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MARKET SYSTEMS
DEVELOPMENT FOR
MARKET SYSTEMS DECENT WORK
DEVELOPMENT FOR
DECENT WORK
bUIlDING DECENT WorK For all MozTrabalha
With support from the Govern-
a MarKET SYSTEM aNalYSIS ment of Sweden, the ILO imple-
ments the MozTrabalha project,
oF ThE CoNSTrUCTIoN which seeks to create and im-
prove employment outcomes in
MaTErIalS SECTor both urban and rural areas, by
focusing on the implementa-
IN MozaMbIQUE tion of employment-intensive
infrastructure investments and
green enterprise solutions, and
May 2018 by creating opportunities to ac-
cess productive employment
for women and female-headed
households.
The project pursues a market
systems development approach
as the unifying framework. The
application of this methodology
has been supported by ILO’s
project The Lab.
This paper summarises the
findings of the market system
analysis of the cashew process-
ing industry in Mozambique. To
request the full report please
contact: maputo@ilo.org
I. CoNSTrUCTIoN MaTErIalS: the LNG-related construction works, especially of
oPPorTUNITIES For DECENT new housing for workers, have increased the demand
for construction materials and inputs, a market with
WorK? enormous opportunity to generate more and better
employment prospects for men and women.
The oil and gas boom in Mozambique has opened up But demand for construction materials does not only
employment opportunities for men and women in the derive from the LNG sector. In fact, district-level public
construction sector and related sub-markets. Signifi- works and small-scale urban and rural housing provide
cant investments in the liquefied natural gas (LNG) greater access for local construction material compa-
market, estimated at US$54 billion between 2016- nies and workers. Despite the opportunities, the sector
2024, have meant that approximately 15,000 direct is permeated with high levels of informality and pre-
jobs and 685, 000 indirect jobs can be created if carious working conditions which in turn prevents firms
the opportunities are harnessed. At the same time, from growing and accessing business opportunities.
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To understand the sector limitations to generate decent informal businesses. However, it is within the residen-
employment, MozTrabalha analysed their root causes, tial market where informal enterprises are dominant. It
focusing on the provinces of Cabo Delgado, Nampula is also here where we find the majority of local contrac-
and Inhambane. The analysis also aimed at identifying tors and more intensive use of locally-generated build-
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feasible interventions to stimulate employment oppor- ing materials and project developers . In this market,
tunities for youth and women, using a range of green complaints regarding unfair competition, project de-
and employment-investment infrastructure solutions. lays, and delivery of poor quality projects are frequent.
II. ThE CoNSTrUCTIoN a) MarKET DEMaND
MaTErIalS MarKET In Mozambique, the most important final client for
domestic companies is the Government, which con-
Construction materials are key to the de- tributes directly or indirectly to around 80-90% of the
velopment of the construciton sector. In jobs in construction. The main construction invest-
the last decade, the sector enjoyed a positive though ments are in health infrastructure, schools, roads and
low growth rate with a yearly average of 2%1. It is water supply and buildings for public administration.
expected that the construction sector boom will re- The figure below presents a picture of the several de-
vamp this market if the opportunity is tapped. Do- mand sources for local construction materials.
mestic firms are typically MSEs which are unable to Demand for construction materials is also fuelled by
meet the growing demand. In the absence of local the residential and commercial construction sector’s
capacity, large and medium contractors usually im- boom of 2010 in Maputo, Matola, Tete, Nacala and
port or manufacture construction materials. In fact, Pemba cities. The housing market, small-scale in-
approximately 60% of the inputs used by producers dustries and district-level public works also drive de-
of building materials and by construction companies mand. According to the state-owned Fund for Housing
2
are imported . Promotion (FHH), there is a deficit of 2 million hous-
The market in Mozambique features both formal and ing units, attributed to the high population growth
Supply Demand
Extraction Transport Manufacturing Transport Trading Buyers
& storage
Micro and small Private
construction contractors Commercial
material Freight Retail traders & residential/
Raw materials Transport manufacturers Transport & wholetraders Small public
extraction (90% of all local Government works
Local Market& mining companies manufacturers)
Medium and large construction material companies Large/medium
(10% of all local manufacturers) construction
companies Large public
infrastructure
projects
Imports Large foreign contractors/Central government
(60% of inputs and construction materials are imported; (FDI, oil & gas)
ForeignMarket for high-end markets this increases to 90%)
Local primary Available local Locally-produced Value added by-products: • Micro-concrete
materials: transport modes: value-added materials • Fibre cement and • Cement blocks
• Crushed rock • Trucks • Cement soil-cement blocks • Bricks
• Sand • Train • Concrete & asphalt • Ceramic bricks • Steel products
• Wood • Roofing tiles • Timber, glass, ceramic
• Limestone • Pre-cast concrete • Pre-cast wall panels
• Clay • Concrete light poles and • Paving stones
concrete floor tiles • Pave blocks
Figure 1: The construction materials value chain 1 Growth rate reported for the period 2005-2012 (Sutton, 2014)
2 ANEMM (2000)
3 ANEMM (2000) and Lopes (2006)
4 Global Development Solutions (2016)
2
LOCAL CONSTRUCTION MATERIALS DEMAND
SMALL AND MEDIUM MAJOR PUBLIC WORKS
SIZED PUBLIC WORKS COMMERCIAL & HOUSING OIL & GAS (ROADS, BRIDGES,
AT THE DISTRICT LEVEL POWER PLANTS)
AFFORDABLE LARGE
HOUSING INFRASTRUCTURE
Tapped market segment PROJECTS (FDI)
Untapped market demand with potential
Market segment with small potential
MID, HIGH-END WORKERS'
REAL STATE HOUSING
SMALL-SCALE
URBAN AND
RURAL HOUSING
Figure 2: Current and potential market segments for local construction materials
rates, which swelled from 20 to 25 million from 2007 truck or rail to manufacturing sites that are run either by
through 2014, as well as rising disposable incomes. medium and large construction companies or by micro
Population growth has been particularly high in the and small enterprises (MSEs). In the case of MSEs, the
19-29 year age group, a segment with many first-time following step involves the transportation of materials
home buyers. Over 4,500 new housing units are ex- for trading and storage by retailers and wholetraders.
pected to enter the market in central Maputo over the At this point, locally-manufactured materials meet the
next five years, versus a projected demand of 23,000 demand, which is led by private companies and govern-
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units in the same area . Although new home develop- ment agencies for commercial and residential construc-
ment has focused on mid and high end real estate tion as well as for small-scale public works.
markets, it is within the the market for af-
fordable housing where opportunities for
domestic material companies lie. In that re-
gard, the FHH plans to construct 100,000
%
4
homes across the country to address the is- Blocks
2
sue of affordable housing.
Paint
4
0
%
Zinc related products
In the area of heavy construction works and
Cement related products
major LNG projects, recent major offshore
%
gas projects are expected to drive demand 2 Bricks
% 3
for workers’ housing and building materials, 3 Doors and windows
especially cement and concrete-based ma- % PVC related products
terials. 5 Wood related products
%
Other materials
b) MarKET SUPPlY 5%
%
8% 10
Mozambique offers a range of inputs going
from raw materials through intermediate in-
puts, building components to finishing goods. Figure 3. Distribution of companies by type of construction
Once produced, these are transported by material
4 Global Development Solutions (2016)
5 IGC (2015)
3
%
1
%
1
%
2
%
2
%
6
2
6
%
% 3
Small 2 Maputo Province (excl. capital)
6
%
Medium
Cabo Delgado
Large
Tete
%
Micro Zambezia
% 8 8
6
5
Inhambane
Nampula
Niassa
% Sofala
15 20%
Maputo City
Gaza
%
3 22%
Figure 4: Distribution of companies by size Figure 5. Geographical distribution
The following figure offers a picture of the distribution Regarding geographical distribution, most of the firms
5
of companies by type of materials . are concentrated in the Southern region, as Maputo
At present, there is a total of 2,097 construction ma- acts as a catalyst for various economic activities.
6
terial companies in Mozambique, a limited number As noted earlier, approximately 60% of the inputs used
considering the size of the construction sector. The by producers of building materials and by heavy construc-
7
domestic market is also primarily dominated by MSEs tion companies are imported . Only the most basic mate-
with small capacity to supply the construction sector. rials are sourced locally –e-g- cement and wood-, though
The following figure describes the market’s distribution even steel has to be imported. Nevertheless, a variety
by enterprise size, in which micro-sized enterprises of materials do offer potential business opportunities,
dominate (56%), followed by small-sized enterprises. including pre-cast concrete, and soil-cement products.
C) WorKErS aND WorKING
CoNDITIoNS
EMPloYMENT lEVElS
WhY FIrMS IMPorT There are approximately 60,347 workers in the con-
8
Almost half of the companies im- struction material companies . The labour market
9
port because of high costs consists mostly of men (95%) , while women partici-
Around 35% admit the required pate in lower levels administrative jobs or other activi-
inputs do not exist in the country ties like carrying water.
Almost 10% of companies at- hIGh lEVElS oF INForMalITY aND Poor WorKPlaCE
tribute the issue to logistics and CoNDITIoNS
transportation problems There is a high number of unregistered companies in
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Nearly 10% of companies say lo- this sector , which is also linked to the precarious work-
cal materials are of poor quality ing conditions in which illegal or informal manufactur-
and lack standards ers operate. Examples include the continued practice
of extracting river sand at the risk of floods, a practice
that is banned in Mozambique, and the inadequate or
poor use of personal protective equipment (PPE), even
by medium and larger companies. Despite continued
warnings by CONSILMO and inspection units compa-
nies fail to enforce the use of PPE among workers.
5 IGC (2015)
6 INE (2016), Second National Company Census, based on the 2014 –
2015 period
7 ANEMM (2000)
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