Is Mozambique’s 20 years of peace at risk ?


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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..."
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Is Mozambique’s 20 years of peace at risk ?

  1. 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. 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. 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) 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) AfriMAP/OSISA report on Democracy and Political Participation in Mozambique APRM Review of Mozambique 2009 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 Mozambique's 20 Years of Peace at Risk? by alex Vines - Protests Give Stark Reminders of Challenges to Investing in Mozambique - by Future Directions About us AFRIKASOURCES Consult Ltd is a multiservices consulting firm. We provides tailor-made expertise and services to governments, international organizations, projects managers,… AFRIKASOURCES was initiated by JeanPhilippe PAYET, an advisor in Strategic Intelligence and Regional Integration, who decided to created a network of experts in various development fields to address clients needs in Africa. Works to date have focused on various countries within Africa like Egypt, Zambia, Djibouti, Senegal, Comoros, Mauritius... and we have a strong footprint in all COMESA [Common Market for Eastern and Southern Africa] countries. [3] AFRIKASOURCES Paris (France) & Mauritius Mail Skype Twitter Web #afrikasources @afrikasources