MSMEs in Mozambique’s manufacturing sector are struggling, facing significant challenges that hinder growth and innovation, as highlighted by the 2022 Manufacturing Industries Survey. The sector is primarily composed of micro-enterprises, leading to limited job creation. Additionally, informality and the decline of larger firms exacerbate compliance issues, although women-led companies show better performance on average.
Micro, small, and medium-sized enterprises (MSMEs) in Mozambique’s manufacturing sector remain in a precarious situation, struggling for survival without achieving substantial growth. This conclusion is drawn from the 2022 Manufacturing Industries Survey (IIM), which highlights that existing political, economic, and social issues contribute to ongoing structural challenges that inhibit innovation and expansion, essential for economic advancement and poverty alleviation.
The survey indicates that although MSMEs are managing to survive, they are not thriving. It articulates that the disorganization within the manufacturing sector hinders potential growth and diminishes job creation opportunities. Notably, 75% of these enterprises are micro businesses that hire fewer than ten employees, while small companies, which employ between ten and fifty, make up roughly 20%. Medium-sized enterprises, which can employ from 51 to 300 individuals, account for only 5% and are primarily located in Maputo.
The report emphasizes the stagnation of the manufacturing sector since 2012 due to insufficient technological advancement and structural inadequacies, threatening its ability to contribute meaningfully to the economic transformation and job creation efforts in Mozambique. The last decade has witnessed a significant contraction in the size of companies, with micro-enterprises increasing from 66% to 75% of the total, while small and medium-sized entities have dwindled.
A critical period after 2017 has seen a surge in asset write-downs among companies, with the provinces of Gaza and Maputo being severely impacted along with specific sectors such as food processing and carpentry. This situation has led to an increase in informality, complicating adherence to formal operational standards.
While the study highlights significant struggles, it also notes positive trends, particularly that women-led companies tend to perform better than their male counterparts. Noteworthy is the finding that women managing medium-sized firms generally possess higher educational qualifications, which may enhance management quality and productivity.
The Manufacturing Industries Survey for 2022 underscores the critical structural challenges faced by MSMEs in Mozambique’s manufacturing sector. These challenges hinder growth, innovation, and job creation, contributing to a stagnant economic landscape. Moreover, the increase in informality and the decline in medium-sized enterprises further complicate compliance with operational standards. However, the report encourages the potential of women-led enterprises, which demonstrate higher performance linked to better educational backgrounds.
Original Source: clubofmozambique.com