The Confederation of Economic Associations of Mozambique (CTA) warned yesterday that the lack of foreign currency in the market is leading airlines to limit their activity in the country, calling for urgent measures to address the matter.
“Airlines are starting to cut back on the Mozambican market because they are unable to expatriate their capital and meet the costs involved in their operations, which is the natural thing to do. From the moment a business becomes unsustainable, any minimally prepared manager has to take action,” said Muhammad Abdullah, head of the Tourism department at the CTA, at a press conference yesterday.
Without access to foreign currency in the foreign exchange market, he also pointed out, airlines were starting to take measures such as offering fares in meticais (the Mozambican currency) that are “more expensive” than in foreign currency, then moving on to reducing frequencies and cutting sales in the Mozambican market.
He cited Ethiopian Airlines as an example, which continues to operate in Mozambique but, he said, had “blocked” sales in the country, which can only be made from abroad, in foreign currency. “Given the potential and resources that the country has, this is worrying,” Abdullah admitted.
According to a survey carried out last week by the CTA and presented today, after the central bank has denied any lack of foreign currency in the market, at least 66 companies have indicated that they have received invoices from abroad, for which they need foreign currency, of which 41% are from the industrial sector, 25% from aviation and 21% from general trade, with these alone representing requests for payment to commercial banks abroad worth US$373 million (€356.5 million).
“Of this value, 40% is from the aviation sector, indicating that this is the most affected sector at the moment. In fact, due to this situation, many companies have decided to suspend flights to Mozambique, as well as selling their tickets through travel agencies based abroad,” similarly highlighted Evaristo Madime, who heads the Industry department at the CTA.
The industry sectors (26%) and commerce (12%) sectors “are the most affected” in terms of value, with the CTA also pointing out constraints on the import of medicines, especially from India (80% of the total purchasing market), but also the lack of replacement parts that is bringing vehicle fleets to a halt due to invoices abroad remaining unpaid since last June.
“Analysing the dynamics of Mozambique’s exports and imports,” the CTA notes that “the problem of the foreign exchange market could be different, if properly addressed,” since the coverage of exports over imports, including Major Projects (mining and gas sectors), is around 87%.
“In a situation like this, the shortage of foreign currency that we are experiencing would not be justifiable. However, given that most of the revenue from Major Projects has not been repatriated to the country, the problem becomes visible,” Madime points out.
“Therefore, in order to reduce the shortage of foreign exchange in the market for importing raw materials by US$500 million [€477.8 million], we propose that the government urge companies in the extractive industry sector, in particular, to repatriate their export
revenues, particularly from large projects,” he added, stressing that this measure, “could in short measure contribute to the reestablishment of normal foreign exchange fluidity”.
Source: Lusa
