Mhamud Charania, Chairman, MEREC Industries SA
• Interview
What impacts of COVID-19 have you observed across sectors?
At the beginning of the lockdown, we saw an increase in demand for essential FMCG, which has kept steady until today. On the downside, we observed some problems in the supply chain due to global disruptions. We faced delays of up to 60 days. Another negative effect of COVID-19 has been the reduction in the supply of foreign currency and the depreciation of the metical, which has pushed the price of imports up. The entire economy is suffering and the market is volatile, so we have simply done our best to maintain a positive cash flow while abiding by all the preventive measures set up by the Ministry of Health. Looking on the bright side, the COVID-19 crisis has proven that the domestic industry is capable of meeting demand. I hope this will serve as a lesson for the future and help us reduce our reliance on imports and increase local production.
How would you characterize the company’s growth trajectory over the years?
MEREC started over 20 years ago with one maize mill producing 100 tons per day. In over two decades, we have seen impressive growth, now producing more than 2,000 tons per day with four premises: two in Maputo, one in Beira, and one in Nacala. We employ close to 520 people. We currently produce 268 tons of maize per day and about 1,500 tons of wheat per day. We also have three pasta plants producing more than 200 tons per day. We export pasta to Malawi, South Africa, Zimbabwe, and Zambia. We are also capable of producing of 24 tons of biscuits and 280 tons of animal feed per day. At present, we are looking forward to the end of COVID-19 so we can finally find opportunities to grow.
What are the best opportunities for growth in the local market?
Mozambique’s population is rapidly growing. According to some estimates, it will double in 20 to 30 years. We mainly cater for the urban population, since rural households normally grow their own crops. We estimate the urban population to grow in this timespan from the current 36% to 50%, with a subsequent increase in formal employment and purchasing power. Therefore, it is reasonable to expect demand for our products to double. We are accompanying this growth not only by increasing production capacity, but also by entering more and more into value-added products. We are in the process of converting part of the wheat or maize flour we produce into value-added products, including specialty flour for products such as muffins or croissants. Similarly, on the protein side, we have observed a gradual diversification of consumption behavior from fish to poultry. This means a foreseeable increase in the demand for animal feed. Overall, we are adding value to our produce and by doing so we are solidifying our brand.
How can Mozambique leverage its agricultural potential?
Mozambique’s large surface of land available for agriculture as well as its ports have endowed it with a competitive edge to South Africa, which is currently the main agricultural supplier for the region. A major obstacle is SADC agreements for exports, whereby SADC countries have somewhat agreed on an open borders policy. While Mozambique adheres to this, the same cannot be said for other countries. I believe that if neighboring countries were to adhere to the SADC agreement, Mozambique would be highly competitive. Once this is in place, there is no reason why Mozambican products would not be able to accommodate for the growing demand in the region. Even on the global scale, Mozambique could play an important role as a provider of specific lucrative goods such as coconut oil, but the lack of certification often means that local produce never leaves the country. As a market leader in the agro-industry sector, MEREC is lobbying the Ministry of Industry and Commerce to invest in local labs that can provide international certifications. This will allow us to reach new markets and increase our exports, thereby fulfilling our full potential. ✖