Political violence raises amid growing expectations for a future Gas Boom in Mozambique.
"A worst case scenario is a Nigerian-like rebellion (spilling out piracy in the Gulf of Guinea) with Mozambicans Groups attacking offshore platforms and disrupting maritime traffic in the region. But Governments of Tanzania, Mozambique and South Africa have already signed a tripartite pact to strengthen maritime security in Indian Ocean and fight piracy..."
Read Afrikasources experts analysis.
1. ANAGO
May 2013 - Issue n°3
Strategic Intelligence
by Afrikasources
IS MOZAMBIQUE’S 20 YEARS OF PEACE AT RISK ?
Political violence raises amid growing expectations for a future Gas Boom
Mozambique is one of Africa’s best
performers, and one of the fastest-growing
economies in the world.
Growth reached 7.4% in 2012 and is likely
to remain at 7% in 2013. Moreover, like
many developing countries, Mozambique
has managed to offset weak demand from
Europe with growing links to the emerging
market economies.
Since the end of a bloody civil war in
1992, a mix of sound policies have
transformed the country:
• Per capita GDP has increased more
than five-fold;
• Key social indicators have improved
s u b s t a n t i a l l y — p r i m a r y s ch o o l
enrollment is now at 90 percent
compared to just 56% in 1995;
• Child mortality has fallen from 183 per
thousand to 103.
Despite its impressive economic growth
rates and the encouraging development
progress made by the government in recent
years, poverty continues to be severe and
widespread. The vast majority of the rural
population still lives on less than US$1.25 a
day and lacks basic services such as access
to safe water, health facilities and schools.
• Mozambique remains among the
world’s poorest countries, with per
capita GDP of $650 in 2012. Many
social indicators remain below the
averages for Sub-Saharan Africa.
• More than half of the population still
lives below the national poverty line,
and some two-thirds still survive off
subsistence agriculture. The child
mortality rate remains high.
• Mozambique is at risk from adverse
climatic events. With Africa’s thirdlongest coastline and numerous
floodplains, there is an ever-present risk
of natural disasters.
Mozambique’s natural resources can boost
economic growth. The largely unexploited
natural resources present huge opportunities
—particularly the new offshore gas fields.
Of course, abundant resources can be a
mixed blessing— boom-bust cycles, poorly
managed investments, and even massive
corruption in some countries.
The challenge is to lift people out of
poverty by creating jobs and improving
lives. Lessons can be learned from
countries that have managed to reduce
poverty and inequities:
• address infrastructure gaps—electricity,
water, transportation—to support the
emergence of new economic activities
outside the natural resources sector,
and reduce business costs.
• invest in education and training so that
Mozambique’s young people can take
advantage of emerging opportunities.
• improve access to credit for Entrepreneurs
to finance their businesses via further
financial sector development.
• strengthen social protections to meet
the basic needs of the most vulnerable
members of the society.
To avoid the resource curse and reap the
benefits, experience suggests to establish
appropriate policy frameworks and
institutions at an early stage to transform
natural resources into productive assets. The
huge investments needed to develop the
resources should be managed carefully and
transparently to ensure that new debt is used
productively and remains sustainable. It is also
important to compile high-quality statistics
and develop strong analytical expertise to
guide policy decisions in an increasingly
complex environment. This calls for high
standards of governance and the bottom line
is transparency in all aspects of the resource
sector—regulation, taxation, and spending.
[1]
FACTS
The Mozambican civil war lasted for 16 years,
leaving most rural infrastructure damaged or
destroyed and large portions of arable land
infested with landmines. Both the conflict and
the subsequent floods and drought forced large
numbers of displaced persons to migrate to
urban and coastal areas. The impact on the
environment has been considerable, resulting in
land desertification and the pollution of inland
and coastal waters in certain areas.
Since 2010, with IMF support, the government
has initiated major social and infrastructure
spending programmes as part of its poverty
reduction strategy. This government spending is
largely covered by international aid (over 30%
of fiscal revenues). In 2013 the country is
expected to benefit from sharp growth in its
domestic resources as a result of taxing incomes
related to the exploitation of national natural
resources, and, in particular, booming coal
production. This situation is likely to enable a
slight reduction of the budget deficit.
2. The extractive industry and international aid to support public accounts
Despite the difficult global environment, economic growth in
Mozambique remains buoyant. Reflecting the rapid start-up of
coal production and exports, real GDP grew by 7.2% in the first
half of 2012. The extractive industry was the fastest-growing sector
(by 39 %), while the transport and communication sector also
performed strongly (introduction of a third mobile operator). Real
GDP growth for 2012 is set to reach 7.5%, reflecting a strongerthan-expected contribution from the coal industry.
Foreign direct investment (FDI),especially in extractive industries,
related smelting activities (aluminum) and a number of large-scale
mega-projects have been among the main drivers of
Mozambique's growth. The scale of this investment has surged
since 2005, hitting $2.1 billion in 2011, though a very large share
of this investment is in a small number of mega-projects. Over
2004-11, the largest investments in the country have been from
Brazil, Mauritius and South Africa, though companies from
Ireland, Switzerland and Portugal are also important.
Huge deposits of natural gas and coal – enough to supply
Germany, Britain, Italy and France for the next 15 years – provide
Mozambique with a real opportunity to consolidate economic
development and improve the quality of life of its citizens. In
2013, Texas-based Anadarko and Italian partner ENI are due to
make the final investment decision on whether to construct one of
the largest liquefied natural gas facilities in the world in
Mozambique. The complex would allow them to tap into deep offshore gas fields that could rival Australia and Qatar as the largest
liquefied natural gas reserves in the world.
At the same time, the emergence of Mozambique as a business
and leisure destination is underlined since 2012 by the completion
of a USD132 million twin-terminal airport complex in the capital
Maputo. The domestic terminal at the facility opened almost two
years after the international terminal began operations.
The country also hosts the Mozal aluminium smelter, near the
capital city of Maputo. This makes Mozambique Africa’s secondlargest producer of the metal, after South Africa (the alumina
smelted at Mozal comes from Western Australia).
On the other hand if access to and distribution of such national
resources is not equitable, it could easily stoke the fires of a civil
war. For most analysts, mining and gas projects in Mozambique
are likely to be affected by an increase in violent protests in the
coming months, as people attempt to gain additional
compensation from mining companies, especially in regions
where projects are entering the construction phase.
Uneven playing fields fosters violence
Recent outbreaks of violence in Mozambique are therefore deeply
worrying not only for Mozambique but the whole sub-region.
In April, members of the Renamo militia (main opposition party’s)
killed four police officers in an attack on a provincial police station
to try to free more than a dozen party members arrested in a police
raid on their headquarters. M. Afonso Dhlakama, leader of the
former rebel group turned main opposition party, the Mozambican
National Resistance (Renamo), confirmed ordering the attack. He
threatened to (re)start war in the country if government forces did
not retreat from strategic positions close to his remote base camp
near Gorongosa National Park, and also stop persecuting his party.
M. Fernando Mazanga (Renamo spokesman) also claimed the
Frelimo government is blaming the attacks on Renamo in order to
taint the opposition party in the eyes of the electorate. Indeed,
Mozambicans are scheduled to head to municipal polls in
November and general elections in 2014.
M. Dhlakama regularly accuses Frelimo of pushing Renamo to war
through the ruling party’s "exclusive governance strategy", illicit
enrichment and squandering of the country’s growing wealth; the
partisan nature of the police and the government; and electoral
fraud. But his warmongering needs to be understood in the context
of waning political support for Renamo, his intention to strengthen
his vanishing political position in the country in general, and among
his party’s cadres and sympathisers in particular.
Mozambique has experienced comparatively fewer serious
incidents of civil unrest in recent years and RENAMO’s recent calls
to hold mass-demonstrations have ignited fears of destabilisation
among the public. Mozambique has had several occurrences of
violent protests in recent years, including three serious protests in
Maputo (in 2008, 2010 and 2012) and a demonstration targeting a
coal operation in Tete province in January 2012; but, importantly,
these protests have not been related to RENAMO and were
primarily led by urban youths demonstrating for socio-economic
reasons.
The violence has come as a shock to most people in the region but
tensions have been on the increase in Mozambique for some time.
Indeed, a 2009 AfriMAP/OSISA report warned about the potential
dangers of the country’s uneven political playing field – and if more
deadly violence ensues then there is little doubt that this will have
been among the usual suspects.
Nevertheless, if RENAMO continues to call for mass
demonstrations, it is improbable that it will get the support of the
public at this time. Mozambicans are not willing to stand for
another bloody conflict. Like in Zimbabwe, the dramatic
consequences of the civil war are still very present in adults mind
and that demotivates them to react violently. Thus, for most
observers, any future unrest, even if anti-government, will focus on
socio-economic issues; unrest is unlikely to be specifically
associated with support for RENAMO.
A worst case scenario is a Nigerian-like rebellion (spilling out
piracy in the Gulf of Guinea) with Mozambicans Groups attacking
offshore platforms and disrupting maritime traffic in the region. But
Governments of Tanzania, Mozambique and South Africa have
already signed a tripartite pact to strengthen maritime security in
Indian Ocean and fight piracy...
It should also be noted that Mozambique has achieved a key
milestone by becoming fully EITI compliant in October 2012. EITI
(Extractive Industries Transparency Initiative) compliance means
that the country has an effective process for annual disclosure and
reconciliation of all revenues from its extractive sector. This allows
citizens to see how much their country receives from oil, gas and
mining companies.
African governments, as well as the mining and oil and gas
companies investing in countries such as Mozambique, will need to
be wary of exaggerating prospects of the wealth and employment
likely to be generated by planned developments. As seen during
some recent unrests, communities are likely to become angered
should they not see a sufficient return from the companies,
particularly in the form of job creation and education.
[2]
3. As Mozambique prepares for elections in 2014, it is imperative that reforms that ensure
inclusive politics be put in place. Sadly, recommendations such as the ones in the
OSISA/AfriMAP and APRM reports are rarely followed up. This has led to tragic
consequences as we saw in Kenya’s 2007 post-election violence, South Africa’s 2008
xenophobia attacks, and Northern Mali’s takeover by rebels in 2011 – all these issues
had been flagged in the respective APRM reports.
Frelimo’s government is already faces growing domestic pressure to do more for citizens
to benefit from the country’s vast coal and gas deposits. This is particularly so giving the
widespread poverty evidenced by the majority of Mozambicans reportedly scrapping by
on an average $400 a year despite annual economic growth of about 7% in the past
five years.
Other development challenges include: combating corruption; reducing the heavy
dependence on external donors; diversifying the sources of economic growth;
integrating capital-intensive mega-projects with the state’s poverty reduction strategy;
and developing the agriculture sector which employs close to 80% of the workforce but
remains largely unproductive, subsistence-based, and where there is a growing
"feminisation of poverty."
More broadly, Mozambique needs to accelerate investment climate reforms; improve
provision of public goods to facilitate inclusive growth (for example, infrastructure,
education, and health); set up well-targeted safety nets for the most vulnerable; and
promote greater citizen participation while building transparent and accountable
systems, including those related to extractive industries.
REFERENCES
EXPOSED
The current President, Armando Guebuza, has
been in power since 2005. He is also head of
the Frelimo party, which has governed the
country since its independence in 1975 and is
expected to be the big favourite in the coming
2014 elections. The opposition remains weak
and lacks the popularity to counterbalance
Frelimo’s well-established hegemony. The
traditional opposition party, Renamo, suffers
from strong internal divisions and the MDM is
still very new (created in 2009). In this
context, President Guebuza was re-elected to
head the party for five years in September
2012 (Frelimo national congress), indicating
that the party is about to reform the
constitution to allow him to stand for a third
term. This scenario is confirmed by the fact
that President Guebuza’s potential successors
in the party, Luisa Diogo and Aires Ali, were
not elected to the political bureau (the
party’s supreme body).
Frelimo has dominated the political, economic
and social set-up of the country ever since it
edged out its erstwhile civil war rival,
Renamo, in the country’s first democratic
elections in 1994. Frelimo won the fourth
presidential and parliamentary elections in
2009 by 70% of the popular vote, and the
party has a two-thirds majority in the national
parliament, 80% of the seats in the provincial
assemblies, and majorities in all elected
municipal assemblies.
OECD Trade Facilitation Indicators – Mozambique (2013)
http://www.oecd.org/tad/facilitation/Mozambique_OECD-Trade-Facilitation-Indicators.pdf
MOZAMBIQUE - SECTOR-SPECIFIC INVESTMENT STRATEGY AND ACTION PLAN - G20 Indicators for Measuring and
Maximizing Economic Value Added and Job Creation from Private Investment in Specific Value Chains - UNCTAD (2013)
http://unctad.org/Sections/diae_dir/docs/diae_G20_Mozambique_en.pdf
AfriMAP/OSISA report on Democracy and Political Participation in Mozambique
http://www.afrimap.org/Report/Mozambique%3A+Democracy+and+Political+Participation
APRM Review of Mozambique 2009
http://www.afrimap.org/english/images/documents/APRM_Country_Review_Report_Mozambique.pdf
Renamo leader’s war talk imperils Mozambique’s growth - by Gwinyayi Dzinesa (senior researcher at the Institute for
Security Studies in Pretoria), April 12 2013
http://www.bdlive.co.za/africa/africanperspectives/2013/04/12/renamo-leaders-war-talk-imperils-mozambiques-growth
Mozambique's 20 Years of Peace at Risk? by alex Vines - http://www.chathamhouse.org/media/comment/view/190757
Protests Give Stark Reminders of Challenges to Investing in Mozambique - by Future Directions
http://shar.es/ZfRbF
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[3]
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