Mozambique's Power Crisis: A Chokehold on Small Businesses

In Mozambique's bustling capital of Maputo, the fragility of the electric grid poses an existential threat to the lifeblood of its economy: small businesses. The frequent and unpredictable power outages strike without mercy, leaving enterprises like small local bakeries scrambling as their products and efforts turn to waste. It's a scenario that is all too common and reflects a greater systemic problem plaguing one of Mozambique's most critical economic sectors.

The findings from our extensive research reveal a startling dependence on electricity, with 95% of Mozambique's small businesses relying on a national grid that fails to provide reliable service. Businesses, ranging from agriculture to manufacturing, find themselves in a prolonged struggle, with 86% reporting frequent disruptions in power supply. This situation is dire for a sector that not only supports livelihoods but employs 80% of the country's active workforce within agriculture alone.

Despite sitting on the world's 14th-largest natural gas reserves and sourcing over three-quarters of its electricity from hydropower, Mozambique's commitment to export the majority of this energy to South Africa has left its own population in a lurch. As a result, only a fraction—44%—has access to electricity, and even for those who do, the cost is disproportionately high.

The economic impact of energy poverty in Mozambique cannot be overstated. We discovered that small enterprises dedicate a significant portion of their revenue—up to 39%—to electricity expenses. Additionally, these businesses lack the financial instruments, such as loans or grants, to alleviate this burden, which further stifles growth potential and earnings.

Our research paints a picture of micro, small, and medium enterprises (MSMEs) in distress, unable to cope with the erratic power cuts that not only cause loss of raw materials but also damage equipment. Only a meager percentage of these businesses possess backup power solutions like diesel generators or wood-fired ovens, forcing many to cease operations during outages.

The way forward requires action on multiple fronts. We advocate for the Mozambican government to enact specialized provincial energy policies, particularly for remote areas where off-grid alternatives such as solar and wind power could bring stability and autonomy. Alongside this, financial support and subsidies for installing renewable energy systems must target small businesses and smallholder farmers.

Furthermore, enhancing entrepreneurial skills through regional training programs, focusing on women in the agricultural sector, will empower and fortify one of the country's most vulnerable segments against the scourge of energy poverty. In tandem, partnerships between the public and private sectors should be encouraged to facilitate access to reliable power, paving the way for sustainable growth and development in Mozambique.