Machel's Cautious Bid to Foreign Firms

The government of Mozambique, long critical of Western economic involvement in southern Africa, is putting out tentative feelers to multinational business. In a speech delivered on March 18, president Samore Machel proclaimed his regime's willingness to allow foreign corporations a limited role in the country's economic development plans. Machel, however, was cautious and skeptical of corporate intentions. "We know what we want, and how we want it," he said, stressing that foreign firms would only be granted minority equity positions in Mozambican operations.

Machel's speech followed a late February meeting between government officials and representatives of 40 multinationals from the U.S., Japan and Western Europe. The meeting was arranged by Business International, a New York-based consulting group headed by Orville Freeman, former U.S. Secretary of Agriculture. The Western del-egation, including senior executives from Coca-Cola, General Motors, Ciba-Geigy, Fiat and Fluor, discussed investment possibilities with Machel, Finance Minister Sergio Fieira and other top officials. "The government hasn't gotten down 4o the nitty gritty," says Lindsay Wellon of Business International. "But they seem to have a general philosophy that favors foreign investment." '

Many observers point to the operations of the U.S. firm General Tire as a model for future corporate activity in Mozambique. Late last year, company technicians supervised the startup of a $32.5 million facility capable of producing 2000 tires daily. While the U.S. multinational only owns a 3.5 percent equity stake in the project, it holds a management contract to oversee the operation. As part of its agreement with the Machel government, General Tire has pledged to train 500 Mozambicans over a two-year period.

Mozambique's outreach to multinational business comes in the wake of new policies designed to return some of the state-controlled small business sector to private hands. Machel has called for private traders who fled the country after independence to return and resume their business activity; he argues the state cannot adequately manage all the abandoned facilities.