Political Economy of Post Civil War Mozambique: An Opportunity

Prof. Suresh Kumar

India-Mozambique Relations, June 2013. Diplomatist

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Introduction

The fifteen years long civil war (1977-1992) had devastated the country’s socio-economic fabric along with the killing of one million people and displaced about five million people. The first multi-party election took place in 1994 and the country is now building on its stability by promoting foreign investment opportunities.
Historically, by about 900 AD trading links had been forged with India, Persia, China and Arab world. Gold was the major lure for these merchants and it attracted the Portuguese to Mozambique with the arrival of Vasco de Gama in 1498 on his way to India. Mozambique was governed from Goa until 1752, when it brought under direct control from Lisbon. This historical link with India was built by Indian trading communities settled down there and their influence is clearly seen today.
President Frelimo in the post civil war restructured political economy through its development agenda around a new Action Plan for Reducing Poverty (PARP 2011‑14). This plan focuses on investment opportunities in agricultural production, power & energy, oil & gas sector, infrastructure development, tourism sector, education sector and promotion of employment linked to the development of small and medium-sized enterprises (SMEs) and investment in human and social development.

1. Investment Opportunities in Agriculture Sector
The wide diversity of soil types and climatic conditions, access to over 60 rivers and 36 million hectares of arable land greatly enhance Mozambique’s potential as an agricultural exporter. The main agricultural exports include cashew nuts, cotton, sugarcane, a variety of fruits and vegetables and tobacco, but virtually any crop can grown easily in Mozambique – and harvesting can occur months before other countries.   The rich waters in the Indian Ocean offer a variety of seafood products from world famous tiger prawns to crayfish to langoustine – as well as a variety of fish such as tuna, grouper and cod.  Mozambique also has 19 million hectares of productive woodland, rich in tropical hardwood and to a lesser extent eucalyptus and pine.  The natural potential of the sector offers a wide range of opportunities for timber, construction materials, furniture, wood products and pulp (Institute of Export Promotion Mozambique, 2011:7).
More than 95% of cashew marketed output is produced by about 1.4 million small family farmers in Mozambique and has cashew investment opportunities, distribution of production in North 57%, Center 24% and South19%. The investment opportunities in Mozambique has fvourable agro climatic conditions for cashew production having land available for new orchards, potential for new processing plants, all production provinces with acres to the see (Export infraestructures) and appropriate institutional environment. The investment opprtunities in chashew plantations as per the available area is mentioned under Table-1.

Table-1, Opprtunities in Chashew Plantations as per the Available Area

Source: Rua da Resistencian, 2012:1-4. CINCAJU. Maputo.

The Mozambican production and its presentation on global markets require a new approach in the packaging sector, to create conditions for the country to compete in an international market, where rules are constantly changing and consumer demands are rising continuously. The MOZNEGOCIOS-International Packaging and Packaging Equipment Trade Fair 2-10 June 2011 has involved producers, suppliers and consumers of the packaging industry from Mozambique and other countries.  In this second edition, the MOZNEGOCIOS fair brought together companies of the packaging sector and agro-processing enterprises.
Mozambique offers some of the best shipping ports in Southern Africa, serving as a link to the sea for its landlocked neighbours and the rest of the world.  The three main ports in Mozambique are in Maputo, Beira and Nacala.  The port at Maputo is the hub of the surrounding fishing and agricultural industries serving South Africa, Swaziland and Zimbabwe.  The ports in Beira and Nacala serve Malawi, Zambia and Zimbabwe.  Beira is linked to by road and rail to the African hinterland.  The recently modernized ports in Mozambique enable them to handle millions of tons of cargo arriving from and departing to distant international destinations (Institute of Export Promotion Mozambique. 2011:8).

2. Investment Opportunity in Power and Energy
The power crisis and its shortage are well marked in Mozambique despite their tremendous hydro, solar and other sources. India’s experience of power generation and its distribution to all remote areas to cater its millions of population is willing to exchange with the country. Table-2 shares the investment opportunities in power sector in Mozambique.

Table-2, Power and Energy Infrastructure Investment Opportunities

Source: Project Opportunities, 2012. CII and EXIM Bank of India: 7-115.

1. Investment Opportunity in Oil & Gas
The oil & gas opportunities in Mozambique attract the foreign investors.  The practice of transfer of technology is appreciated by the country and inviting Indian investors in this sector (Table-3).

1. Moamba Natural Gas Cobined Cycle Power Plant
Initially, the construction of the Project was planned to take place in Moamba, in Maputo Province, with a total capacity of 750 MW, under the responsibility of EDM, Intelec and Sasol. In 2009, the Project verified some constrains, with a paralysation of approximately a year, due to financial crises which have affected Eskom from South Africa, with implications for the conclusions of the PPA negotiations that was underway.
The concept of Moamba Project with a capacity of 750 MW was in better line for Mozambique option, once, besides the development stage achieved, the project would provide opportunity for the effective time use of the natural gas allocated for the country, evaluated in 27 million of GJ comparing with other alternatives options (Table-3).
During the Semester- I of 2010, EDM and Eskom have done some alternatives options evaluations, namely, for the medium scale projects, which its design has had in consideration the consumer needs and the level of the country increase.
The results of the evaluations done conclude to develop the Project with an option for 150 MW for the Phase I, in Ressano Garcia, fully operational on the last quarter of 2012.
In addition and taking to account that the 150 MW will not maximize the use of the natural gas available to Mozambique, the Government approved a proposal of the national investor for the development of a Project with a capacity of 280 MW, with the expected date of operation at the end of 2013.

1. CESUL Project
The construction of 1500 km transmission line, also known as the backbone transmission line, on which the development of various projects, including Benga and Mphanda Nkuwa, are dependent (Table-3). The timing for equity funds deals with the demonstration of commitment at financial close such as:
Phase 1a: end of 2011 for equity commitment:
Phase 1b: end 2012 for equity commitment: Project will be developed in two phases as PPPs, on a BOT basis.

Table-3, Oil & Gas Opportunities

Source: Project Opportunities, March 2012. CII, Export-Import Bank of India, Ministry of Commerce, Government of India: 6-56.

1. Investment Opportunity in Infrastructure
India has offered 5 billion US dollars for the next three years under lines of credit to help Africa achieve its development goals during the Forum Summit 2011. The list of Line of credit as on January 2012 has been allotted to Mozambique as mentioned in Table-4.

Table-4, Line of credit in the Infrastructure Programme as on January 2012

Source: Background Note, 2012: 78-85.
The tremendous market opportunities in Mozambique persuades the region to develop inter and intra connectivity via road, railway, air, river and sea routes. Table-5 highlights the different route and transport infrastructure investment opportunities in the country.

Table-5, All Routes & Transport Infrastructure Investment Opportunities

Source: Project Opportunities, 2012. CII and EXIM Bank of India: 7-115.

1. Investment Opportunity in Tourism
India’s experience of developing Science and Technology (S&T) in the country as per the needs of the vast population is appreciated in the developing countries.  The S&T invokes the work in developing ICT parks, tele-communication, well-designed construction of tourism adventurous places, connecting villages to cities, incubation Centre with state of art facility, international universities and institutes like Microsoft and others. Table-6 shares the investment opportunities in this sector in detail.

Table-6, S & T and Tourism Infrastructure Investment Opportunities

Source: Project Opportunities, 2012. CII and EXIM Bank of India: 7-115.

1. Investment Opportunity in Education
The main objective of the sector is strengthening the higher education system through training of faculty, establishing linkage among India and Mozambique higher educational institutes and experience share through study tour. Table-7 highlights the project on Mozambique and the investment offer in it.

Table-7, Education Sector Construction Investment Opportunities

Source: Project Opportunities, 2012. CII and EXIM Bank of India: 7-115.

Conclusion
Mozambique government keen to come out of the civil war trauma and it is possible only through the development in the right perspective. The democratic elected government strengthens the different aspects of the political economy to reach the down trodden people of the society and this is the right approach to curb any incident of innocent killings of people. The country deserves global recognition for its policies, which aimed at political stability and economic growth. Mozambique is an example of what Africa offered the world and a good example of overcoming the tragedy of war and even the SADC recognizes the government’s role to stabilize the country and the region.

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