MSMEs in Mozambique’s manufacturing sector struggle to thrive due to structural challenges, including stagnation since 2012 and increasing informality. Although the sector sees a rise in micro-enterprises, small and medium-sized firms are in decline, particularly in Gaza and Maputo. Encouragingly, female-led businesses perform better, potentially due to higher education levels.
Micro, small and medium-sized enterprises (MSMEs) in Mozambique’s manufacturing sector are facing significant challenges, stifling their growth and sustainability amid adverse political, economic, and social conditions. According to the 2022 Manufacturing Industries Survey (IIM), these structural issues hinder innovation, expansion, and essential job creation, which are crucial for economic development and poverty alleviation.
The survey indicates that while manufacturing MSMEs are managing to survive, they are not achieving substantial growth. The lack of an organized framework within the manufacturing sector is deemed a significant barrier to true development and increased hiring opportunities. Specifically, 75% of these companies fall into the micro category, employing up to 10 people, while 20% are small firms with 10-50 employees, and only 5% are medium-sized operations employing 51-300, primarily concentrated around Maputo.
Since 2012, stagnation in technological advancements has prevented the manufacturing sector from evolving, a situation that threatens its ability to contribute significantly to the economy and job creation. The report also reveals that the number of micro-enterprises has risen substantially over the past decade, from 66% to 75%, coinciding with a decline in small and medium-sized enterprises since 2017, which saw many firms experiencing significant asset write-downs.
The provinces of Gaza and Maputo have been particularly hard-hit by this trend, with sectors like food processing and carpentry bearing the brunt of the decline. As companies shrink in size, informality within the sector increases, complicating compliance with official operating standards. The study notes a declining trend in businesses meeting formal operational criteria, which heightens economic and regulatory obstacles.
However, the study does present an encouraging finding: enterprises led by women tend to perform better than those led by men. Additionally, higher levels of education among women managing medium-sized companies are linked to more efficient management practices, potentially leading to increased productivity in the sector.
In summary, MSMEs in Mozambique’s manufacturing sector face considerable structural challenges that impede their growth and sustainability. The trends show an increase in micro-enterprises and a decline in small and medium-sized firms, which exacerbates informality and compliance issues. Despite these obstacles, female-led businesses are emerging as a potential beacon of improved productivity, which could inspire future growth in the sector.
Original Source: clubofmozambique.com
