Obstacles to entrepreneurship in Mozambique: the case of Vilanculos Madeira, Vilanculos.

Abstract

Through this report, the researcher sets out to understand the challenges to doing business in rural Mozambique by documenting and discussing the case study of Vilanculos Madeira Lda. With this understanding and in the context of the literature, the researcher then tries to develop some practical recommendations for both the government and the private sector, such that these challenges can be reduced and further Small and Medium Enterprise growth can continue. The literature indicates that Mozambique’s economy is growing rapidly, but that there are a number of challenges to doing business in the country for both local and foreign investors (the VM case study supports this notion). In the literature review, the researcher has documented a number of other relevant and interesting case studies of how similar challenges to doing business have been tackled by other countries around the world, and it is these case studies that form the grounds to some of the recommendations of this report. It is a conclusion of the researcher that a large number of the challenges identified stem from shortfalls in the current regulatory environment of Mozambique, particularly how these regulations are implemented and enforced. To assist with structuring the report, the researcher has used the 10 areas of business regulation as described in the World Bank’s “Doing Business” series of reports. As such, the recommendations aimed at the government and policy makers of Mozambique are presented in the above mentioned structure and speak of the various regulatory reforms that the researcher feels need to take place to improve the situation. It is in this context that the case studies of reform that are documented in the literature review prove to be so informative. It is from these case studies that the reader is led to understand that the most important element of correcting Mozambique’s challenging business environment emanates from creating the case for change. If the government and its leaders do not see the need for change, the battle is surely lost. However, if government does see need for change and they appoint the right kinds of leadership to lead the change, there is no reason why Mozambique could not overcome the documented challenges and become a shining example of reform in Africa. In the context of the private sector, the researcher has concluded that the best the business owners and managers can do is to learn to comply and work within the limits imposed by the current regulatory setup, as there is not much opportunity for the private sector to change the regulatory environment. Therefore the recommendations to the private sector are more geared towards compliance and how to achieve it, whilst also working with organised structures like chambers of business to help create the case for change.