From the Field: Going Bananas in Mozambique
June 19, 2012
Believe it or not, it has been more than two months since I arrived in Maputo. Having made new friends, nailed the key Portuguese phrases, figured out what price to pay food at the market and acclimatized myself to the train of children running with (or after?) me in the mornings – Mozambique is starting to feel more like home.
|Shizu is a Volunteer Consultant with TechnoServe. She joined the organization to assist the Investment Advisory Team in Maputo, Mozambique, after spending two years at Goldman Sachs in New York. Her post was originally published at SocialFinance.ca.|
Believe it or not, it has been more than two months since I arrived in Maputo. Having made new friends, nailed the key Portuguese phrases, figured out what price to pay for food at the market and acclimatized myself to the train of children running with (or after?) me in the mornings – Mozambique is starting to feel more like home.
Statistically, Mozambique ranks among the 10 poorest countries in the world, with 54 percent of the population living below the poverty line. It’s been fascinating to live in a country that is truly experiencing an identity crisis, having just become a democracy after a decades-long civil war and colonial rule. But more than just political change, there has been a multi-billion dollar surge in foreign investments on the back of significant natural gas and coal finds, a growing presence of strategic country moves – like Chinese funding of the construction of roads, conference centers and important buildings. In addition, there has been an ongoing brain drain where skilled locals have left Mozambique, only to be replaced by expensive expatriates.
With the spark in foreign investments in particular, the metical, Mozambique’s currency, significantly appreciated – negatively affecting the local export market and increasing costs for staple items like bread and fuel. As a result of this, large riots sparked across Maputo in September 2010, which left a subtle sense of uncertainty for the future.
More than ever, times are changing in the country and people are demanding more – more transparency, more jobs and more rights to natural and intellectual resources.
Mozambique hosts one of TechnoServe’s largest programs, where our primarily role is to help alleviate poverty through the development of the private sector. We are focusing on the agribusiness, agroforestry, eco-tourism and poultry sectors, with increasing movement into other industries such as renewable energy and oilseeds.
Here, we are working to cultivate an environment that catalyzes business success – for example, through initiatives such as working with the government on corporate policies and collaborating with donor agencies to provide high-impact funding. A small business that is flourishing creates jobs, which in turn create income stability and choices – the choice to send a child to school, buy a mobile phone to receive money or hire additional staff to grow the enterprise.
This level of choice is an important development that is a result of unleashing entrepreneurship in Mozambique.
However, the work that TechnoServe is doing to facilitate these results is rarely this simple. There are differing incentives among different stakeholders, sometimes questionable (or absent) government policies and myriad behavioral and cultural issues at play. In addition, there is still a severe shortage of skilled workers – due to the absence of technical schools and a war that left a generation illiterate – that makes running a successful enterprise challenging.
I have been focusing most of my time with TechnoServe on a new capital-raising initiative for a growth-oriented greenfield banana plantation. From developing a feasible business and financial model, to going into the field to see how bananas are produced from seed to fruit, to helping raise in excess of $30 million, it will be my main project for the foreseeable future.
With the plan to plant more than 3,000 hectares in the years ahead (approximately 8,150 acres, or the size of a small city…absolutely huge!), the company may grow to become one of the largest producers of bananas in the country. While soil studies are underway, comparable areas indicate that Mozambique has the potential to produce similar or higher yields versus Latin American counterparts – currently the largest exporting region of tropical fruits. The country is also well-positioned with large regional markets like South Africa, Tanzania and Zimbabwe. It’s also surrounded by ports to export fruit to the growing international appetites of China and the Middle East.
The entrepreneur I am working with is a local Mozambican – unfortunately, quite rare here with most deep pockets coming from South Africa or India. Having made his career and solid reputation in multiple industries, he is now looking to put a majority of his wealth into agriculture. I admire and respect his vision for commercial agriculture, an industry having the potential for significant poverty alleviation.
At full-scale production, the company will provide jobs to more than 4,000 local people while simultaneously fighting food security issues and a serious countrywide trade deficit. While such projects yield huge benefits directly and indirectly across the supply chain, they are not without risks given the amount of scale, capital and patience required to succeed.
Exciting as the potential results might be, there are many challenges still to face. In rural Mozambique roads are still hard to come by, 1 percent of the country has irrigation and less than 10 percent has access to the electric grid. If equipment breaks down there are no replacement parts in arm’s reach. Skilled talent is in severe shortage and culturally many people aren’t used to working for anyone but themselves.
Despite these hurdles, returns will be lucrative if the banana business is carefully executed and managed in the coming years.
The banana plantation owner sat me down the other day and asked how my “mini retirement” was going. I shrugged it off, laughing, but he was entirely serious. I assured him that moving to Mozambique, severing my relationship with New York and packing my necessities into one suitcase was one of the best life decisions I’ve made so far. He responded by promising to buy me a plane ticket three years from now to see his banana plantation in full operation.
I was thrilled, because using my finance experience to support an initiative as meaningful as this man’s plantation has been, even in just a few months, an incredibly rewarding experience.