case-study-mozambique-horizontal-linkages-33f0d2280b99f52a.pdf

This case study examines the challenges of establishing horizontal business linkages in Mozambique, focusing on the Mozal aluminum smelter and the Mozlink II program. It highlights how low industrial capacity, limited human capital, and a weak private sector hinder the ability of local SMEs to diversify their client bases beyond single large-scale 'megaprojects'.

• The Mozlink II program (2007–2010) aimed to help Mozambican SMEs gain technical capabilities to compete for large contracts across various industries. With a budget of USD 1 million (of which nearly USD 700,000 was spent), it provided training to 77 entities and mentorship to 45, resulting in USD 53 million in incremental sales for local SMEs.
• Despite the success of Mozlink II in generating sales, horizontal linkages remained limited because many SMEs became overly specialized for the technical needs of the Mozal smelter. This created a dependency where firms could not use their acquired equipment or skills elsewhere in the economy, leading to losses for some companies once their contracts ended.
• The definition of 'local companies' as any entity registered in Mozambique undermined the development of indigenous capacity. Approximately two-thirds of expenditures on these 'Mozambican' companies were actually for goods, equipment, and fuel imported from South Africa via subsidiaries of foreign firms.
• Severe systemic constraints in Mozambique hinder the effectiveness of supplier development programs. These include a large informal sector, low human capital—with only 2 per cent of the population completing high school—and a business environment that discourages formal registration and limits access to finance for SMEs due to a lack of collateral.
• Other mining initiatives, such as those by Rio Tinto and Vale in the Tete region, failed to achieve desired results in building local supplier capacity. The Vale program shifted toward a traditional corporate social responsibility approach after IFC investment ended, and Rio Tinto sold its assets to India’s International Coal Venture Private Limited in 2014, which made no specific local development commitments.
• Mozambique's 2014 Mining Act prioritizes local content but fails to define 'local content' or 'local procurement requirements' within the legislation. Instead, these are left to individual mining contracts, which the document notes can lead to lower transparency, lower oversight, and increased red tape.

APA

International Institute for Sustainable Development (n.d.). case-study-mozambique-horizontal-linkages-33f0d2280b99f52a.pdf. https://www.iisd.org/sites/default/files/publications/case-study-mozambique-horizontal-linkages.pdf

Chicago

International Institute for Sustainable Development. case-study-mozambique-horizontal-linkages-33f0d2280b99f52a.pdf. n.d. https://www.iisd.org/sites/default/files/publications/case-study-mozambique-horizontal-linkages.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=case-study-mozambique-horizontal-linkages-33f0d2280b99f52a.pdf |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{internationalinstituteforsustainabledevelopmentndcasestudymozambiquehorizontallinkages33f0d2280b99f52apdf, author = {{International Institute for Sustainable Development}}, title = {{case-study-mozambique-horizontal-linkages-33f0d2280b99f52a.pdf}}, institution = {International Institute for Sustainable Development}, 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} }