Ministers talk about debt and defence

Mozambique on Thursday asked Brazil for a restructuring of its US$224 million debt (€187 million) to the country during an internet meeting between the foreign ministers of the two countries, the government in Maputo announced. “Mozambique asked Brazil to consider the terms of the restructuring” with “extending maturity and exemption from default interest” and so that the debt “is treated bilaterally between the two states,” Santos Álvaro, director for Europe and Americas in the Ministry of Foreign Affairs and Cooperation (MINED) told journalists at the end of the closed-door meeting between the Mozambican foreign minister, Verónica Macamo, and her Brazilian counterpart Ernesto Araújo.

Mozambique alluded to several constraints in support of the request to restructure the debt, including the Covid-19 pandemic and armed conflicts in the centre and north of the country. According to MINED, the Mozambican request was well received, and is now dependent on the negotiation of a final amortisation proposal between the ministries of finance of the two countries.The debt includes US$177 million for the construction of Nacala Airport, US$57 million for the construction of the Moamba Major dam – a project interrupted in 2016 due to the cancellation of financing – and US$32 million for projects related to agrarian mechanisation. During the meeting, Verónica Macamo delivered an update on the armed conflict in Cabo Delgado, and “Brazil expressed its total willingness to support Mozambique in the fight against terrorism”, depending on “a clear definition of the type of support Mozambique needs”, Santos Álvaro said.

For this purpose, new meetings would take place between the defence and security holders of the two states. The director for Europe and the Americas at MINED also said that Brazil confirmed support for Mozambique’s candidacy for a non-permanent member of the United Nations Security Council seat, 2023-2024 term, elections for which will take place in 2022.The UN Security Council is made up of 15 members – five permanent, and 10 non-permanent elected for two-year terms, with five being replaced each year. There is a fixed number of seats for the different regional groups into which the UN General Assembly is divided, with Mozambique’s candidacy having the support of the Southern African Development Community (SADC).

 

Cashew producers ranking

Withdrawal of the multinational Olam from the cashew business in Mozambique and the terrorist attacks in the province of Cabo Delgado, one of the country’s cashew producing regions, could remove Mozambique from the list of the world’s ten largest producers of cashew nuts and threaten its place as the fourth-largest processor worldwide. The warning comes from economist Constantino Marrengula. Contacted by “O País” to talk about the impact of Olam’s decision, the university professor recalled that the cashew nut is a strategic crop for the Mozambican economy, and employs more than one million rural families. This cashew producing population is concentrated in the northern and central regions of the country, where there is a higher incidence of poverty. “The [Olam] announcement represents a setback for family incomes,” Marrengula stated.

The cashew nut comes 11th among Mozambique’s export products, and Olam’s decision is also a setback for employment, public finances, exports and industrial capacities, reinforcing a long-term trend of loss of productive capacity in an area vital to the economy. “The cashew sector is one among the few areas of the economy that position Mozambique as an important player in a market with promising long-term prospects, with increases in consumption expected in countries like China,” Marrengula said.

In the list of risks for the sector, the economist highlighted severe climatic events, such as Cyclones Dineo, Idai and Kenneth, which devastated cashew production in Inhambane, Zambézia and Nampula provinces. According to a report on the competitiveness of Mozambique’s cashew industry prepared by producer association INCAJU in partnership with the French Development Agency, by June 2020 only 11 of the 26 existing companies were in operation (about 40%).

“Data from the Cashew Industrial Association indicate that at least one company closed in 2020 due to the break in export logistics due to the Covid-19 pandemic, the increase in the price of raw cashew nuts and the fall in the price of nuts,” he said. Between 2017-2020, cashew nut production grew between 0.7% and 2.3%, but the economist and university professor says it is difficult to predict what will become of the sector in the future. “Taking as a reference Olam’s announcement and the current state of the sector, it is to be doubted that the country will be advantaged by this scenario. On the contrary, it runs the risk of losing its position in the ranking of the largest cashew nut producers and processors,” Marrengula said.

He also noted that, in the last three years, the prices of raw and processed cashew nuts both fell, as well as tending to converge, reducing the margin for processors. In the economist’s view, in the scenario described, “intermediaries with the possibility of selling raw cashew nuts in markets that pay more, such as India and Tanzania, will win. It starts to compensate for exporting the little raw cashew nut available”.

“India, Mozambique’s main competitor, has bolstered its protectionist and support measures for its [own] cashew [processing] industry, which ends up favouring exports of raw nuts from Mozambique,” Marrengula notes. However, even “without being the price maker, Mozambique will be able to maintain the strategic relevance of the sector by intervening on the cost side, while reformulating its marketing strategy and seeking alternative markets, as suggested by INCAJU itself at the time of the launch of the competitiveness report”.

Reinforces border security

South Africa will deploy a special force to the border with Mozambique to curb the huge problem of illegal immigrants coming from Mozambique , South Africa’s home affairs, Minister Aaron Motsoaledi, said on Monday.

“It is not just because of Covid-19 that illegal entries are happening here, it is something that we have been observing for some time. We have porous borders. This will be resolved with the deployment of the new full-time border guards,” he told the press. “On my last visit, I saw in Mbuzini that the military did not rest in blocking people trying to enter the country illegally and I can assure you that illegal entries into South Africa are not entirely due to Covid-19,” he said. “This border post was the first one I visited when I was appointed interior minister in 2019 and our ambassador here told me that the number of flights from Dubai increased exponentially in a week because people from Pakistan, India, Bangladesh, Somalia, among others, would be using Emirates to enter Mozambique and then cross illegally into South Africa,” Aaron Motsoaledi said.

The Lebombo border post, the second busiest in the country after Beitbridge on the border with Zimbabwe, was one of 20 borders reopened today by South Africa after the closure of about two months to contain Covid-19, which has caused more than 47,000 deaths and about 1.5 million infections in the country, the most affected by the pandemic on the African continent.