The start-up ecosystem in Mozambique
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Photo Credit: Shutterstock, Bright scene from Maputo of ships and buildings

Mozambique is off the radar for many Western investors, but since the discovery of the world’s 4th biggest natural gas reserves deposit as well as the increasing exploitation of Africa’s second biggest coal reserves, that could potentially change rapidly

Sabre is an impact investing specialist at GroFin Capital, part of VC4Africa’s investor networkDomingos Mazivila is a Senior Advisor to the USAID Speed [Support Program for Economic and Enterprise Development] Program in Mozambique. Below they share some news from Maputo on Mozambique’s startup-ecosystem.

Mozambique is one of Africa’s most attractive markets, yet remains off the radar for many Western investors. However, since the discovery of the world’s 4th biggest natural gas reserves deposit as well as the increasing exploitation of Africa’s second biggest coal reserves, that could potentially change rapidly. AT Kearney ranked it Africa’s 9th most attractive retail market in 2014 and according to EY, Mozambique has had the greatest increase in FDI (32%) in all of Africa aside for Kenya.  Also according to Ventures Africa Magazine, the country will maintain sub-Saharan Africa’s second fastest growth rates (after Malawi) between now and 2017.

So what does all this mean for the entrepreneurs on the ground? And are local investors, government entities, donors and other stakeholders leveraging this opportunity to grow an ecosystem? Who are the main government supporters for the entrepreneurial ecosystem?

This is cross-cutting. However, one government entity consolidating and coordinating support resources for start-ups and other small businesses is the IPEME. Through IPEME, local businesses can get access to training, micro-credit, and to a lesser extent, business linkages, such as delegations and missions. While not comprehensive, it’s a good starting point to connect to the ecosystem. IPEME also collaborates with the Ministry of Education and Ministry of Technology for some of the relevant entrepreneurial and workforce development programming.

Are there any Incubators or Accelerators active in Mozambique?

This wave is just starting to gain momentum in Mozambique but it’s getting lots of interest and support, including from government.  There are only a few;

IdeiaLab – IdeiaLab is an ‘entrepreneurship lab’ promoting entrepreneurship and innovation, focused on growth entrepreneurs and using a participative approach.

RLabs Mozambique – As of Sept. 2013, RLabs was launching its first Mozambican outpost, with support from the Ministry of Technology and the Finnish Government. It is not in Maputo however, it’s in Lionde, one of the Millennium villages, about 2 hours from the capital.

Maputo Living Labs – Maputo Living Labs was founded in 2011 and provides both IT training and incubation of IT solutions in response to local business needs.

Are there local VC funds or angel investors actively investing in local entrepreneurs?

While international investors are pouring into Mozambique, local venture capital or angel networks are still very nascent. The culture of angel investing and funding start-ups in Mozambique was never there before. At the same time there was a shortage of innovative ideas, which has a bit to do with our universities and education system.

Within tertiary education, people traditionally studied social sciences so they weren’t cut out for the kind of high-tech, high-growth businesses backed by VCs. However, in the past 5 years the labor market has been driven by the extractive industry with a massive demand for every kind of labor.  This has actually changed the tertiary institutions and the student base, all of whom are increasingly shifting towards the sciences. This may be truly catalytic in the medium term.

On that note, there is also a science industrial zone that is reportedly being developed around Maputo. And government has recently structured a donor-supported 7 mm meticais fund for start-ups. At the same time, now that this wealth of resources has been discovered there is space for us to begin bridging and building up all kinds of local financing and business support measures- why not? The resources are there.  Plus, we’ve got a growing number of corporations willing to enter into partnerships with local institutions to begin capitalizing our entrepreneurial ecosystem.

What’s the perspective of the Mozambican entrepreneur in the midst of this ecosystem- in his view, what are the greatest challenges and greatest opportunities?

In terms of opportunities, this is a unique moment for Mozambican entrepreneurs. Historically, the country has relied a lot on donor funding with non-nationally owned models.  Today there are corporate investors, like Anadarko, Mozal, forming initiatives and syndicates, to finance train and support SMEs and start-ups.  For example, Anadarko’s initiative is in collaboration with a university and IPEME.  It’s true that it’s the extractive sector that’s the driving force attracting foreign interest but it spills into the entire value chain- including training, construction, finance, technology, and manufacturing.

As far as challenges, the greatest challenges are skills development. We are still working on the necessary paradigm shift in the universities so that graduates have the STEM skills and critical thinking capability needed to excel in a startup ecosystem.  Also, the other hurdle is bolstering our quality standards, especially for manufacturing. So now there is a bold opportunity for Mozambican entrepreneurs, it’s truly a unique moment for us.

This piece was originally published on VC4A

Photo Credit: Shutterstock/ Bright scene from Maputo of ships and buildings

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Tara Collier

About Tara Collier

Tara Sabre Collier is an impact investing specialist at GroFin Capital, a pan-African impact investing fund. She is also the co-founder of EOSS Consulting, an economic development consulting firm based in Rio de Janeiro, Brazil.

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