Parliament approves new Electricity Law

The Assembly of the Republic (the Mozambican parliament), on Thursday (01-08) approved, definitively and by consensus, the Electricity Law, a document that defines the general organisation and legal framework for electricity supply activities in the country. Speaking during the presentation of the justification for the proposed revision of the law, submitted to parliament by the government, Minister of Mineral Resources and Energy Carlos Zacarias explained that the change is based on number 04, of article 51, of the law, which deals with exceptional situations where different international rules are permitted.

review also aims to safeguard future projects that the country may develop in the energy sector and other similar projects, whose investors are from the electricity sector, some of whom are involved in previous projects.

“We have already developed projects under the old electricity law, but there are ongoing projects in the sector that must be assessed in light of international rules,” Zacarias noted.

The minister stated that creditors have been demanding changes, especially with regard to arbitration.

The amendment approved by parliament establishes that the parties may, by agreement, freely choose the forum for arbitration and the languages to be used in the arbitration process, provided that they are simultaneously translated into Portuguese.

Previously, the electricity law established that the arbitration forum would take place in Maputo, and always in Portuguese.

According to Zacarias, after approximately two years of implementation of the Electricity Law, now revised, the old provisions no longer proved viable for some international investment projects, given that “the forum is not considered impartial and the language is ineligible to conduct the arbitration process in the resolution of conflicts by international financial institutions”.

According to the minister, the creditors of the projects underway in the electricity sector demand that both the arbitration, as well as the language, and the choice of venue, be viable to facilitate international resolutions in the electricity field. “The creditors demand an impartial forum to resolve any disputes that may arise between the State and the concession holders,” he stressed. The 9th ordinary session of parliament ends next Thursday (08-08).

Mozambique Elections

The Democratic Alliance Coalition (CAD) today announced two peaceful demonstrations for Wednesday against its exclusion from the October 9 general elections, a source from the group told Lusa.

“We will hold two peaceful demonstrations on Wednesday, one at 12:00 and the other at 20:00. Every citizen should demonstrate wherever they are” against the exclusion of the CAD, and the “partisanship of the Constitutional Council”, said Luís Mariquel, national coordinator of communication and image of the CAD and assistant to Venâncio Mondlane, their presidential candidate.  According to the official, at the 12:00 demonstration people should “paint their hands black and hold them up high wherever they are” and at 20:00 they should gather in a local square “to light candles for five minutes”, symbolising the “death of justice and democracy in Mozambique”.

“This time we are not going to march – we want to avoid confusion. It will be a very peaceful demonstration,” Mariquel said, referencing episodes of violence recorded in some recent marches in the country.

“Let it be clear here that the central and northern provinces are simply waiting for the whistle to start blowing up the country, so this is [also] a way of damping people’s spirits down,” he added.

Thursday, the Mozambican Constitutional Council (CC) definitively excluded the CAD, which supports the presidential candidacy of Venâncio Mondlane, from the general elections of October 9. In the ruling, given in response to an appeal filed by the CAD regarding the exclusion of the candidacy previously decided by the National Electoral Commission (CNE), the CC declared null and void the CNE’s decision of May 9, which accepted the registration of the Democratic Alliance Coalition (CAD) for electoral purposes. On Sunday, Venâncio Mondlane called for demonstrations, asking his supporters to paint their hands black as a sign of the “funeral of justice and democracy”, and saying he would not back down, because he is “the people’s candidate”.

“I am a survivor, like many of us here,” Mondlane told supporters waiting for him at Maputo International Airport, where he landed after a tour of Europe.

On Friday, the CAD accused the CC of violating the Constitution, saying that the exclusion of their party from the October elections was political persecution for its support of Venâncio Mondlane’s candidacy. “We signed up and the decision was accepted and published in the Official Gazette. When they realised that Venâncio Mondlane’s candidacy was supported by the CAD, the problems began. That problem is political persecution,” president of CAD Manecas Daniel told reporters in Maputo. Mozambique will hold presidential elections on 9 October, simultaneously with legislative elections and elections for governors and provincial assemblies.

Nyusi inaugurates solar power station in Bazaruto

Mozambican President, Filipe Nyusi, inaugurated, on Thursday, a solar power station, in the Bazaruto archipelago in Inhassoro district, in the southern province of Inhambane. The power station, which was built as a result of the partnership between the publicly-owned electricity company, EDM, and the National Energy Fund (FUNAE), will enable over 400 connections to be made in the surrounding communities of Pangaia and Sithone. According to the President, the power plant will bring new dynamics to the tourist archipelago of Bazaruto and the local population will no longer face a lack of electricity.

“We celebrate the inauguration of this electricity connection in Bazaruto, using solar energy, which is considered to be cleaner and more environmentally friendly”, he said.

The solar energy network on the island of Bazaruto complements the electricity produced from natural gas, which only served tourist centers.

“These infrastructures are a demonstration of our unwavering will to bring development to every corner of our country”, said Nyusi. “Our community leaders have been patient, since we started in 2020 with the electrification programme for administrative posts. We are already at an advanced stage in this province”. He also said that, in the specific case of the Bazaruto Archipelago, the tourist resorts on Bazaruto, Nguessa, São Sebastião and Magarruque islands have benefited from an electricity network through independent generators powered by natural gas drawn from the gas fields in Panda and Temane, via an 86-kilometre underwater pipeline.

SERNIC claims to have identified masterminds of kidnappings

Mozambique’s National Criminal Investigation Service (SERNIC) claims to have identified the masterminds of the kidnappings that have been plaguing the country’s cities. According to Hilário Lole, the SERNIC spokesperson in Maputo city, cited by Radio Mozambique, the masterminds of the kidnappings are three Mozambican nationals who are living in South Africa. Lole explained that, in order to arrest them, the Mozambican authorities are working in close coordination with the International Police (INTERPOL).

“These are individuals we have already identified. International arrest warrants have already been issued because we have information that they are on South African territory. Work is being done with the forces of that country, in close coordination with INTERPOL, to facilitate their neutralization and subsequent accountability on Mozambican territory”, he said.

According to Lole, the Police are on the trail of the four armed individuals who kidnapped, on Monday, a 24 year old man, in broad daylight, in central Maputo. The victim is son of an Asian businessman.

According to eyewitnesses, the victim was forced to enter the car belonging to the kidnappers in the early hours of the morning, near the Hotel Términus.

Recently, the chairperson of the Mozambican Muhammadan Community, Salim Omar, said that the businesses of Asian origin no longer trust the police since they continue to be threatened by their tormentors. He also said that over 100 business people and their families have left the country due to the kidnappings that have struck Mozambican cities for 12 years.

According to the Strategic Analysis Report (RAE), published by the Mozambican Financial Intelligence Office (GIFiM), which is a specialist unit in the Ministry of Economy and Finance, the wave of kidnappings in the country have generated, since 2014, over 33 million dollars in money laundering. The document also said that this money was concealed in various accounts, held by the suspects, close relatives of the suspects and companies, controlled by the suspects and/or their close relatives, followed by the illicit export of capital under various pretexts with a view to concealing its criminal origin.

Materials seized in investigating alleged corruption at LAM

On Tuesday, the Central Office for Combating Corruption (GC) announced that the authorities in Mozambique had seized materials as part of their investigation into allegations of corruption at Mozambique Airlines (LAM).

“We have several suspects and some searches and seizures have been carried out. We’re still in the process of investigating the case, which we can’t detail here for reasons of secrecy,” said Romualdo Johnam, at a press conference to take stock of activities in the first half of this year in Maputo.   A case investigating alleged corruption schemes in the sale of tickets by the Mozambican airline and the management of the company’s fleet is at issue. The company’s fleet has been under restructuring since April 2023 as part of a plan by Fly Modern Ark, the company hired to recover LAM. In February, LAM’s restructuring director, Sérgio Matos, denounced a scheme to embezzle money, with losses of around €3 million in ticket shops through automatic payment terminal machines (TPA/POS) that do not belong to the company.

“[The tickets are] being sold, but the company isn’t getting all the money, and in the last three months of valuations, we’ve seen that the difference we were getting was in the order of between $2 million (€1.8 million) and $3 million (€2.7 million). In the month of December [2023] alone, we had a deficit of $3.2 million [€2.9 million],” Sérgio Matos noted at the time, adding that the inspection recorded suspicious cases even in the collection of cash in shops.

The inspection also identified anomalies when it came to fuelling aircraft.

“If an aircraft has a maximum fuel capacity of around 80,000 litres, we call it 80 tonnes, [in the documents] the same aircraft is being fuelled at 95 tonnes. So the question is where the remaining 15 tonnes are going,” he asked.  Following the reports of alleged corruption at LAM, the Institute for the Management of State Holdings (IGEPE), the entity that manages the state-owned business sector in Mozambique, announced that it wants to see the alleged embezzlement and acts of internal sabotage investigated and requested an investigation by the Public Prosecutor’s Office.

In January 2023, the GCCC opened case no. 06/11/P/GCCC/2023 to investigate allegations about fleet management, namely the sale of aircraft, their leasing, the company’s indebtedness for acquiring new equipment, and maintenance operations.  The process also concerns suppliers’ contracting, invoicing legitimacy, and the sale of the company’s corporate assets.  South African company Fly Modern Ark has managed LAM since April last year, and a restructuring plan is underway.

The company’s revitalisation strategy follows years of operational problems related to a reduced fleet and a lack of investment, with a record of some incidents, not fatal, associated by experts with poor aircraft maintenance.  In June of this year, the LAM Board of Directors chose Américo Muchanga, a former president of Mozambique Airports, as the company’s chairman.

LAM operates 12 destinations on the domestic market. At the regional level, it flies regularly to Johannesburg, Dar es Salaam, Harare, Lusaka, and Cape Town, and Lisbon is the only intercontinental destination..

Business activity PMI index in positive territory for three months

The business activity PMI index in Mozambique remained positive in July for the third consecutive month, signalling “ongoing growth in the country’s private sector”, according to Standard Bank, which conducted the survey released on Monday.

“Companies were able to generate further increases in sales, feeding through to rises in output, employment and purchasing activity. Cost pressures remained muted and companies kept their own selling prices broadly unchanged,” the study reads.

It adds, however, that “the outlook for activity over the coming year” was “less positive”, having “dropped to the weakest since October 2020”.

This index had risen in February (50.7 points), for the first time in five months, then also recording the highest growth since July 2023, but returned to negative territory in March (49.7 points), rising in April (49.9 points). It has been in positive territory since May (50.9 points), but fell in July to 50.6 points, compared to 51.0 points in June.  PMI indicators above 50 points point to an improvement in business conditions compared to the previous month, while indicators below this value show a deterioration.

“New orders increased for the sixth month running in July amid strengthening market demand and the securing of new customers. The rate of expansion eased to a three-month low, however. Likewise, business activity continued to grow at the beginning of the second half of the year, with companies reacting to the increase in the volume of new orders by expanding their production. Similarly, business activity continued to rise as the second half of the year got underway, with firms responding to higher new orders by expanding their output,” the report points out.

However, it is acknowledged that “the growth rate was moderate” in July, adding that the sector data ” indicated that the overall increase in activity was centred on the agriculture, manufacturing and wholesale & retail categories” and that companies “responded to higher new orders by expanding their workforce numbers and purchasing activity”.

“Employment rose for the sixth consecutive month. Despite being modest, the rate of job creation quickened to a level unsurpassed in just over a year. As with output, the agriculture, manufacturing and wholesale & retail sectors were the main sources of rising staffing levels,” it points out. Although “business expansion plans and expected growth of new orders supported confidence in the year-ahead outlook for business activity, sentiment dropped in July to the lowest since October 2020. Exactly 35% of panellists were optimistic in the outlook”.

Quoted in the study released yesterday, Standard Bank Mozambique’s chief economist, Fáusio Mussá, commented that the decline in this index, from June to July, “mostly reflects softer growth in output and new orders, compared with the previous month, and stocks of purchases slipping below the 50-level”.  “Notably, employment continued to rise for the sixth month running, as most sectors continued hiring,” Mussá also highlighted.

The Purchasing Managers Index (PMI) published monthly by Standard Bank is the result of responses from purchasing managers from a panel of around 400 private sector companies.

Cuamba will export more than 10,000 tons

THE district of Cuamba in Niassa expects to export more than 10,000 tons of pigeon peas to India this year.

This however represents a reduction of 6,000 tons compared to the previous campaign in which the district sold 17,000 tons of this crop to India, according to Radio Mozambique. 

The director of the District Services of Economic Activities in Cuamba, João de Almeida Júnior, points to the insufficient rainfall caused by the El Niño phenomenon as being the reason for the reduction in yield. He said that exporting pigeon peas to India brings gains in foreign exchange, partnerships, new opportunities and strengthens the economy of Mozambican families. In addition to pigeon peas, Cuamba district is currently also commercialising 2,000 tons of sesame and 1,800 tons of soybeans.

‘Peace Unity-2024’

Chinese Navy’s amphibious dock landing ship Qilianshan (Hull 985) arrived in the waters off Mozambique on the afternoon of August 2 local time. It will participate in the “Peace Unity-2024” joint exercise aiming at jointly safeguarding maritime security from August 6 to 8.

Participating troops from both China and Mozambique will conduct exercises on four subjects, including joint maritime patrols, visit, board, search and seizure (VBSS), maritime rescue, and anti-terrorism and anti-piracy.

On the morning of August 3, participating troops of Mozambique boarded the Chinese naval ship Qilianshan via a patrol boat for further consultations on the next step of the exercise. Prior to the exercise, the two sides conducted preliminary training and held discussions on operational command, tactical techniques, and other related matters.

It is learned that the Chinese naval ship Qilianshan, carrying a helicopter unit and participating troops, departed from Tanzania for Mozambique on the morning of July 29. During the voyage, it conducted exercises in preparation for the upcoming mission, including joint search and rescue operations, anti-terrorism and anti-piracy drills.

Mozambique: Reference rate to remain at 21.2%

The Mozambican Banking Association (AMB) announced on Friday that the reference interest rate for credit operations in Mozambique will remain at 21.2% in August, after six decreases since the beginning of the year. This rate, known as the “prime rate”, had been falling since 2018 until it reached a minimum of 15.5% in February 2021, when the trend reversed, and the rate began to rise until it reached 24.10% in July last year.

In January 2024, the rate returned to the values of April 2023 (23.5 %) after six consecutive months at highs of 24.10%, remaining unchanged in February by the AMB’s decision at 23.50%. It then fell in March to 23.10%, in April to 22.70%, in May to 22.30%, in June to 22%, and in July to 21.20%.

Increases in the prime rate are associated with the central bank raising the monetary policy interest rate (MIMO rate, which influences the formula for calculating the prime rate) to control inflation. The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided on 31 July to lower the main MIMO interest rate from 15% to 14.25%, justifying it with the prospect of inflation remaining in single digits in the medium term.

“This decision is underpinned by the continued consolidation of the inflation outlook in single digits in the medium term, in a context where the uncertainties associated with the projections remain favourable,” said the governor of the Bank of Mozambique during the presentation of the measures taken by the CPMO. The central bank and AMB agreed in 2017 to create the prime rate to eliminate the proliferation of reference rates on the cost of money.

At the time, it was launched with a value of 27.75%.

The promoters explained that the aim is for all credit operations to be based on a single rate, plus a margin (“spread”), which will be added to or subtracted from the “prime rate” by analysing the risk of each contract.

Money returned by Chang is deposited in the Bank of Mozambique

The Bank of Mozambique has been keeping the approximately US$7 million returned by Manuel Chang “for a long time”, said he central bank governor yesterday. Speaking at a press conference in the central bank’s Maputo headquarters, Rogério Zandamela maintained that it is time to celebrate the decision of the London Court rather than anticipating the more than US$2 billion yet to come. The announcement of more than US$2 billion in favour of Mozambique in the London court ruling on the ‘hidden debts’ case is good news and should be celebrated, Bank of Mozambique governor Rogério Zandamela says.

Zandamela distances himself from those who think that the money will never enter the coffers of the Mozambican state. “This is the time to celebrate, to hope that everything goes well. Nothing is easy. A country does not develop by easy things,” he said.

Regarding the benefits of the funds that could be channelled to the country, Zandamela explains: “We will celebrate with faith that this money will come in. We have to be proud of what we have achieved. We have to stop this idea that good things happen to people and bad things happen because we are incompetent. Good things are the result of effort.”

Zandamela confirmed that Mozambique received the money returned by Manuel Chang and says it is in the central bank’s custody. “It has been with us for a long time, a long time, twoyears,  three? It was before Covid. Until the prosecutor’s office and the courts decide, we are the custodians of this amount,” he explained. When asked about other amounts that may have been returned by the defendants in the context of undeclared debts, Rogério Zandamela offered no comment.

READ: Mozambique: Country expects to receive $1.9B after London ‘hidden debts’ ruling – PGR

‘Hidden Debts’: Prinvest should pay Mozambique 2.3 billion dollars – AIM report

Mozambique: Justice has $7 million returned by Manuel Chang, under PGR custody – Watch

Cabinet approves resolution on African Continental Free Trade Area

Mozambique’s government approved on Tuesday the resolution on Mozambique’s Tariff Offer for the Implementation of the Agreement creating the African Continental Free Trade Area (AfCFTA) and the national strategy for its implementation. The decision was taken by the cabinet, which met today in Maputo for its 24th Ordinary Session, according to a final communiqué that explains that the two resolutions will allow Mozambique to “access the AfCFTA Adjustment Fund”.

The fund “aims to assist States Parties implement the AfCFTA agreement, to limit possible negative impacts that may result from the implementation of the agreement,” the communiqué said. It will also allow Mozambique to start using the Pan-African Payment and Settlement System (PAPSS), “which will be made available jointly” by the African Export-Import Bank (Afreximbank) and the AfCFTA Secretariat, “to be used by African companies in intra-African commercial transactions”.

He added that Mozambique will “be part of the Guided Intra-African Trade Initiative for Goods”, which “aims to create real opportunities in Africa through economic operators from countries that have already submitted their tariff offers and are carrying out commercial transactions”, in this case in value chains such as ceramic tiles, batteries, vegetables, avocados, flowers, pharmaceuticals, palm oil, tea, rubber and air conditioning components. The secretary general of the African Continental Free Trade Area (AfCFTA), Wamkele Mene, said in Nassau on June 13 that despite the progress made, it would take time to fully implement intra-African trade.

“We did something that was a vision, and now it’s becoming a reality. What we are doing is establishing an integrated market, which has been a long-standing vision of African leaders,” said Wamkele Mene, speaking at the Annual Meetings of the African Export-Import Bank (AAM2024) and the 3rd Afro-Caribbean Trade and Investment Forum (ACTIF2024). In his speech, Mene emphasised the significant progress already made but warned of the importance of the political will of African leaders.

“We are on the right track in terms of building the legal basis that positions the continent to be a common market. The second important aspect is political will and commitment,” he said. Launched in 2018 and approved a year later, the African free trade agreement came into force at the beginning of 2021 and covers a market with more than 1.3 billion consumers.

The African Union estimates that its barrier-free realisation could increase trade growth by at least 53% and potentially double intra-African trade, lifting 30 million Africans out of extreme poverty and increasing the incomes of almost 68 million others. According to the World Bank, the continent’s Gross Domestic Product (GDP) could grow by $450 billion (around €420 billion) by 2035. The treaty eliminates customs duties on 97% of goods traded between African countries, liberalises trade in services, and improves regulatory and trade infrastructures.

Intra-African exports represent around 16% of African countries’ foreign trade, compared to 55% for Asia, 49% for North America and 63% for the European Union (EU). Despite this, 47 of the 54 members of the African Union have ratified the agreement, committing themselves to eliminating trade barriers and strengthening economic integration. Seven countries – Benin, Liberia, Libya, Madagascar, Somalia, South Sudan and Sudan – have yet to ratify it and Eritrea still doesn’t agree with the creation of the AfCFTA.