The business performance ratios of SMEs in Maputo province for Q2 2022 point to a slight contraction in business performance in this province compared to Q1, reflecting reduced turnover against a backdrop of rising production costs.

The information is contained in the report of the Business Strength Index published a few days ago by the Confederation of Business Associations of Mozambique, CTA.

According to the report, activity in the agriculture sector continued to be affected by rising input costs in 25%, most notably the price of fuel, pesticides and fertilizers as well as seeds.

Compared to the first quarter of 2022, there was also a reduction in the selling prices of vegetables due to a greater supply in the market, points out the CTA report that MZNews had access.

"Production was also impacted by the irregular rainfall. In the fishing sector, we saw the reduction of production due to the winter and the worsening of operating costs above 25% resulting from the rise in fuel costs, in a context where companies have no room to increase prices."

In the industry sector the report points to increases in the cost of raw materials, with the price of wheat flour increasing by 75% and bulk wheat by over 100%. As expected, the transport sector performed critically due to the challenge imposed by higher fuel prices on the cost structure of companies.

Business performance was affected by the delay in readjustment of fares for passenger transport, and reduced sales in cargo transport partly associated with the loss of purchasing power of customers, and gradual rise in the cost of some critical services such as maintenance. In the hotel and restaurant sector, due to the seasonal effect, it continues to fall short of its potential.

The CTA report also mentions that the rise in operating costs affected the profitability of restaurant services since revenue did not show much improvement. To stimulate demand, operators in the sector have embarked on the practice of promotions and bets on holding cultural and official events that have brought some relief to the sector.