the concept, hindering their ability to understand and act in the industry.

The lack of clarity and the politicization of local content result in a scenario where there is a lot of criticism but few concrete solutions. This situation creates a significant challenge for the private sector, which struggles to understand how to operate effectively within the industry and how to align its practices with local content requirements.

PM: The concentration of resources and attention on the Oil & Gas industry’s megaprojects can bring a series of risks that need to be managed carefully to ensure sustainable and inclusive development. What risks can arise from this concentration of the masses on major projects?

EC: Mozambique faces a number of challenges and opportunities in the oil and gas sector, whose instability is an intrinsic feature. The global scenario, with daily fluctuations in the price of a barrel of oil, makes the industry highly volatile and subject to international risks that no government has absolute control over.

It is essential to recognize that, although the energy sector offers significant gains, we cannot rely exclusively on it to drive economic growth. We need to adopt a diversified approach, investing in other sectors such as agriculture and tourism to ensure balanced and sustainable development.

As well as being a source of revenue, the oil and gas industry must be seen as a means of capturing and reinvesting added value in other segments of the economy. Ignoring this need for diversification could result in adverse long-term consequences, since mineral resources are finite and will eventually run out.

It is therefore imperative that Mozambique adopts a strategic approach, prioritizing not only economic growth, but also the well-being and quality of life of its citizens. Only in this way can we guarantee solid and sustainable economic growth that benefits the entire Mozambican population.

PM: With this line of financing available, how does the Local Content Association of Mozambique (ACLM) intend to implement strategies to identify and prepare Small and Medium-sized Enterprises (SMEs) in order to enable them to participate in and benefit from this line of credit?

EC: A crucial step in boosting economic growth around megaprojects is to focus on Mozambican companies that are at the forefront of taking advantage of the opportunities arising in this booming industry.

While it is in the interest of supporting the majority of Mozambican companies, we will initially direct our efforts towards those that are closest to the opportunities, those that are theoretically eligible to benefit from them. Our immediate aim is to collaborate with companies that already have contracts and purchase orders secured, as we understand that having an opportunity is only the first step – effective execution is key.

We are committed to guiding and empowering these companies so that they can not only secure the opportunities that present themselves, but also execute them with excellence. Our mission is to be an active partner in the success of these companies, providing the support they need to reach their full potential and contribute significantly to Mozambique’s economic growth and development.

Through this strategic approach, we are ready to catalyze business growth and promote a vibrant and sustainable business environment around the megaprojects in our country.

Get to know the President of ACLM by following his LinkedIN page: Elthon Chemane

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