MEDIATORS MAKE PROPOSAL ON PROVINCIAL GOVERNORS

The mediating team in the Joint Commission between the Mozambican government and the Renamo rebels on Tuesday presented a proposal on the appointment of governors for the six central and northern provinces where Renamo claims that it won the October 2014 elections.

The coordinator of the mediating team, the Italian Mario Raffaelli, told reporters after a meeting of the Commission that was much shorter than usual (about 40 minutes) “Today we talked about governors. As mediators we thought it better to advance with the problem of governors, because decentralization is quicker (than the other items on the agenda)”.But he gave no details of the mediators’ proposal. He said the government and Renamo delegations had promised to study the proposal and give their reactions on Wednesday.Renamo has demanded the right to govern Sofala, Manica, Tete, Zambezia, Nampula and Niassa provinces, on the grounds that it won the elections in these parts of the country. This claim is, however, untrue,

The results, announced by the National Elections Commission (CNE), and confirmed by the Constitutional Council, show that Renamo leader Afonso Dhlakama came top of the presidential poll in Sofala, Manica, Tete, Zambezia and Nampula. But Renamo only won the parliamentary elections in two provinces (Sofala and Zambezia). As for the third election, for provincial assemblies, Renamo won a majority of seats in three provinces (Sofala, Zambezia and Tete). Renamo’s claim of victory in Niassa is entirely false, since the ruling Frelimo Party won all three elections there.The decision by the mediators to return to the question of governors came as something of a surprise, since it had been assumed that the Commission would continue to discuss military matters, particularly the inclusion of members of the Renamo militia in the armed forces and the police.It is possible that this discussion will continue at Wednesday’s meeting.The purpose of the Joint Commission was to prepare a meeting between President Filipe Nyusi and Dhlakama – but there is still no sign that such a meeting will take place in the near future. Dhlakama shows no interest in coming to Maputo, and remains in his bush headquarters in the central district of Gorongosa. So far Renamo has refused to allow the opening of a demilitarized corridor so that the mediators can reach the Gorongosa camp and speak face to face with Dhlakama.

DEATH THREAT ISSUED

The mayor of the central Mozambican city of Quelimane, Manuel de Araujo, who is a prominent member of the opposition Mozambique Democratic Movement (MDM), has claimed that on Tuesday a member of the city’s elected Municipal Assembly made a death threat against him.

A statement issued by the Quelimane Municipal Council said that an Assembly member from the ruling Frelimo Party, Nilsa Gomes (Photo), declared in the middle of the Assembly session “the mayor deserves a bullet in his head”.This threat, made publicly, follows claims by Araujo that earlier in the month he was threatened with death by a Frelimo veteran of the independence war. Araujo also told the independent television station STV that in recent days unknown people have been following his movements, a matter he has reported to the police.After the threat by Gomes, the chairperson of the Municipal Assembly interrupted the session to restore order in the room and decided to suspend Gomes, forbidding her from returning to the session.The head of the Frelimo group, Rijone Bombino, then withdrew all the Frelimo members from the meeting. The sole effect of this boycott was to ensure that the MDM could do what it liked in the Assembly without any opposition.The MDM has a majority of seats in the Quelimane Municipal Assembly, and can meet the necessary quorum on its own. Despite the Frelimo absence, the MDM members continued the Assembly’s work and approved the report from the Municipal Council on its activities in the first six months of 2016. Interviewed by STV, Bombino did not deny that Gomes had made the threat. Instead he said that Frelimo had been provoked by insults made by Araujo, who had allegedly blamed Frelimo for a string of unsolved murders.

Eni asks banks for billions to finance

Italian oil firm Eni has approached banks for billions of dollars to finance a huge offshore gas development in Mozambique, a significant step in getting a long-delayed project off the ground, the company and sources said.Eni confirmed it met bankers in London last week about project financing to develop the Coral field, part of the huge reserves discovered six years ago in the Area 4 concession off the Mozambican coast.“It’s running into billions of dollars,” one source familiar with the financing told Reuters, adding banks were also looking for credit guarantees from foreign governments, including Britain and China.Banks are likely to respond within three to four weeks with terms of loans they are willing to provide, one of the last stages before Eni can make a final investment decision (FID) on the project, two sources close to the deal said.Eni said it hoped to announce a FID by the end of this year.Some lenders may be concerned about involvement in a project in Mozambique, given recent clashes between opposition guerrillas and government forces and financial scandals.The International Monetary Fund (IMF) is in Mozambique this week to try to restore trust between President Filipe Nyusi’s government and international lenders after more than $2 billion in secret loans came to light this year.The IMF has suspended its own lending to the southeast African country, insisting on external scrutiny as a precursor to resuming financial aid.“The biggest challenge is Mozambique country risk,” one of the sources said.Reserves discovered in Mozambique’s Rovuma Basin in recent years amount to some 85 trillion cubic feet, one of the largest finds in a decade and enough to supply Germany, Britain, France and Italy for nearly two decades.The gas offers Mozambique an opportunity to transform itself from one of the world’s poorest countries into a middle-income state and a major global liquefied natural gas (LNG) exporter.Negotiations with operators Eni and U.S. firm Anadarko have dragged on for years due to disputes over terms and concerns about falling energy prices.However, there have been several signs of significant progress in recent months.Eni has struck a deal with Samsung Heavy to provide a floating LNG platform to process the gas from the Coral field, which will be sold to BP.Eni has also wrapped up long-running talks to sell a multi-billion dollar stake in other fields in Area 4 to Exxon Mobil, sources told Reuters last month.In 2013, Eni sold 20 percent of its Area 4 licence to China’s CNPC for $4.2 billion but since then oil and gas prices have come down by more than half.Anadarko’s $24 billion onshore LNG project is expected to lag Eni’s and its FID is unlikely this year.

Nampula will have 30 more tourist

Nampula provincial Director of Culture and Tourism Agostinho Zacarias says that more than 30 new tourism projects will come into operation in the province next year, representing an investment of about 1.7 billion meticais.The projects are being built in the districts of Malema, Mozambique Island, Memba and the port city of Nacala. Zacarias said that, as part of the Kapulana project, the provincial government is building a tourist resort in Memba that should be operational by the end of this year, as well as opening three more resorts in the tourist city of Nacala.Increased investment in the tourism sector in Nampula is however coming at a time when the sector is registering a considerable reduction in tourism numbers as a result of the political and military situation.With little more than three months to the end of the year, only 50,000 of the anticipated 80,000 seasonal visitors have so far arrived.

2.5 million

The National Cashew Institute (INAJU), in the northern Mozambican province of Nampula, in the current campaign has sprayed 2.5 million cashew trees against mildew and other pests.Speaking at a press conference in Nampula city, the INCAJU provincial delegate, Jaime Chissico, said that this was only 15 per cent of the 14 million trees in the province. Because of the lack of funds to buy more chemicals, it was not possible to spray all the cashew trees.Given this situation, Chissico urged cashew producers to use other, cheaper forms of treatment, such as cleaning and pruning their trees by hand.Chissico said that in this campaign Nampula expects to market about 45,000 tonnes of cashew nuts. Most of these nuts will be sold to the local cashew processing factories.In the 2015-2016 campaign, Nampula, the largest cashew producing province in the country marketed 44,000 tonnes of nuts. So Chissico was expecting an increase of around three per cent in production this campaign.There are now 13 cashew processing factories in Nampula, but only 11 of them are functioning.

Crocodile skins

The Ministry of Agriculture and Food Security (MASA), through the National Veterinary Directorate (DNAV), is promoting the proper treatment of goat, cow and crocodile skins as a source of foreign exchange revenue for the country.The DNAV initiative springs from the growing demand for skins overseas, especially South Africa, the European Union, Hong Kong, China and Namibia, markets that demand that this product is handled properly and tanned to high quality.The newspaper Domingo reports that from 2014 to 2016, the country earned about US$ million US exporting skins, US$763,000 resulted from crocodile skin alone.Data cited by the weekly indicate that during this two-year period, about 11,000 crocodile skins were exported to six countries, including Spain, Italy and Portugal, and that the largest amount was exported to South Africa, followed by Japan and South Korea.To maximize exports, the DNAV is supporting the establishment of a Mozambican tannery industry and mobilizing national public and private entities towards entry in the Trade System Control and Export System (TRACES) which regulates the business internationally. 

As Domimgo reports, one of the prospective exporters of skin is the Maputo Municipal Abattoir which was recently registered in the TRACES system.Nationally, information on skin processing techniques is being disseminated to farmers and allied trades.As part of export promotion, preparations are underway for the construction of a tannery in Maputo which will initially produce an added-value leather tanned with chromium sulphate and other salts that give it a bluish colour.Currently, South Africa is the biggest buyer, with about 672,000 tons of imports in the last three years, although the European Union market offers the best prices among the other competitors.The goat skin is exported only to South Africa and was worth more than US$388,000 US dollars between 2014 and 2015.A first batch of 3,000 skins from the southern provinces of Maputo and Gaza has been exported to Portugal, with skins selling at US$15 per unit, and a ton worth US$500.

GE Mozambique’s departing leader

The saying “there is no substitute for experience” is one that is often used in the business world because managers with a thorough understanding of their businesses not only easily gain the respect of their employees, but they are usually good at navigating business crises too.Today, GE Reports Africa interviews Vini Dall’Armellina, GE Mozambique’s Country Manager for Transportation. As the first GE employee in Mozambique, he was responsible for establishing the GE office in that country in 2012 and growing operations. As he prepares for his next role in GE Transportation’s global risk team, he looks back over the last couple of years.“My main responsibility was to grow GE business in the country and that included setting up a permanent business for GE in Mozambique as well as building a network within both private and public environments that would support all GE businesses to pursue opportunities in the country,” says Dall’Armellina.While this sounds like a daunting task, setting up an office would also provide the opportunity to create brand awareness. “When I first came to Mozambique in 2010, GE was thought of as an appliances company and people would ask me if I sold refrigerators. They just could not believe the size of GE and the businesses we were involved in. Now, after a few short years, GE is recognised as an important player in Mozambique’s development and most importantly, GE is now known as a brand that can be trusted.”GE has sold more than 120 locomotives to four different customers in Mozambique and signed a maintenance agreement that created a strong parts flow to the country, thereby turning Mozambique into the second-largest rail transportation market in Sub-Saharan Africa.“Our first sale was to CFM, the state-owned railway company and it was the first purchase of a new locomotive for the country in over 20 years. The new C30ACi is able to pull trains that are 30% longer than the trains the old locomotives could pull. We also delivered more than 100 locomotives that will be operating in coal transportation because coal is the second-largest mineral resource in Mozambique, and is a key enabler to the country’s development and job generation,” he says.

Getting started was not easy. “In the beginning, getting people to open doors for an unknown company was very challenging. The government relations team had a key role in helping to build the necessary relations. And then, creating an understanding of the local business culture and explaining it to GE was probably more challenging than building a team,” says Dall’Armellina.Finding the right people took time, but the office now has 49 employees, of which over 40% had little to no work experience before joining GE, and have now been able to grow their skills and experience.“Delegating and developing talent is critical for everyone’s growth. We have to empower ourselves by understanding what has to be done and by proving we can do it. Discourage people from working in silos because we experience more success when we tackle problems as a team,” he says.

“Advances” in restoring confidence

The mission from the International Monetary Fund (IMF) that has been working in Mozambique since last Thursday believes advances have been made in restoring international confidence in the Mozambican government.The mission, headed by Michel Lazare, an assistant director at the IMF, met on Wednesday with Prime Minister Carlos Agostinho do Rosario. Lazare told reporters “the meeting was fruitful and there are advances in complying with the measures defined to restore confidence”.

But Lazare, who also headed the previous IMF mission in June, declined to give any details or say what measures he had in mind. He simply added that the meeting President Filipe Nyusi had in Washington earlier this month with IMF and World Bank officials, including IMF Managing Director Christine Lagarde, “were a success”.

After the meeting between Nyusi and Lagarde, the IMF announced that an independent, international audit will go ahead into the government-guaranteed loans for over a billion US dollars that were hidden from the Mozambican public and the IMF alike until April of this year.The controversy arises over three government guaranteed loans to quasi-public companies in 2013 and 2014, the closing years of the government of Nyusi’s predecessor, Armando Guebuza. Between them these loans amounted to over two billion US dollars, and added 20 per cent to the Mozambican foreign debt.One of the loans was public – this was the 850 million dollars of bonds launched on the European bond market by the Mozambique Tuna Company (EMATUM). The main banks handling the bond issue were Credit Suisse and VTB of Russia.

But the same two banks lent large, but undisclosed sums to the companies Proindicus (622 million dollars) and Mozambique Assets Management (MAM – 535 million dollars). Proindicus was set up to provide security to offshore oil and gas operations and to other shipping in the Mozambique Channel, while MAM is to sell naval maintenance and repair services.It is these latter two loans and their government guarantees that angered the IMF. When the loans became public knowledge in April, the IMF suspended its programme with Mozambique, including the second instalment of a 283 million dollar loan from the Standby Credit Facility (SCF). Other partners followed the IMF’s lead – notably all 14 donors and funding agencies that provided direct support for the Mozambican state budget suspended all further disbursements.

The IMF suspected corruption was involved in the loans. In an interview with the BBC in May Lagarde said “When we see a country and a programme with the IMF where international community money is committed, that is not respecting its financial disclosure engagement, which is clearly concealing corruption, we suspend the programme. We did that just recently with Mozambique.’The main demand raised by the IMF, and echoed by Mozambique’s other western partners, such as the United States and Britain, has been for an independent audit which would track down exactly what happened with all the money involved.At his meeting with Lagarde, Nyusi made it clear that the government now accepts this. An IMF statement on the meeting “welcomed the initial steps being taken on the agreed reforms and policies”, but also “stressed the need for further policy action aimed at stabilizing the economy and for more decisive efforts to improve transparency, in particular an international and independent audit of the companies that were funded under the loans disclosed in April 2016”.Lagarde, the statement said, “welcomed that the President indicated the Government of Mozambique’s willingness to work with the IMF on the terms-of-reference for this process—to be initiated by the office of the Attorney General—and to implement it”.

NINE MILLION TONNES OF COAL FOR NACALA-A-VELHA THIS YEAR

The Nacala Integrated Logistics Corridor (CLN) hopes to move nine million tonnes of coal this year from the Moatize coal basin in the western Mozambican province of Tete to the northern port of Nacala-a-Velha.This coal is carried along a new railway, some 900 kilometres long, from Moatize to Nacala-a-Velha which crosses southern Malawi.Speaking at the signing of addenda to the Nacala Corridor lease contracts between the government, CLN and the Northern Development Corridor (CDN, which is responsible for the older Nacala port, on the opposite side of the bay to Nacala-a-Velha), CLN chairperson Renato Torres said that the amount of coal moved to Nacala-a-Velha could reach 14 million tonnes in 2017 and the maximum capacity of 22 million tonnes a year in 2018. The coal comes from the giant open cast mine in Moatize operated by the Brazilian company Vale. CLN was initially set up by Vale (with 80 per cent of the shares), and by the Mozambican publicly owned ports and rail company, CFM (with 20 per cent). Subsequently, Vale sold part of its holding to the Japanese company Mitsui.The addenda to the lease agreements seek to allow CLN to mobilise the further foreign investment (put at three billion US dollars) needed so that the railway and port can reach their maximum capacity.

A statement from CLN declared “we have strengthened our commitment to the development of the region and to the importance of this project for the integration not only of the centre and north of Mozambique, but also as an important link for connecting neighboring countries, such as Malawi and Zambia, to a deep water port in Nacala. These countries will benefit from improvements in the rail facilities”.CLN believed that, with the new investments, Mozambique will be able to compete on a footing of equality with other countries in the export of minerals. “The state-of-the-art technology employed in the Nacala Corridor plus the use of trains of large capacity will make the coal from Tete highly competitive on the international market”. The coal trains running between Moatize and Nacala-a-Velha are the longest in Africa, with four locomotives and 120 wagons. Unlike Beira, the other port used by Vale to export coal, Nacala-a-Velha does not need to be dredged. The port can receive ships of up to 180,000 tonnes, and since coal exports began in January 48 ships have picked up coal from the port.

Transport Minister Carlos Mesquita told the ceremony that the conditions now exist to increase coal production at Moatize, particularly in light of the recent improvement in coal prices. The Friday signing follows a decision in principle by the government in June that CLN and CDN should be authorized to contract loans of up to three billion dollars. Of this sum, 1.9 billion will be invested in Mozambique, and the rest in Malawi. The agreement does not create any financial obligation on the government, since the risks of the operations will be the responsibility of CLN, CDN and their shareholders.