VZCZCXRO7719
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #1610/01 3521311
ZNR UUUUU ZZH
R 181311Z DEC 06
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 6565
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLMC/MILLENNIUM CHALLENGE CORP  0138
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MAPUTO 001610 
 
SIPDIS 
 
SIPDIS 
 
AF/S FOR HTREGER AND JMALONEY 
JOHANNESBURG FSC FOR RDONOVAN 
JOHANNESBURG TDA FOR DSHUSTER 
USDOC FOR RTELCHIN 
MCC FOR SGAULL 
USAID FOR AFR/SA 
 
E.O. 12958: N/A 
TAGS: ECON EAID EINV ETRD MZ
SUBJECT: Mozambique: Artisan Entrepreneur Takes Advantage of 
AGOA But Lacks Capital 
 
MAPUTO 00001610  001.2 OF 002 
 
 
¶1. Summary: One Mozambican handicrafts company, Artes 
Mondlane, has succeeded in exporting an increasing flow of 
product to the US under AGOA, but faces serious challenges 
due to lack of capital.  Econoff spoke with the owner, 
Carlos Mondlane, on December 7 to learn more about his 
success and the constraints he encounters.  We believe this 
case is emblematic of many other small businesses in 
Mozambique, some of them struggling to export to the U.S. 
End Summary. 
 
¶2. On December 7 Econoff and LES visited the offices of 
Artes Mondlane, headquartered in Maputo, Mozambique.  Carlos 
Mondlane, who runs the family business with his children, 
explained how his personal story led him to develop the only 
company currently exporting artisan Mozambican crafts to the 
U.S.  Growing up an orphan, Mondlane learned the art of 
sculpture at a young age and peddled his handicrafts on the 
street.  Hoping for a better way to support his family, in 
the early 1990s Mondlane decided to purchase handicrafts 
from fellow artisans and act as a wholesaler supplying 
handicrafts to purchasers regionally and internationally. 
He started his company, Artes Mondlane, in 1992.  In 1998 he 
began exporting very small quantities of handicrafts, 
primarily to South Africa and Europe. 
 
¶3.  Artes Mondlane, with the support of Aid to Artisans, 
began exporting to the U.S. in 1999.  (Note:  Aid to 
Artisans is a nonprofit organization that offers practical 
assistance to artisan groups worldwide in product 
development, business skills training and development of new 
markets.  In fiscal year 2005, Aid to Artisans benefited 
more than 21,000 artisans, of whom two-thirds were women. 
End Note.)  Since then, the business has grown 
significantly, with Artes Mondlane now exporting to numerous 
destinations.  The company now exports the equivalent of one 
container, or 12,000 pieces, a month.  The products are 
packaged and sent by air. 
 
¶4.  According to Mondlane, there is international demand for 
at least two containers a month, and likely more, but he is 
unable to commit himself to such high quantities because of 
problems with his supply chain.  Currently, Artes Mondlane 
purchases handicraft from individuals spread throughout 
Mozambique.  Lack of capital means that there is a serious 
strain on production capacity - Artes Mondlane is only able 
to pay producers for 50% of the product and must then wait 
for payment from its purchasers to pay producers the rest. 
Consequently, artisans often have difficulty securing the 
wood and other inputs, putting further stress on production. 
 
¶5.  When asked what it would take to meet the current 
demand, Mondlane responded that if he had the capital, he 
would stockpile raw materials for his artisans.  They could 
then create items to meet demand and would receive full 
payment upon delivery to Artes Mondlane.  With sufficient 
capital, Mondlane felt confident that he could expand beyond 
two containers per month. 
 
¶6.  Citing a specific example, Mondlane mentioned that he 
had just received an order from the US for 1,900 sugar bowls 
made from sandalwood, but that he was not going to be able 
to meet the order because of supply problems.  Current year 
exports to the U.S. included sugar bowls, vases, candle 
holders, wood boxes and statutes - all made out of 
sandalwood or pau preto. (Note: Pau preto wood, also known 
as African ebony, is from the Mpingo tree (Dalbergia 
Melanoxylon). End note.)  In 2005 the company exported USD 
173,000 worth of product, USD 97,000 to the U.S. alone.  Mr. 
Mondlane feels that he could easily double that amount if 
the supply chain issue were resolved.  He spoke highly of 
AGOA and the opportunity that it has created, and stated 
that he continues to look for solutions to the supply 
problem in the hopes of increasing his exports to the U.S. 
 
¶7.  Comment:  Artes Mondlane's experience is a useful 
example of an opportunity for increased exports under AGOA 
stymied by lack of capital.  Many Mozambican entrepreneurs - 
from artisan dealers to commercial farmers - feel the crunch 
of capital and cannot expand their business for this reason. 
Although Artes Mondlane was able to secure some loan finance 
early in its career, recently the combination of high 
 
MAPUTO 00001610  002.2 OF 002 
 
 
interest rates and strict guarantee requirements makes 
borrowing unattractive. 
 
Dudley