Economic slowdown

Falling oil and gas prices, the lack of a government budget, fear of Renamo violence and the possible bursting of the Maputo property bubble are combining to create a noticeable economic slowdown in Maputo. Gas and coal companies have all reduced staff and deferred some projects. Reuters reported Friday, as it did in 2013 and 2014, that Anadarko is considering selling its Mozambican gas interests to Exxon Mobil or Qatar Petroleum. Africa Energy Intelligence reports that another reason (or excuse) given for the slowdown is the failure of ENI and Anadarko to agree the boundary between two adjoining gas fields. And Abdul Carimo, chair of the Zambezia corridor (Corredor de Desenvolvimento Integrado da Zambezia, CODIZA) admitted last week that no one is willing to finance the proposed 500 km railway to transport coal from the mines in Moatize, Tete, to a new port at Macuse, Zambezia.Normally, the annual plan and budget is approved by parliament before the end of the previous year. But every five years a new government takes office in January and must propose a new plan and budget - largely written by the previous government, but always with some changes. Thus the new plan has been approved by parliament, but nearly four months into 2015 it has not yet approved the new budget. Salaries and day-to-day bills are being paid but no new projects have been started this year, which is beginning to have an impact on the construction sector.There was another kidnapping in Maputo on Thursday, the seventh of the year. Most are of people linked to the Asian business community. But the kidnappings and on-going threats of violence from Renamo have caused some business people to send families out of the country and some companies to reduce the number of foreign staff.Maputo is still a city of cranes and multi-story buildings growing up like weeds. But there are indications that the bubble may be bursting. Two years ago flats were being sold for high prices "off plan", before construction even started. Now there a huge banners on partly completed buildings offering flats, and sales people are telephoning everyone on their lists offering substantial discounts. Work has stopped on several partly finished buildings. The system had been to sell flats of partly finished buildings to pay the rest of the construction costs, which may no longer be possible. Many of the flats in finished buildings remain empty, possibly bought as an investment or a place for illegal money, and it appears there is less hot money around.In Maputo, many of the new restaurants run by Portuguese who fled a collapsing economy there are now offering cheap lunch deals and there seem to be fewer people in the more expensive restaurants. Taken together, there seems a noticeable decline in the Maputo economy.