Diretor Geral / General Director (Grupo Mondego)

An interview conducted by Alejandro Dorado Nájera (@DoradoAlex) and Diana Lopes.

 
Mozambique has a huge growth potential even compared with many neighboring countries and with the rest of the world. In your opinion, what are the main advantages of Mozambique compared to the countries of the region from an economic point of view?

I know well this part of Southern Africa and for what I see Mozambique has something that distinguishes it from its neighbors.
First of all, its people and then the wealth that Mozambique has in terms of natural and mineral resources still to be exploited. We have a fabulous wealth still unknown to our population. Mozambique is different from other southern African countries for its climate, for its people, for its beautiful beaches along more than 2,700 km of coastline and for its agricultural potential that is likely to be one of the richest in Africa. We also have the natural beauty characteristic of this African coast and huge mineral resources (from granite, marble, gemstones, oil or gas) that is not yet explored in its entirety.
One of our biggest challenges is to find the way in which we can benefit from the exploitation of these resources and not only companies from abroad. This is because if we give these resources to someone from outside we are giving our "gold". Therefore, Mozambique has to find ways so that domestic companies with foreign partners can explore the enormous potential that Mozambique has. These partnerships with foreign countries would always be established in a way in which these foreign companies take their profit but leave a great deal of it here in Mozambique so it can be shared with our people that really need it.

As head of the construction sector in the CTA, you know the evolution of this sector well, which experienced a tremendous growth during the years 2012, 2013 and 2014 dragged by the growth of other sectors of the economy but, since 2015, this sector it is undergoing a crisis following the economic downturn and the depreciation of the metical –the Mozambican currency- against the dollar. How this situation is affecting the construction sector?

Since 2009 we started to notice in Mozambique an evolution in all sectors except agriculture. Expectations were created in every business sector: gas, coal, precious stones, etc. But I think we talked long before the expectations became reality.
If we have a plan or project we should only divulgate after we start taking the fruit of it. We gave the people very high expectations, and the idea spread that we were very rich and we had a lot of gas and oil. It’s true, however we should not have given such high expectations before profiting.
There was another mistake regarding mineral resources exploitation related to the expectations around the great wealth of the country. Two years after the discoveries and the expectation created because certain companies had detected billions of dollars in gas and oil, prices on the international markets shrunk by more than half and the plans that the country had to earn foreign currencies has been delayed.

As for the real estate sector, we had a very large boom from 2012. The construction of buildings has been very profitable for many people, because everything built was being sold. There were many foreigners working here, including Brazilians and Italians. They expected to have seven-year-long contracts, so they bought houses they were planning to sell when they left taking the money back. This business was profitable for a time both for those who sold real estate, and for those who bought it; at the end of their stay in Mozambique, they would sell the property at the same purchasing price or even more.
They had proper housing and they thought the companies and businesses that were working at would keep them in the country, but in the end many of these contracts failed and they were repatriated and the possibility of selling the properties was not longer there.
Currently, an entrepreneur getting a loan from a bank in the current situation, in four years he would have no money, no property or land, because the interest rates now here can go to 20%. The crisis in the real estate is rooted.


Businessmen and company leaders have played a key role in helping the Government in opening the economy and in the implementation of reforms. The country and the companies have difficulties ahead, as the increase in import prices due to the depreciation of the metical and the slowdown in foreign investment. In your opinion, what are the measures that the government should implement to improve the economic situation and business climate?

I really praise the government and President Nyusi because it has supported the business sector in all aspects. I have made presidential visits with the President of the Republic to a number of countries (such as France, Germany, China, etc.), and in his speeches he says that we entrepreneurs must fight for this country and if we do not have the ability to do it alone we can join other investors, but without leaving most of the responsibility to them.
I encourage all international entrepreneurs to invest in Mozambique; your investment is safe here. Things may not be at its best in the first year, but in two years the situation is going to improve. Foreign businessmen must come to Mozambique because this is a credible and country and the investment here is not risky. I may seem a bit suspicious saying this because I am Mozambican, but I am optimist about this country and I have a lot of hope about it. We must not surrender at all.

Grupo Mondego is one of the most prestigious and diversified Mozambican companies and has the highest confidence of financers and partners in the construction sector. Could you explain to our audience the scope of the activities of your company as well as the number of employees and presence in the country?

Grupo Mondego is a group composed of several companies and projects such as Construtora do Mondego, real estate projects, agriculture projects, ceramic and bricks factories, a railways and roads company and an equipment rental business.

Construtora do Mondego opened its activities after the 16-year-long Civil War in 1993. By 1997 the company had no big developments due to the post-war effects. The country was in a moment of appeasement and only from 1997 the company began to evolve with strength in all provinces.

We are working in all provinces for the State. In the public works we have hired about 1,300 domestic workers and about 10 foreigners.
The logistics of this country are not easy; the distances are long, given that most of the construction materials used in the works go from Maputo to the north and center of the country.
We started to study the country in 1996 and managed to establish offices that are functioning normally, but it is more difficult for a foreign company that wants to invest in the country because the logistics costs more than the material itself.
At this time we are connected to the public works sector, health, education and construction of courts and our structures have developed accordingly.


You have warned in the past about the fact that Mozambican companies were excluded from the participation in major projects in the country and pointed to the government because of privileging foreign companies. How is the situation now?

We are in dialogue with the government and with the CTA (Confederation of Economic Associations of Mozambique) in the direction of welcoming foreign companies but with the participation of national companies through partnerships, because it is not fair that foreign companies come to Mozambique and do public works alone, for example. We must encourage partnerships.

As Minister Carlos Bonete Martin told us in his interview, public housing is one of the sectorial priorities and infrastructure is one of the main Government’s priorities. That provides a window of opportunity for you to collaborate and take advantage of this State drive impulse. What is your relationship with the Mozambican State in terms of projects carried out with them?

We should now be working 50% in the private sector and 50% in the public sector. In the private sector we work differently from the public sector. If we have a building to build, for example, we put a person in charge in, an engineer and a driver, and we hire domestic companies for various services such as iron assemblers, concrete and others. These companies provide good services, however they lack the ability to make the projects by themselves.
We have a parent company that is Mondego and all these companies come to work as it aggregates. That's what we want to do with the large foreign companies - make a big company and then create a link between this and the many other that work in the sector they know the best, helping to develop the country and creating local jobs. In the public sector works we must put more Mozambicans in control.
We have the tourism sector for example, where we have several projects in various parts of the country with partnerships, since we do not have the financial capacity for all these projects, so we want partnerships with serious companies. Foreign businessmen can invest in tourism in Mozambique and within six years they will see the profit.

Let’s imagine an international company that wants to come to partner with a local company. What are the main advantages that your company has compared to your major competitors?

A national company like Grupo Mondego, knows the whole country, knows each province, knows the people, knows the leaders and knows the ways work in made in the country.
When a foreign company comes alone without joining a local one, it has to spend at least two years just to test the waters. The company comes here and cannot delegate the work to the right people whereas a local company that’s already here does that knows what local workers may require. Foreign companies have all the advantages of partnering with local businesses.
Grupo Mondego is financially, technically and logistically prepared for these partnerships.

Working with the public sector, might be very rewarding because you are part of the construction of very important infrastructures for the Mozambican people. What are the works that Grupo Mondego has done which you feel most proud of?

We started in 1997 to work in health and education infrastructure and these are the most important sectors in which we have worked. Without health and education, the country does not develop. Grupo Mondego is very pleased when we are asked by the government to work in places where there are no schools, or wells among other features. These are the projects that give us more pleasure because they are projects that make a real difference in local people's lives.
A few months ago we were doing a work that made us particularly happy. The local ladies of that village, had to get up at 4am, walk 20 km to bring a 20 liters bucket of water on their head every day. This meant each family had 20 liters per day for hygiene and cooking. We went to this village, dug a well with a water deposit and two solar panels and this little work made all the difference in the life of that population. There is no work that gives us better enjoyment. We feel we are made to carry out these projects.

Speaking now of Mondego's own projects. Grupo Mondego is looking at the tourism sector, which lacks infrastructure. We are rehabilitating an inn in the Tete area. We have seven hectares in Nacala where we are building a hotel with 200 rooms and 70 houses. Here in Maputo we have a project to raise a 17-story building that will also have 240 hotel rooms. We also have some areas in Vilankulo with potential for infrastructure to support tourism. They are our own projects and we accept partnerships. In this sense, I send a message to international investors that want to invest with a four-or-five-year time scope.

Does Grupo Mondego have any communication strategy to show these competitive advantages that you have and this will to partner with foreign investors?

Our communication strategy is sending a message of optimism. Right now we have a connection with a Portuguese company to be our partner, but this partnership is faltering due to the country's economic situation. We should stop lamenting; we should have hope. We must remember that lamenting make foreign businessmen who want to invest in Mozambique flee. I am an optimist and I guarantee that in three years this country will be with great force.
We must invest now when the country is in crisis and not when it is in power because when the country is fine there will not be room for everyone.

Mozambique has filled the news in the international press in recent weeks with the scandal of the debt of EMATUM, the deterioration in the rating agencies’ rankings and the controversy with the hidden loans of other public companies and the IMF. Entrepreneurs and trade associations also have an interest in having a good country image abroad because it affects confidence, foreign investment and also the financing of the private sector. What is the role of the company in this task of reconstruction of Mozambique Brand abroad?

We support the government in this direction and the government supports us as well. Grupo Mondego has close ties with the government and is encouraging all sectors to do everything to generate economic activity. Let's all do something to stimulate the local economy. I appeal to all local businessmen to invest.
One of the biggest current problems of our country is that we import almost everything. We have to pay in foreign currency but we do not manufacture dollars, other countries do not accept the metical, and the government will not create more public so we are in a complicated situation. If I have to buy material from Europe I have to do it in euros and if I do not have them how do I do? Local businessmen are having some difficulties; it is the reality at the moment but we will survive.

As you know, the audience of the Harvard Business Review is mainly composed of CEOs and policy makers interested in management and direction. What are the lessons and learning that you can share with our audience in this regard?

To run a business with multiple employees across the country, it is necessary to know the country and the people. Then you have to know how to manage with humility and know that you deal with people, no machines.
Being a good manager means to work hand with hand with your workers, and not just wanting to take advantage of them. To have a good business you need to be well surrounded; and you must have good employees to make good management. Good management depends largely on the team with which you are working.

Finally, what is the message that you would like to convey to potential investors and readers of HBR about Mozambique and its investment opportunities?

The message I would like to send of trust in the people and government of the country. For the knowledge and experience I have, I can say that there is no humbler people that the Mozambican people. I would also say that all entrepreneurs who want to invest in Mozambique are welcome and that all the investments they make are safe.