The economic impact of pharmacies in Maputo, Mozambique.

Abstract

ABSTRACT The pivotal role of SMEs in fostering economic growth and job creation is globally apparent, and more crucial in low income countries. This study focused in quantifying the economic impact of pharmacies in Maputo, employed a quantitative cross-sectional questionnaire based methodology, with an economic multiplier technique. From an estimated 145 functional pharmacies in Maputo, a probabilistic sample of 106 pharmacies with a 5% margin of error was randomly chosen. Two clusters were analysed namely; the municipality districts and the pharmacy franchises. Such distinction; not only aided in better understanding the pharmacy’s economic impact amongst the municipality geographic areas, but also the role of their population’s income, their marginal propensity to consume, and the economic nature of pharmacy franchises. The economic impact of pharmacies was set as a function of pharmacy’s activity expenditures; magnified by an economic multiplier or local premium coefficient. Such expenditure were represented by three independent variables namely; direct employment or income impact, expenditure profile or expenditure impact, and tax revenue or tax impact. The sampled pharmacies generated an estimated 723 direct jobs, worth about MZN 7.78 million in monthly salaries and wages. Expenditure profile which represented the typical pharmacy’s operational expenditure excluding salaries, wages and taxes, was estimated to an annual value of MZN 9.13 million; whereas the annual tax (income and corporate) revenue was about MZN 3.63 million. The average local premium or economic multiplier was estimated to about 3.89; which meant that for every metical generated by pharmacy’s activities, it added 3.89 times the value to the local economy. When applying the economic multiplier to the sample expenditures estimates; it yielded an average sampled economic impact of about MZN 422.58 million (ZAR 112.39 million or USD 8.01 million). When inferring the sample results to the population of functional pharmacies in Maputo, the estimated total economic impact was worth about MZN 578.06 million (ZAR 153.74 million or USD 10.96 million); which represented 0.12% of the country’s GDP with each individual pharmacy contributing an average of MZN 3.99 million (ZAR 1.06 million or USD 0.076 million). Finally, the employment or income impact represented 88% of the overall impact share, 9% was attributed to the pharmacy’s expenditure profile and 3% to the related tax expenditures. The economic impact of pharmacies in the city of Maputo was apparent. It was also evident from respondents feedback that such pharmacy activities and their inter-related economic value chains were in inception phase, therefore demanding more formal and clear governance structure from the related authorities, so that the associated expenditures were able to more effectively re-cycle throughout the economy with an increasing yielded value and impact to the local economy.