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“Global crises have taught us that it is more important to have income than to have credit”

Interview - September 19, 2013
According to Celso Correia, President of one of Mozambique’s largest conglomerates, Insitec: “The financial system must be a pillar of the economic system in order to promote economic development and generate work for the citizens of Mozambique.” Here, he talks to Upper Reach about the country’s financial sector and potential for hydropower, as well as its socioeconomic development and achievements that are restoring pride in the nation.
What path will the economy of Mozambique follow and how will the recent discoveries of mineral resources benefit companies here and enable a better future for the country?

As a Mozambican, I am pleased about the discovery of natural resources that can provide a different and better future, and how we have been working to reach this point.
We still have not resolved the issue of poverty. The fact that we have discovered these resources does not mean that we have already eradicated poverty. The hardest part is yet to come; Mozambique belongs to the African continent and has been, for many years, deprived of an education for its people which would have allowed us to have a knowledge base to face these discoveries in a more positive way.
From the assessment of the general education of Mozambican people, we arrived at the conclusion that we still are at the beginning of the journey. Unfortunately, the education process of a man does not have the same duration as it does the process of building or exploring a natural resource.
We had this notion and orientation before the recent discovery of natural resources; in other words, the adopted model in Mozambique is one of stability, mainly after the agreements of the “Acordo Geral de Paz” (general peace agreement). This is a model of planning and of directing the investments coming from the resources we have to restructure areas of the country.
Mozambique must continue with this plan/model, which regards the discovery of these natural resources as a positive impact. (Naturally, we have negative impacts like natural disasters and other problems that could arise along the way). This needs to happen without the intention of diminishing what Mozambique represents for the world economy – people want to invest in Mozambique, not only because of its resources, but also because of its history and the path it has been following in recent years. We were able to create a process of economic development that serves Mozambicans, one which serves current citizens (of this age and time with their characteristics and specific needs); therefore, we need to unify our efforts with their needs. 
There is still no general access to credit, especially for young entrepreneurs. What are the strategies of the financial sector to expand its base, not only of already developed clients, but also of the creative youth who want to invest?

Today we live in a market economy. In recent years, the financial sector in Mozambique has assisted in achieving stability in a very big market. It is regulated in a very positive way, respecting the international standards of any financial system, investors with a great deal of experience at the international level. This scenario gives Mozambique a conducive environment in which to work. 
One of the challenges we are trying to overcome is to keep interest rates for loans accessible. This work is ongoing, and it involves ensuring that Mozambicans are able to increase their savings so that the funding base of the financial system is based on the citizens’ savings. Another challenge is the coverage of banks at the national level. We have already made great steps regarding that; we had a coverage level of nearly 15%, and today we are already above 50% national coverage. This means that it is easier for citizens to have a bank on their doorstep.
For certain, another challenge is for the financial system to keep up with the momentum of the big projects. Regarding access to credit, I do not believe that it is the main hurdle to be overcome by the citizens of Mozambique. The experience from financial crises, at the global level, has taught us that it is more important to have income than to have credit. The young from Mozambique (their majority) must firstly be concerned with having an income to later on have credit. There is a minority that assumes the risk – these are the “artists”, the entrepreneurs, they know how to get away; normally they obtain loans. 
The issue of credit, at the moment, is focused on consumption credit, which is sustained by income, the credit for the financing of education, and housing loans. A country that today has more than 50% of their young population still living with their parents, tomorrow will have their own homes.
For housing loans to be possible, it is necessary to have an income that qualifies for a housing loan. A mistake has been made, which the entire world made: it was to give credit solely on the base of guarantees (collateral), forgetting that an income is needed in order to payback a loan.
We are gradually overcoming these challenges. The financial system must be a pillar of the economic system in order to promote economic development and generate work for the citizens of Mozambique. We can face a big risk in adopting a model that generates wealth but does not generate jobs for the people and in that way, we will be obligated to design extensive welfare states which push us to take care of the population. In a model like that people would not have jobs and consequently, an income. 
During the waiting time while the results of the exploration of natural resources are compiled, it is necessary to continue and build infrastructure to consolidate the country’s economic base. In the scheme of this preparation, the construction industry takes on an essential role…

The construction industry has a very important role in building the new Mozambique. Unfortunately, the majority of the citizens in Mozambique do not have higher education skills, and so the employability of the average citizen depends largely on the technical area, by the nature of the construction industry. 
Mozambique is a work in progress. We are building a country and everybody has to put on their hard hats and roll up their sleeves in order to build something that serves all citizens. This is possible from the “Mozambique-asation” of the economy, that is, I will not adopt a type of profitable technology without beforehand studying the impact it will have on the employability level of the citizens. It is necessary to find equilibrium, because without it, it will not be to out benefit to have found gas or coal. 
Before the discovery of oil, Norway was one of the poorest countries in Europe. With the discovery of oil, Norway was able to administer the resources in an efficient way and the pillar of its energy base turned to hydroelectric energy. Mozambique is very similar to Norway in this sense. What will be the role of Insitec, with the dam that will be built in Mphanda Nkuwa, to make Mozambique’s energy sector evolve?

There are areas in Mozambique that will become, naturally, more competitive; but in others, it is necessary to improve their infrastructure and technology. 
In the area of energy, we are naturally competitive. Mozambique has extensive potential in this area; our potential for hydroelectric energy is extremely positive and has great value because of the example set by HCB (Hidroelectrica de Cahora Bessa) – we have shown that we have the capacity to manage our fantastic hydrological geography and allow for the construction of more dams. 
Given the current global context, in relation to clean energies, we can make a big impact and we are part of an environment in which the search for energy is ferocious. With the rate of growth southern Africa has had, the search for energy is huge: all the energy generated will be absorbed, not only by the country, but rather by the entire region.
In this context, it makes all sense for us to be looking at gas and coal, but looking at the energy sector in a more integrated way; the revenues of oil and gas are above average. According to the logic of the modern world, those which have the most gas or oil have advantages over the others and this reality must not be ignored by Mozambicans. 
All these advantages place Mozambique in a different position: the rules of the international game are different for Mozambique, since it does not need international aid to finance its education, health, or its own future. This is a second independence about to happen, one making it possible for the people of Mozambique to regain their self-esteem. It is companies like Insitec who are working in this regard… 

Self-esteem is to like what we are and to value ourselves. This type of process is not made by decree; it is built. When we see a country that in spite of not having resolved its own problems, but still daily improves its reality, it values what is to be constructed. As a nation, we are very diverse; this diversity is our greater wealth. 
To know that there will not be any excluded children anymore – that they already have access to primary schooling (despite knowing that the education is not good due to the low quality teaching) – cheers us up to like ourselves. Also knowing that more children have access to drinking water, nutrition, etc… these are achievements that make us look at ourselves in a different way. 
There are companies, like Insitec, which offer the possibility to show themselves as serious and diversified partners. What is the strategy to attract more foreign capital and show that Mozambique is a solid place to invest?

The strategy is not speculative because of one reason. Unfortunately, the circulation of capital in the financial markets has proven to be extremely speculative in the last decades. Mozambique has shown real assets (we do not sell commercial papers or financial packages) for 20 years already, which confers a certain stability. Investors seek certainty that the asset exists, that something is real, that his or her capital is in a regulated environment and that there is no inherent political risk to any perturbation of his or her operations.
These pillars show the work we have done. We have examples of investors who came, integrated themselves and have had success and made considerable returns. 
What is the responsibility of your generation, which came after the generation that founded the country?

The message (theoretically) that has been distributed is that our mission must be to end poverty; it is almost an obligation. The most important responsibility we have is to know how to consolidate the new state of Mozambique, by following the country’s rules, valuing our diversity, respecting the balance of the social environment, and encouraging the active participation of the young in the process of development of the country.
We are in a transition phase, from a poor country to a more prosperous country (not rich); one of political transition. By the laws of life, the current generation will cede its place to the younger generation. In the construction of nations, this process is not fast; our biggest challenge is to drive this new generation in an intelligent way.