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Ministry reports that pressure and interference are causing inefficiency in Mozambique’s state-owned enterprises

Analysis of the Financial Health of the State Business Sector: Challenges and Recommendations

State-Owned Enterprises in Financial Crisis: A Dualistic Dilemma

The state business sector is currently facing economic and financial inefficiencies, with many companies struggling with weak accounts. A recent analysis of the sector’s financial health has revealed that this situation is due to the dualistic nature of the sector, which divides company objectives between social provision and profit maximization in a competitive market. This dilemma is further aggravated by “pressure” and “government interference.”

The 2020-2022 Analysis of the Financial Health of the State Business Sector, released by the Ministry of Economy and Finance, highlights the major challenges faced by many companies in the sector. Particularly, strategic-social enterprises are experiencing financial difficulties, with accounts in the red.

The report points out several key challenges, including low levels of investment, poor returns on invested capital, dilution of shareholdings, lack of financial resources, and high debt. The dual mission of these companies to meet both social and economic objectives creates a paradox between social provision and profit maximization in a competitive market, leading to challenges in resource allocation and decision-making.

Government interference is also cited as a significant issue, with companies facing pressure to align their decisions and operations with government agendas and priorities. This interference makes it difficult to implement effective and independent management practices.

To address these challenges, the Ministry of Economy and Finance suggests changing the financing criteria in favor of these companies. The report emphasizes the need for state intervention in monitoring weak companies with a dual role in the country to strengthen public finances and ensure the provision of essential goods and services.

Despite these challenges, the analysis reveals that 2022 was relatively better for state-owned enterprises (SOEs) compared to previous years, thanks to post-Covid-19 economic recovery and government reforms. The growth potential in strategic-structuring companies is deemed extremely high, with the business volume of SOEs experiencing significant growth.

While the pace of recovery in economic-financial indicators is satisfactory, the report stresses the importance of improving the regulatory environment to enhance communication between regulators and service providers. It also recommends activating financing decisions based on the strategic position of each company in the economy and its potential multiplier effect.

Overall, the analysis underscores the need for a more efficient and sustainable approach to financing state-owned enterprises to ensure their long-term viability and contribution to the national economy.


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