TRADE AND DEVELOPMENT BOARD COMMISSSION ON ENTERPRISE, BUSINESS FACILITATION AND DEVELOPMENT Expert Meeting on "ENHANCING THE PARTICIPATION OF SMALL AND MEDIUM- SIZED ENTERPRISES IN GLOBAL VALUE CHAINS" Geneva, 18-19 October 2007 PAPER SUBMITTED TO THE EXPERT MEETING* Characteristics of the most successful supplier development and linkages programmes The case of Mozambique by Mr. Antonio Luis Macamo Linkages Division Manager ____________________ *The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD
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TRADE AND DEVELOPMENT BOARD COMMISSSION
ON ENTERPRISE, BUSINESS FACILITATION AND DEVELOPMENT
Expert Meeting on
"ENHANCING THE PARTICIPATION OF SMALL AND MEDIUM-SIZED ENTERPRISES IN GLOBAL VALUE CHAINS"
Geneva, 18-19 October 2007
PAPER SUBMITTED TO THE EXPERT MEETING*
Characteristics of the most successful supplier development and linkages
programmes The case of Mozambique
by
Mr. Antonio Luis Macamo Linkages Division Manager
____________________ *The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD
Characteristics of the most successful Characteristics of the most successful supplier development and linkages supplier development and linkages
programmesprogrammesThe case of MozambiqueThe case of Mozambique
by
Antonio Luis MacamoLinkages Division Manager
Expert Meeting on"ENHANCING THE PARTICIPATION OF SMALL AND MEDIUM-SIZED
ENTERPRISES IN GLOBAL VALUE CHAINS"
Geneva, 19 October 2007
“The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD”
• GoM approves a Linkage Program and a Linkages Division is established with in CPI in 1998;
• GoM get continuous commitment from international agencies to support SMEs e Linkages ( CDE; Ex. WBankPoDE; IFC-PEP Africa; Etc.)
• MNC investing in Mozambique committed in empowerment of SMEs and local sourcing;
• GoM approves National Industrial Strategy and National Strategy For SMEs Development.
• CPI adopt Linkages Provision in negotiations for “Investment Project Agreement” between MNC and GoM.
• Specific linkages strategy and incentives in preparation.• More local banks and other organizations supporting
SMEs and Linkages initiative.
How Mozambique Linkages moved (so-far)• Started in one MNC, the Mozal Aluminum Smelter:
– Construction Phase I: Market efforts, familiarization and creation of business environment (mixed successes).
– Construction phase II: the SMEELP was designed and implemented as a partnership program between Mozal, CPI and Apdf-IFC (All 18 SMEs Successfully delivered contracts).
– Mozal operations: SMEELP is replicated as Mozlink I for the operational phase.
• Mozlink II:– Consolidation of Mozlink I and inclusion of other MNCs.– Increased commitment from MNCs by financial contribution to co-
fund the program.• Further expansions:
– Rio Doce – Moatize Coal Mine and Tete/Beira regional market.– Kenmare Moma Heavy Sands and Nacala Region.
• Creation of SME Contracts (by MNC):– Packages solely allocated to SME’s– Ensure realistic scope in terms of size and complexity.– Sufficient back up time in case of failure.
• Assessment of SME capabilities (CPI, Partner Agency and/or consultant ):– SME data base established and periodically updated (CPI).
• Training (Consultant):– Tendering Training (Pre-Tender): How to tender.– Induction Training (Post-Award): How to execute contracts.– On Demand Training: HSEQ, Business Management, etc.– Training Modules written and presented in Portuguese, periodically updated
• Mentorship (MNC and Consultant):– Custom made Mentorship Plan for individual SME.– Business Mentorship: Financial/Commercial assistance.– Technical Mentorship: On/Off Site Technical assistance including HSEQ.
• Communication and Access to information (CPI):– Coordinates communications with SMEs and MNC (Exchange of information).– Website with business information, opportunities and database of selected companies.
Key Components of the Mz linkages program
MOZAMBIQUE LINKAGES MARKET (I)Southern Region:
– All companies committed to locall sourcing.– Mozlink II expanding regionally as a partnership between IFC, CPI and MNCs
including the public Electricity Distribution Company – EDM.– Mozlink includes a supply chain development component.– MNC contributes financially for the program.
15,000,000.00Beer Brewery CDM (SABMiller)
50,000,000.00Agric. & processing sugar caneIllovo and Tongatt
Hullet*
15,000,000.00Logistic & Transp.MAPUTO PORT*
25,000,000.00Coca-Cola
50,000,000.00Natural gas production and
processingSasol Petroleum Temane
150,000,000.00Aluminum SmelterMOZAL
Potential linkage market (US$)ActivitiesCompanies
*Only in the market side
MOZAMBIQUE LINKAGES MARKET (II)Central and Tete Regions:
– Market efforts in course with companies acceptance.– Specific program agreed with Rio Doce for Moatize Coal
Mine.
50,000,000.00Agric. & Processing Sena Sugar and Tongatt Hullet
30,000,000.00Logistics and Transp.
Sena railway & Beira Port
50,000,000.00Power GenerationCahora Bassa Hydrop.
100,000,000,00Mining and ProcessingRio Doce-Moatize Coal
– Market efforts in course with Kenmare and a Specific program proposed.
– Nacala Refinery* and Port & Railway to be approched.
75,000,000.00Oil refineryNacala Petroleum
Refinery*
20,000,000.00
Logistics and Transp.
Nacala Port & Railway
40,000,000.00Mining and
ProcessingKenmare Moma Heavy
Sands
Potential linkage market (US$)ActivitiesCompanies
*Project recently approved
Mozambique Linkages Results (up to date)
• Local expenditure: +$175,000,000.00• Number of local suppliers: #150• SMEs trained on SMEELP: #45 (18 awarded
contracts)• SMES trained on Mozlink: #50 (all with
contracts).• Next target on Mozlink II: #50 SMEs.
Success factors of Mozambique Linkages• Strong Government support and promotion of appropriate environment:
– Program designed aligning government interests and business challenges;– Linkages Provisions to get commitment of MNC;– Institutional framework for coordination and facilitation (Piloting and familiarization for
team and SME);• Good coordination “one team one project”:
– A steering committee with all stakeholders involved (MNC, CPI/GoM, Partner Agencies and Consultants);
– All stakeholders with a single objective: ensure that SMEs deliver their contracts on time and specifications.
“Failure is expensive and time consuming”• Training Materials, based on the MNCs needs, designed locally:
– Specific requirements of the clients (Technical, Financial, HSEQ)– Address cultural and language barriers;– Fill the gap on understanding of Standards and Procedures;– Business mentorship after training
• Strong commitment from MNCs:– Creation of appropriate (sizable) contracts for SMEs– Provision of technical mentorship to SMEs awarded contracts.– Support the program financially