Mozambique: Horizontal linkages—Constraints of building horizontal linkages in a low-capacity environment

The document analyzes the difficulties of creating sustainable horizontal linkages in Mozambique, where a weak manufacturing base and low human capital hinder the ability of local SMEs to diversify beyond specific 'megaprojects'. While the Mozlink II program generated USD 53 million in incremental sales for SMEs, many firms became overly specialized and dependent on the Mozal smelter, failing to transfer skills to other sectors. The study highlights that supplier development programs are insufficient without a broader strategy to address systemic constraints such as lack of access to finance, low educational attainment, and a policy environment biased toward foreign investment.

• The Mozlink II program (2007–2010), which included Mozal, Sasol, SABMiller, and Coca Cola, provided training and mentorship to 77 entities and 45 received mentorship, resulting in USD 53 million in incremental sales for local SMEs.
• Horizontal linkages remained limited because the technical nature of the Mozal smelter led SMEs to specialize in a narrow niche, creating dependency and leaving them unable to serve other industries. Some firms, such as KANES, suffered large losses after their contracts ended because their equipment was not usable elsewhere in the economy.
• The definition of 'local companies' as any entity registered in Mozambique allowed subsidiaries of foreign firms, particularly South African companies, to capture benefits. It is estimated that two-thirds of expenditures on these 'Mozambican' companies were actually for goods and services imported from South Africa.
• Severe systemic constraints hampered business linkage efforts by Rio Tinto and Vale in the Tete region, including a lack of industrial development and extremely low educational levels, with only 2% of the population having completed high school.
• SMEs in Mozambique face significant barriers to growth, specifically a lack of access to commercial bank financing due to high interest rates and a lack of formal credit histories or collateral.

APA

Dolo, S., Togo, G., & Odendaal, M. (2018). Mozambique: Horizontal linkages—Constraints of building horizontal linkages in a low-capacity environment. International Institute for Sustainable Development. https://www.iisd.org/sites/default/files/publications/case-study-mozambique-horizontal-linkages.pdf

Chicago

Dolo, Somine, Guire Togo, and Martin Odendaal. Mozambique: Horizontal linkages—Constraints of building horizontal linkages in a low-capacity environment. International Institute for Sustainable Development, 2018. https://www.iisd.org/sites/default/files/publications/case-study-mozambique-horizontal-linkages.pdf.

Wikipedia

{{cite report |last1=Dolo |first1=Somine |last2=Togo |first2=Guire |last3=Odendaal |first3=Martin |title=Mozambique: Horizontal linkages—Constraints of building horizontal linkages in a low-capacity environment |publisher=International Institute for Sustainable Development |date=2018 |url=https://www.iisd.org/sites/default/files/publications/case-study-mozambique-horizontal-linkages.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dolo2018mozambique, author = {Dolo, Somine and Togo, Guire and Odendaal, Martin}, title = {{Mozambique: Horizontal linkages—Constraints of building horizontal linkages in a low-capacity environment}}, institution = {International Institute for Sustainable Development}, year = {2018}, url = {https://www.iisd.org/sites/default/files/publications/case-study-mozambique-horizontal-linkages.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }