Structural Challenges Impeding Growth of MSMEs in Mozambique’s…

Micro, small, and medium-sized enterprises (MSMEs) in Mozambique are struggling to grow due to political, economic, and social challenges, as highlighted in the 2022 IIM survey. 75% are micro-enterprises, and the sector has stagnated since 2012, resulting in increased informality and a decrease in company sizes. However, businesses led by women perform better, attributed to their higher education levels.

Micro, small, and medium-sized enterprises (MSMEs) in Mozambique’s manufacturing sector are currently experiencing significant barriers to growth due to the prevailing political, economic, and social climate. Recent findings from the 2022 Manufacturing Industries Survey (IIM) indicate that these businesses are only managing to survive, failing to achieve substantial development, which is essential for economic transformation and poverty alleviation.

The survey reveals that 75% of manufacturing companies are micro-enterprises, with staffing of up to 10 employees, and around 20% are small enterprises with a workforce of 10 to 50. Meanwhile, only 5% are medium-sized enterprises, employing between 51 to 300 individuals, mainly located in Maputo. The document underscores that a lack of structural organization within the sector inhibits growth and job creation.

Since 2012, the manufacturing sector has seen stagnation due to insufficient technological advancements and structural integrity. This stagnation hampers the sector’s potential contribution to economic development. Over the past decade, a pronounced reduction in company sizes has occurred, with micro-enterprises growing from 66% to 75% of the total, while small and medium firms have diminished significantly, particularly since 2017.

The provinces of Gaza and Maputo have been notably affected, especially in food processing and carpentry. As companies shrink, informality in the sector is increasing, complicating adherence to formal operational standards. The report indicates a notable decline in the number of companies meeting formal criteria, thereby exacerbating economic and regulatory challenges in Mozambique.

Interestingly, the study highlights that businesses led by women tend to outperform those led by men, with women managing medium-sized enterprises generally possessing higher education levels. This higher educational attainment is believed to enhance their managerial efficiency and productivity.

In conclusion, the structural challenges faced by MSMEs in Mozambique’s manufacturing sector significantly hinder their growth and development. The lack of organization, technological progress, and rising informality complicate adherence to regulatory standards. Despite these challenges, the promising performance of women-led businesses presents potential pathways for enhanced productivity and management efficacy within the sector.

Original Source: clubofmozambique.com