Page 83 - Risk Report 2024

7. Energy 8. Logistics

The sector is largely energy-dependent, with a very quick Unreliable roads, railways, and ports hamper sector
effect on food availability when energy is unavailable for businesses, with most products being transported at greater
manufacturing and irrigation. On manufacturing specifically, cost by road. Although trucks are quicker and more reliable,
production losses at the beginning of the COVID-19 pandemic criminal targeting of trucks on major routes is becoming
and the time it took to catch up and distribute products to more prevalent leading to losses. Poor road infrastructure
the market, particularly demonstrated this vulnerability. and crime make it difficult for the sector to deliver goods
Producers constantly investigate alternative energy sources to customers. Cargo insurance is of key importance and the
to minimise this impact, but due to the scale of energy needs costs of insurance has increased due to an increase in truck
and low profit margins, these investments are mostly not high jacking. The impact of unreliable ports includes breach
financially viable. of export contracts, resulting in contract cancellations and
reduced chances of new contracts. Alternative ports like
Maputo are more expensive, increasing cost to consumers
and reducing profitability.

9. Food Security 10. Climate Change
Grain harvests as the country's staple food, are generally Extreme weather impacts the quantity and quality of crops
stable on a year-to-year basis because of the mixture of as well as infrastructure directly, while indirectly affecting
irrigation and dry land cultivation, but adverse climate the same through logistics and supply chain impacts. Much is
conditions such as drought and wet conditions impact quality being done to develop cultivars more resilient to a changing
and quantity of harvests. Although grains can relatively easily climate, and alternative crops. In forestry, groundwater
be imported cost-effectively, they influence and affect farmer levels drop due to climate change, which reduces the
profitability and the ability to service debt. With rising input hectarage available for commercial forestry. Fires caused by
costs across the board further impacting profitability, there volatile weather patterns, often lead to the extension of the
is uncertainty in the longer term with regards to maintaining fire season for forestry companies, causing increased costs
the country’s food basket. and resources required to fight fires. These factors directly
influence the serviceability of contracts, often with monetary
consequences. Adapting to ESG-supportive business
practices and minimum standards set by credit providers to
reach climate goals, leads to increased cost of compliance
and reporting on achievement of such minimum standards.

11. Technology 12. Skills

There is potentially more upside than downside for the The sector involves every skill available and must attract
sector, specifically on cultivation and monitoring. The sector scarce top talent to less desirable geographical areas.
should be proactive to stay ahead of the curve in a rapidly Although higher compensation is a strong motivator, other
changing environment, as the catch-up process would factors play a role, such as proximity to good schools,
not be desirable. Unfortunately, cyberattacks have been safe neighbourhoods, and work opportunities for spouses.
steadily increasing as the sector becomes more digitised Remote working options have brought some relief, but in
and reliant on the internet. Although larger enterprises have most cases, this is not an option in this sector. The sector
adapted and invested in proper cybersecurity systems, the invests heavily to develop local talent and build a talent
interconnectivity of technology is creating opportunities for pipeline in the areas where it operates, building and funding
criminals to exploit users. The industry must invest to mature schools, as well as giving bursaries. Training and upskilling
the users as a key defence mechanism. existing workforces are critical and broadly done well.