managing editor: nigel morgan - rhula intelligent solutions weekly 22 april to 29 april 2016.pdf ·...
TRANSCRIPT
1
World Bank and UK government suspend direct financial aid to Mozambique in the wake of previously undisclosed
government-guaranteed debts (see pages 14-17).
Rhula Intelligent Solutions is a Private Risk Management Company servicing
multinational companies and private clients operating in Mozambique. The Rhula
Mozambique Weekly Report is currently being distributed to governments, in-country
embassies, non-governmental organisations, research institutes, foreign investors as
well as local businesses and individuals (on request). For additional information on who
we are and our services please visit www.rhula.net or contact:
Joe van der Walt Operations Director
Mobile (SA): +27 79 516 8710 Mobile (Moz): +258 826 780 038
Email: [email protected]
WEEKLY MEDIA REVIEW No. 128: 22 APRIL TO 29 APRIL 2016
www.rhula.net
Managing Editor: Nigel Morgan
David Barske Head of Research & Analysis
Mobile (SA): +27 76 691 8934 Mobile (Moz): +258 84 689 5140
Email: [email protected]
Disclaimer:
The information contained in this report is intended to provide general information on a particular subject or subjects. While all reasonable steps are taken to
ensure the accuracy and the integrity of information and date transmitted electronically and to preserve the confidentiality thereof, no liability or responsibility
whatsoever is accepted by us should information or date for whatever reason or cause be corrupted or fail to reach its intended destination. It is not an
exhaustive document on such subject(s), nor does it create a business or professional services relationship. The information contained herein is not intended
to constitute professional advice or services. The material discussed is meant to provide general information, and should not be acted on without obtaining
professional advice appropriately tailored to your individual needs. Your use of this document and the information it contains is at your own risk
2
TABLE OF CONTENTS
BUSINESS INDEX .......................................................................................................... 6
ECONOMY & BUSINESS ............................................................................................. 10
GRAPH 1: MOZAMBIQUE CURRENCY EVALUATION ......................................... 10
Macro-Economy: ...................................................................................................... 11
IMF welcomes information on previously undisclosed debts ...................................... 11
IMF statement on Mozambique – unabridged ............................................................ 12
Government starts releasing details on debts ............................................................ 13
Mozambican public debt now US$11.64 billion – Prime Minister Rosário .................. 14
World Bank suspends direct financial aid to Mozambique ......................................... 16
UK delays financial aid payments to Mozambique ..................................................... 17
Confidential report alerts investors to possible Mozambique ‘default’ ........................ 18
Banks to “think twice” about Mozambique .................................................................. 19
Mozambique investors claim banks withheld crucial information ............................... 21
CTA says public debt will increase costs ................................................................... 22
Shelves in Mozambique’s supermarkets may soon be empty, as in the 1980’s –
Economist .................................................................................................................. 23
Civil society calls for audit of public debt .................................................................... 24
Dubai Chamber on trade mission to South Africa and Mozambique next week ......... 25
President outlines opportunities with Belgian businesses .......................................... 26
Mozambique unrest ‘a threat’ to Malawi business ...................................................... 27
Africans investing in Africa ......................................................................................... 27
Financial Services:................................................................................................... 30
Former Barclays CEO teams up with Carlyle to bid for British bank’s Africa business
................................................................................................................................... 30
Standard & Poor’s sees South Africa’s banks up against growing credit risks ........... 31
Minerals & Energy:................................................................................................... 32
Analysis: has Mozambique already squandered its natural gas bonanza? ................ 32
3
Global LNG-prices jump on buy tenders and supply issues ....................................... 33
Mozambique has conditions to be a natural gas exporter .......................................... 34
Anadarko expects to reach agreement with government in the first half of 2016 ....... 35
ENI may benefit from tech savvy partner in Mozambique LNG-CFO ......................... 35
PTTEP to start Mozambique LNG project by end of year .......................................... 36
India has eyes on Mozambique energy...................................................................... 37
SacOil holds off signing Mozambique gas pipeline joint venture ................................ 38
SADC fuel channel expansion opens opportunities for logistics partners .................. 39
Iran seals GTL deal with South Africa ........................................................................ 41
Uganda picks Tanzania over Kenya for oil pipeline route .......................................... 42
Kenmare enters agreement for proposed US$100 million investment ....................... 43
Mozambique braces up for its first iron-ore mining project in Tete ............................. 43
Zimbabwe’s cash crisis fuels gold smuggling into Mozambique ................................ 44
Premier African Minerals buys 52% stake in Mozambique’s TCT .............................. 45
South African power utility Eskom is not under pressure to tap international markets to
help fund its ZAR340 billion (US$23.5 billion) five-year expansion plan, its chief
executive said on Tuesday 26 April. .......................................................................... 46
Transport & Construction: ...................................................................................... 47
Transport on agenda of Mozambique-Malawi-Zambia Summit .................................. 47
China’s CHEC involved in investment of US$1 billion in the new port of Maputo ...... 48
International companies compete for new Tete-Zambézia railway in Mozambique ... 49
President Nyusi inaugurates Cuamba water treatment station .................................. 49
Agriculture: ............................................................................................................... 50
South African farmers look to Africa ........................................................................... 50
Government demands compliance with lower food prices ......................................... 51
New director of Mozambique Cotton Institute urged to increase production .............. 52
Other: ........................................................................................................................ 52
Coca-Cola Mozambique hit by metical drop ............................................................... 52
Government announces new statutory minimum wages ............................................ 53
Mozambique’s employers say 2016 will be economically difficult .............................. 54
4
Matchedje Motors lays off 20 out of 60 workers in Mozambique ................................ 55
RBR Group Ltd finalises purchase of Registered Training Organisation ................... 55
POLITICS ...................................................................................................................... 56
Mozambique’s secret loans: what happens now? – Joseph Hanlon .......................... 56
Frelimo veteran says that hidden debts are sovereign ............................................... 57
Bar Association demands transparency over debt ..................................................... 57
“Mozambican government violated budget law in hidden borrowings” – CIP ............. 58
IMF was complacent and patronising towards Mozambique government – António
Francisco ................................................................................................................... 58
Government working to restore confidence – President Nyusi ................................... 59
MDM demands parliamentary inquiry into undisclosed debts .................................... 60
Renamo demands government explanation of debts ................................................. 61
Parliament will discuss undisclosed debts “at the right time” – Speaker .................... 62
Democracy not compatible with armed parties .......................................................... 63
Bilateral relations with Germany will not suffer any setbacks despite military crisis in
the country ................................................................................................................. 64
King of Swaziland visits Mozambique ........................................................................ 64
Mozambique chairs defence body of the Community of Portuguese Speaking
Countries .................................................................................................................... 65
President Nyusi receives credentials of new ambassadors ....................................... 65
SECURITY .................................................................................................................... 65
Renamo and Frelimo accused of targeting civilians in tat-for-tat violence .................. 65
Renamo armed attempt to occupy Chiramba ............................................................. 67
“Situation calm in Chiramba” – Defence Minister ....................................................... 68
“No Renamo gunmen in Mossurize” – PRM ............................................................... 68
Mass grave with more than 100 corpses discovered in Gorongosa district ................ 69
Carriers suspend routes in Tete ................................................................................. 69
Police threaten to repress illegal protests .................................................................. 70
Mozambique boosts security in Maputo due to demonstration fears ......................... 71
5
Mozambican civil society distances itself from demonstration calls ........................... 71
Frelimo warns of risk of looting during protests against debt ..................................... 72
Foreign citizens in Maputo and Matola advised to remain vigilant, avoid large crowds
................................................................................................................................... 72
CRIME ........................................................................................................................... 73
MAP 1: KIDNAPPING INCIDENTS IN CENTRAL MAPUTO 2014 – 2016 ............. 73
GRAPH 2: REPORTED KIDNAPPINGS PER YEAR ............................................. 74
GRAPH 3: TIME OF KIDNAPPINGS 2014 - 2016 .................................................. 74
GRAPH 4: KIDNAPPINGS PER GENDER / AGE-GROUP 2014 - 2016 ................ 75
ZAR58 million heroin bust at South African border with Mozambique ....................... 75
16 arrested in Zambézia in 2015 for crimes against albinos ...................................... 75
Indian citizen murdered in Chimoio ............................................................................ 76
17 Malawians detained in Manica Province ............................................................... 77
23 Malawians detained in Inhambane ........................................................................ 77
Community Security Council established in the districts of Matlemele and Nkobe .... 77
Mozambique registers 51 prison deaths in first quarter.............................................. 77
HUMAN RIGHTS, SOCIAL DEVELOPMENT AND NGO’S ......................................... 78
Zimbabwe on alert amid Mozambique tensions ......................................................... 78
Cholera and weather concerns scare Mozambican refugees during relocation process
................................................................................................................................... 78
President Nyusi announces joint refugee commission with Malawi ........................... 79
MDM accuses government of indifference towards Mozambican refugees in Malawi 80
WILDLIFE AND ENVIRONMENTAL PROTECTION .................................................... 80
Australia may take in African rhinos to prevent extinction .......................................... 80
Africa leaders and conservationists seek end to slaughter of elephants, rhinos ........ 81
Anti-poaching lessons from Tanzania ........................................................................ 82
Swaziland unveils plan to legalise rhino horn to pay for anti-poaching efforts ........... 84
How to steal an ivory stockpile ................................................................................... 85
6
PRM arrest suspected poachers in Inhambane ......................................................... 89
HEALTH ........................................................................................................................ 89
Mozambique “Number one suicide nation in Africa” – WHO ...................................... 89
Funding for construction of new Nampula General Hospital secured ........................ 90
Substantial decline in mortality from malaria .............................................................. 91
‘Goodbye Malaria’ aims to eliminate Malaria by 2030 ................................................ 92
‘Malaria bond’ set to play innovative role in fundraising ............................................. 92
Update: giant rats helping control TB in Mozambique ................................................ 93
BUSINESS INDEX
Aberdeen Asset Management 22
Absa 31, 43
AfDB 50
AFGRI 51
Africa Finance Corporation 29
Al Fardan Group of Companies 25
AME Trade 35
Anadarko 14, 15, 20, 35, 36, 39
Anglo American 47
Ashmore 22
Atlas Mara 27
Atlas Merchant Capital 30
Attijariwafa Bank 30
Barclays 30, 31, 43
Barclays Africa Group Limited 31
Bela Vista Holdings 48
BlackRock 22
BMCE 30
BP 36
Brenthurst Foundation 28
Carlyle Group 30
7
CFM 49
Chetu Limitada 39
China Harbour Engineering Co. 48, 49
China Henan International Cooperation Group 50
China Petroleum Technology Development Corporation 38
CNOOC 42
CNPC 37
Coca-Cola 52
Cove Energy 36
CPP 37, 38
Credit Suisse 11, 12, 13, 16, 18, 19, 20, 21, 22
Crossroads Distribution 39
D. Capital Partners 92
Dalberg 92, 93
Dangote Group 28
Ecobank 27, 28, 29
EduHub 25
EGAS 34
EIU 49
Ematum 11, 14, 15, 16, 18, 19, 20, 21, 22, 24, 25, 56, 58, 59, 60, 61
Emopesca 14
ENH 34, 35, 37, 38
ENI 14, 15, 20, 35, 39
Eskom 46, 47
Essa Al-Ghurair Investments L.L.C, 25
European Investment Bank 43
Exx Africa 19, 20
Exxaro 47
Fidelity Printers and Refinery 44
Futuro Skills 55
GAPI Sociedade de Investimentos SA 45
Gerab National Enterprises 25
Gigajoule Group 39
GIPS 14, 15
GKB Ventures 20
Glencore 47
8
GSPC 34
Haggar Trading 29
Huadian Corp 36
ICVL 38
Illovo 29, 30
Iluka 43
Imobiliária 39
Invest Africa 25
Jindal 38
Kansai 34
Kenmare 43
King Ally Holdings 43
Kogas 34
Komipo 33
Logística e Procurment 39
M&G Investments 43
Majid Al Futtaim Retail 25
Mara Group 31
Maroc Telecom 30
Matchedje Motors 55
Moody’s 17
Mozambique Asset Management 12, 14
MTN 28
Nagi Investments 69
Nandos 92
NN Investment Partners 21
Orlean Invest 12
PacMoz 55
PB Projects 51
PCD 15
PetroSA 41
Phambile Investimentos 39
Premier African Minerals Ltd. 45
Profin Consulting 38, 39
Progas Investment 38
Proindicus 11, 13, 14, 15, 21, 22, 25, 61
9
Prudential 43
PTTEP 36, 37
Public Investment Corporation 39
RBR Group Ltd. 55
Reserve Bank of Zimbabwe 44
Rio Tinto 38
Royal Air Maroc 30
SacOil 37, 38, 39
Sasol 41
Senter360 51
ShopRite 28, 29
Sociedade Unipessoal Limitada 39
South African Reserve Bank 39
South32 47
Standard & Poor’s 31
Standard Bank 25, 31
TCT Industrias Florestais Ltd. 45
Thai Development Company Limited 49
Thai Moçambique Logística 49
Total 42
Transnet 48
Transport Commodity Trading Mozambique Ltd. 45
Tullow Oil 42
VTB 11, 12, 13, 16, 18, 19, 20, 21, 22
World Bank 11, 13, 15, 16, 17, 18, 19, 20, 56
YPF 34
10
ECONOMY & BUSINESS
Mozambique Exchange Rate and Fuel Prices: 29 April 2016
GRAPH 1: MOZAMBIQUE CURRENCY EVALUATION
Mozambique Fuel Prices
Fuel Type Price Per Litre
Petrol 47,52MT
Diesel 36,81MT
Prices only valid for Maputo, Beira and Nacala
Mozambique Metical (MZN) Exchange Rate
Currency Buy Sell
Euro (EUR) 54,13 55,23
U.S. Dollar (USD) 47,50 48,46
S.A. Rand (ZAR) 3,34 3,40
11
Macro-Economy:
IMF welcomes information on previously undisclosed debts
In a brief statement issued on Saturday 23 April, the International Monetary Fund (IMF) welcomed the Mozambican government’s acknowledgement “that an amount in excess of US$1-billion of external debt guaranteed by the government had not previously been disclosed to the Fund”.
These undisclosed loans first came to light in an article in The Wall Street Journal on 3 April. The IMF reacted by suspending a mission that was to have visited Mozambique during the course of the week 15 to 22 April, and halting disbursement of the second instalment of a US$283 million loan agreed last October from the Fund’s Standby Credit Facility (SCF).
Prime Minister Carlos Agostinho do Rosário went to Washington on Tuesday 19 April, for talks with IMF Managing Director Christine Lagarde, and with World Bank staff. A technical team headed by the Deputy Minister of Economy and Finance, Maria Isaltina Lucas, also worked with the IMF on the details of the undisclosed loans.
The first official IMF reaction to these talks came on Saturday, when the IMF Mission Chief for Mozambique, Michel Lazare, issued a very brief statement which welcomed “the authorities’ extensive disclosure of information which constitutes an important first step toward full restoration of trust and confidence”.
Lazare added that: “the Fund and Mozambique will continue to work together constructively to evaluate the
macro-economic implications of this disclosure of information and identify steps to consolidate financial stability, debt sustainability and enhance governance and oversight of public enterprises”.
This sparse statement contained no information on what the government guaranteed debt was spent on. But other IMF officials, speaking on condition of anonymity, told reporters that the undisclosed loans amounted to roughly US$1.35 billion.
This is in addition to the US$850 million government guaranteed bond issued by the Mozambique Tuna Company (Ematum) in 2013. The conditions attached to that bond were unbearable, and so the government successfully swapped the Ematum bond for sovereign government debt, with an extra two years for repayment (up to 2023), but at a higher interest rate (10.5%).
Breaking down the previously undisclosed loans, an IMF source confirmed that the state company Proindicus had been lent US$504 million by the Swiss bank Credit Suisse and US$118 million by Russia’s VTB. This confirms a statement by Mozambique’s Finance Minister Adriano Maleiane that the Proindicus loans are for US$622 million.
Reuters managed to obtain a document on this loan from Credit Suisse, which said that the money “was to be spent on high-speed naval interceptors, radar stations, off-shore patrol vessels and aircrafts”. Credit Suisse refused to comment on the document.
This use of the money fits in with concerns about piracy and the safety of offshore drilling operations. Huge deposits
12
of natural gas have been discovered in the Rovuma Basin, off the coast of the northern province of Cabo Delgado, and the drilling platforms and auxiliary vessels require protection.
Also connected with the nascent hydrocarbon industry is a second undisclosed loan, for US$535 million which, according to the IMF source, went to “Mozambique Asset Management”, another state company which is involved in building the Pemba Logistical Base, in the Cabo Delgado Provincial capital of Pemba, to support oil and gas operations.
There was no mention of this company at the ceremony in August 2014 when the then president, Armando Guebuza, laid the first stone for the logistics base.
The base has been sub-leased to a consortium in which the main investor is the Nigerian company Orlean Invest, which is already involved in hydrocarbon logistical facilities in Nigeria and Angola. At the time, it was believed that construction costs for the Pemba Logistical Base would be borne by Orlean Invest.
The IMF source also told Reuters that the Mozambican Interior Ministry had borrowed between US$130 million and US$200 million “from an unidentified bilateral lender”. Absolutely no details of this alleged loan have yet come to light.
Another IMF source told Reuters that: “We’re confident that we’re not going to find anything else”, adding that Prime Minister Rosário’s visit had gone some way to mending relations. “But we can’t just go back to where we were. That takes time”.
Mozambique’s debt situation was now “very close to unsustainability”, the source added.
The failure of Mozambique, Credit Suisse and VTB to disclose the extra borrowing during negotiations to reschedule the tuna bond has infuriated investors, some of whom have threatened to sue.
However, the IMF source urged them to be patient, saying that reigniting tensions would be more likely to trigger a serious default
Source: Agencia de Informacao de Moçambique/CNBC/Reuters Johannesburg
IMF statement on Mozambique – unabridged
Press Release No. 16/184
23 April 2016
Michel Lazare, the IMF Mission Chief for Mozambique, issued the following statement on Saturday:
“Following a meeting held earlier this week between Carlos Agostinho do Rosário, Prime Minister of Mozambique, and Ms. Christine Lagarde, IMF Managing Director, a technical team led by the Vice-Minister of Finance, Ms. Isaltina Lucas, worked intensively with the IMF Mozambique staff team.
The authorities acknowledged that an amount in excess of US$1-billion of external debt guaranteed by the government had not previously been disclosed to the Fund. Staff welcomed the authorities’ extensive disclosure of information which constitutes an important first step toward full restoration of trust and confidence.
13
Looking ahead, the Fund and Mozambique will continue to work together constructively to evaluate the macro-economic implications of this disclosure of information and identify steps to consolidate financial stability, debt sustainability and enhance governance and oversight of public enterprises”.
Source: IMF
Government starts releasing details on debts
On Tuesday 26 April, government spokesperson and Deputy Minister of Health, Mouzinho Saíde, justified previously undisclosed government debts as necessary for the “protection of strategic infrastructures”.
Speaking to reporters at the end of the weekly session of the Council of Ministers (Cabinet), Deputy Minister Saíde confirmed that the previously undisclosed government-guaranteed debts amounted to US$1.382 billion.
These debts, mostly contracted in 2013 and 2014 by the previous government, headed by president Armando Guebuza, had not been disclosed to the Mozambican public or to the IMF.
When, thanks to international press coverage earlier this month, the IMF discovered that the government had not revealed the true situation of the public debt, it cancelled a mission that was scheduled to have visited Maputo during the course of the week 15 to 22 April, and suspended the second instalment of a loan from the Fund's SCF. Prime Minister Carlos Agostinho do Rosário visited Washington from 19 to 22 April for urgent talks with IMF and World Bank officials,
and promised to make details of the debts public.
Deputy Minister Saíde took a step in this direction on Tuesday. He said that the largest of the hitherto undeclared government guarantees went to the state company Proindicus, which borrowed US$622 million from the Swiss bank Credit Suisse and from the Russian VTB.
The deputy minister said Proindicus had been established in 2012 as the national authority responsible for protecting strategic national infrastructures and the country's Exclusive Economic Zone (stretching for 200 nautical miles from the coast). At the time there were clear threats to the security of Mozambican waters, said Deputy Minister Saíde, (for example: in 2010 Somali pirates seized a Mozambican fishing vessel, the “Vega 5”, off the coast of the southern province of Inhambane).
Other threats included illegal fishing, illegal immigration and drug trafficking, said Deputy Minister Saíde. “These threats, plus the need to protect the assets of oil and gas companies operating in the Exclusive Economic Zone, meant that Proindicus had to acquire resources which would allow management of an integrated system of monitoring and protection”, he added.
Those resources included various types of boat, maritime patrol aircraft, radars along the length of the Mozambican coast, and contracts for satellite communications. Deputy Minister Saíde did not say how many boats or aircrafts Proindicus had acquired, or the unit cost of each of them.
The oil and gas companies he mentioned are working in the Rovuma Basin off the coast of the northern province of Cabo
14
Delgado, where large reserves of natural gas have been found. There are two consortia here, one headed by the US company Anadarko, and one by the Italian ENI. Deputy Minister Saíde did not say whether they would be expected to pay for the protective services offered by Proindicus.
A second government guaranteed loan, this time for US$535 million, went to the previously unheard-of company Mozambique Asset Management (MAM).
The final undisclosed debt mentioned by Deputy Minister Saíde is a US$225 million bilateral credit for the Ministry of the Interior, covering the period 2009-2014. The deputy minister did not reveal who had lent the money, or which of the many areas run by the Ministry of the Interior it had been spent on. He did, however, promise that more details on the debts would be forthcoming in the near future.
Source: Agencia de Informacao de Moçambique
Mozambican public debt now US$11.64 billion – Prime Minister Rosário
On Thursday 28 April, Prime Minister Carlos Agostinho do Rosário announced that Mozambique’s total public debt stood at US$11.64 billion, as of 31 December 2015.
Speaking at a Maputo press conference called to explain the country’s current economic situation, he said that the overwhelming majority of the debt – US$9.89 billion – was foreign debt (a slight increase from previous estimates of US$9.64 billion). The confirmed domestic debt was US$1.75 billion, while a sum of US$233 million was still being reconciled.
From the figures released by Prime Minister Rosário it is clear that the foreign debt ballooned enormously under the previous government, led by president Armando Guebuza. The Guebuza government guaranteed loans taken out by three publicly-owned companies in 2013-2014 amounting to just over US$2 billion. That is over 17% of the total foreign debt.
Of these three companies, the only one known to the Mozambican public, or to the IMF, prior to this month was Ematum, which issued bonds for US$850 million in 2013, fully guaranteed by the government.
The two large undisclosed loans were to companies called Proindicus (US$622 million) and Mozambique Assets Management (US$535 million).
Prime Minister Rosário said that the purpose of Proindicus “is to provide security services to hydrocarbon companies, to protect maritime traffic and vessels and to provide search and rescue services in Mozambican territorial waters”.
As for MAM, its purpose was to provide maintenance and repair services to Proindicus and other companies, so that they did not send foreign currency out of the country in order to purchase these services. Proindicus is owned by the same three public concerns that own Ematum – the Institute for the Management of State Holdings (IGEPE), the public fishing company Emopesca, and GIPS (Investments, Holdings and Services Management). Although the latter is a limited company, it is mostly owned by the social services of the State Intelligence and Security Agency (SISE).
As for MAM, Finance Minister Adriano Maleiane told the press conference that it
15
is 98% owned by GIPS, 1% by Ematum and 1% by Proindicus.
Minister Maleiane said that the Proindicus loan is to be repaid in the next five years at an interest rate of 3.75%. The first payment is due in May, and that is for just US$24 million. But over the five-year period, the repayments will be running at an average of US$119 million a year.
As for MAM, the repayment period is four years at an interest rate of 7.7%. As with Proindicus, the first payment falls due in May. But it is for US$124 million. Minister Maleiane said that MAM “is looking for a solution for the first payment”. It was “trying to find the resources”. But if it failed, then the State would have to pay.
“The State has issued guarantees and these are to be honoured if the companies cannot honour their payments”, he admitted. Prime Minister Rosário divided these debts into public and commercial components. “We want to make it clear that the State will pay the public interest part of the debts, while the commercial component must be paid by the respective companies”.
Proindicus and MAM are supposed to run at a profit by selling their services to oil and gas companies and other maritime enterprises – this had not happened so far, Prime Minister Rosário said, because it had taken longer than expected for the main hydrocarbon prospection companies, the American Anadarko and ENI of Italy, to reach their final investment decisions.
“It was assumed that by now Anadarko and ENI would be operating”, he said. That would go towards covering the commercial part of the debt. But currently there was no revenue coming in from
Anadarko or ENI paying for the services that could be provided by Proindicus and MAM.
One of the aims of MAM is to set up a floating dock to repair vessels at sea. Minister Maleiane believes that other private companies could take a stake in this dock.
He denied that MAM had anything to do with the Logistical Base being set up in Pemba (Cabo Delgado Province), to provide services for the oil and gas industry. MAM was not linked to the public company Ports of Cabo Delgado (PCD), which has the lease on the Pemba base.
Yet, according to comments by government spokesperson and Deputy Health Minister, Mouzinho Saíde, made on Tuesday, MAM will operate a shipyard in Pemba. Not only is there no new shipyard other than the Logistical Base, but the whole Cabo Delgado coast, from Palma (the nearest district to the natural gas discoveries in the Rovuma Basin) to Pemba, has been leased to PCD.
Prime Minister Rosário admitted that the information on the Proindicus and MAM debts “should have been shared in good time with the Mozambican people and with the international cooperation partners, including the IMF and the World Bank”.
But “the sensitive moment, characterised by instability, together with the transition from the previous government to the new cycle of governance which began in 2015, meant that we had knowledge and gradual contact with the dossiers on these debts as we went into greater depth about what was already known”.
16
This is a polite way of claiming that Guebuza’s outgoing government did not inform the new government of the true state of the country’s debts.
“We could have done better”, admitted Prime Minister Rosário. But it had been difficult to discuss debts that concerned “state security” in the “atypical situation” when the main opposition party, Renamo, had one foot in parliament, and the other in a bush war against the government.
As for the deal struck with the Ematum bondholders whereby the Ematum bond was transformed into a sovereign government bond, Prime Minister Rosário thought this was good for the country, despite the higher interest rate (10.5%).
Under the original arrangement the government was paying the bondholders roughly US$200 million a year. But now the payments were staggered over a longer period. As from 2017, interest on the bond of US$78 million a year will be paid (in six-monthly payments of US$39 million).
This is a “bullet bond”, meaning that the capital will be paid in a lump sum at the end. That single payment will come in 2023, and Prime Minister Rosário put it at US$731 million. Efforts would be made to make Ematum a going concern. “To ensure that Ematum pays its part, a strategic partner is being identified who can bring experience and technical capacity to make the company profitable”.
Asked why the government had opted to buy the 24 Ematum fishing boats from a shipyard in Cherbourg (France) rather than issuing an international tender, since there are many shipyards across the globe that can build fishing boats,
Fisheries Minister Agostinho Mondlane claimed this was a matter of economy.
He said the order also contained military vessels, and in general military equipment is not put out to tender. It had been decided to put the six military speedboats and the 24 fishing boats in the same order, and so they had to come from the same shipyard. He was confident that a single order for the 30 boats had lowered costs.
Source: Agencia de Informacao de Moçambique/Paul Fauvet/Reuters
World Bank suspends direct financial aid to Mozambique
On Wednesday 27 April, the World Bank announced that it is suspending direct financial aid to Mozambique, therefore joining the IMF in cutting off budgetary assistance after learning of more than US$1 billion in previously undisclosed loans, reports The Wall Street Journal, citing a source familiar to the matter.
The World Bank “will continue to fund individual investment projects, but it is suspending payments of approximately US$40 million this year for direct budgetary support”, reads the report, pointing out that the financial institution “had more than US$1.6 billion committed to Mozambique across 23 different projects as of October and was expected to provide approximately US$110 million this year for direct budgetary support, of which US$70 million have been disbursed”.
In the article The Wall Street Journal recalls how it had previously reported that Credit Suisse Group AG, Russia’s VTB Group “and others” had loaned more than
17
US$1 billion to Mozambique’s government starting in 2013.
“In 2013, when most of the loans were made, Mozambique’s official budget included US$6 million in government-guaranteed debt. Yet the country loaded up with nearly US$1.5 billion in government-guaranteed debt, vastly more than its parliament had approved”, reports The Wall Street Journal.
Following the first Wall Street Journal report, the IMF announced that it had stopped disbursement of a US$55 million loan and had suspended lending, because Mozambique had violated the terms of its agreement by failing to disclose the loans.
“With the World Bank also pulling back, Mozambique is getting pinched by both its long-term and immediate sources of aid”, writes The Wall Street Journal, stressing that: “the loan disbursements from the IMF are short-term emergency assistance to help shore up its finances”, and that the World Bank’s funding, “which includes grant and loan programmes that can run for up to 40 years, is for the country’s longer-term development”.
Before the loans were disclosed, Mozambique’s debt risk profile was considered “moderate” by the IMF. The newly disclosed debt is expected to shift the country’s debt risk to “high”.
The person familiar with the discussions between the World Bank and Mozambique told The Wall Street Journal that: “a downgrade would trigger a series of changes to the World Bank’s support in the country, reducing the overall amount of aid to the country and increasing grants as a percentage of aid”.
The Wall Street Journal adds that the World Bank’s general budget support payments will be on hold until the IMF finishes its analysis, a process that could take months, according to the person familiar with the matter.
“Processing of investment lending currently continues, while further approval of development policy loans is delayed pending the DSA and the analysis of macro-economic stability by the IMF and the World Bank”, the World Bank spokesperson said.
“Following the DSA, a decision will be made on the volume of World Bank support to Mozambique”. Lucie Villa, a vice president and senior analyst with Moody’s Investors Service’s sovereign risk group, said the ratings firm is closely following Mozambique’s status in the IMF programme because without IMF support, the country’s ability to raise cash from either donors or investors will be limited, fuelling liquidity concerns.
Source: The Wall Street Journal/Reuters
UK delays financial aid payments to Mozambique
On Thursday 28 April, the UK government said it was delaying all financial aid payments to the government of Mozambique, following confirmation of undisclosed loans which it said appeared to be “a serious breach of trust”.
The announcement follows the decision of the World Bank and the IMF to suspend direct financial aid to Mozambique after learning of more than US$1 billion in previously undisclosed loans. The move by the UK government is a fresh blow to one of the world’s poorest countries, which relies heavily on international
18
donors that make contributions for food, medicine, schools and other essentials.
The Wall Street Journal previously reported that Credit Suisse Group AG, Russia’s VTB Group and others had lent more than US$1 billion to Mozambique’s government starting in 2013.
A spokesperson for the UK Department for International Development (DFID), Cordelia Nelson, cited in the British government statement, said that: “the existence of the loans, and the lack of transparency around them, is deeply disappointing”, and warned of “serious implications for Mozambique’s economy for the medium-term”.
“This appears to be a serious breach of trust, so we are working closely with other international partners to establish the truth and co-ordinate an appropriate response”, Nelson added. “We support the IMF’s call for full disclosure of loan transactions and debt to the people of Mozambique. Any undisclosed debt-related transactions, irrespective of their purpose, need to be reported transparently and publicly”.
“The UK follows strict rules and procedures when providing aid and our priority continues to be supporting the people of Mozambique to lift themselves out of poverty and build a more prosperous country”, she said.
A £25 million (US$36.4 million) payment that would have been due shortly through an economic development policy grant has been suspended, said Nelson. The UK said it doesn’t provide general budget support to Mozambique and that there is no evidence to date of any misuse of UK funds.
The World Bank is holding back payments of US$40 million this year for direct budgetary support as a result of the undisclosed lending. The IMF stopped a US$55 million loan disbursement to the country after it learned about the undisclosed loans, which so far amount to approximately 10% of GDP.
The disclosure has placed the country on rocky terrain with donors, who provide approximately 30% of the country’s revenue, according to analysts. Donors rely heavily on information from the IMF when making lending decisions and the country’s relationship with the IMF requires full disclosure of all borrowing.
Source: The Wall Street Journal/Julie Wernau/Matthieu Wirz/Agencia de Informacao de Moçambique
[ Note: Mozambique’s leading foreign donors are: 1) the USA: 2) World Bank; 3) UK; 4) EU; and 5) Sweden.]
Confidential report alerts investors to possible Mozambique ‘default’
In March this year, the government of Mozambique admitted that any borrowing beyond the debt sustainability threshold may have an adverse effect on the country’s ability to pay and force it to default.
According to a memorandum accompanying the confidential prospectus sent to holders of Ematum bonds in March, the Ministry of Finance lists the possibility of more loans among the default risks.
“Any future loans beyond the sustainable levels of debt may have an adverse material effect on the economy of Mozambique and its ability to service debt, including the sovereign debt bonds
19
that replace the Ematum obligations”, the document reads. Altogether, there are 21 such risks identified in the document, 19 internal and two external. The external risks include the possibility of “volatility in global raw material prices” and a “slowdown in world economy, instability in international financial markets and other negative external economic shocks”.
Among the 19 internal risks identified in the document that serves as a financial and economic presentation of Mozambique to investors, which was conveyed by Credit Suisse and the Russian VTB, it is admitted that “investing in securities in emerging markets such as Mozambique generally involves a higher risk than in developed markets”.
The document also notes that: “Mozambique has in the recent past experienced volatility and violence in relation to the acquisition or maintenance of political power”, and adds that if a significant degree of “political violence or instability occurs, the manufacturing industry, agriculture, mining and quarrying, tourism and foreign investment levels, among other things, could suffer, adversely affecting the economy of Mozambique”.
In addition to the admission of over-dependence on imports and agriculture, the possibility of natural gas projects being postponed and difficulties with power supply, the document also explains that: “certain segments of the Mozambican economy are not registered and a failure by the government to broaden the tax base could have a negative impact on economic growth”.
The memorandum also notes that: “the banking sector is highly concentrated”, and says: “if the government is unable to
achieve budgetary targets and limit the budget deficit, the Mozambican economy may be adversely affected”.
The memorandum of Information, whose authorship is attributed to the Republic of Mozambique, is part of the prospectus distributed in March by the two banks to potential investors in sovereign debt which already held Ematum bonds, and includes a set of information about the country and, in particular, the value of public debt since 2012, in addition to the detailed explanation of the process of exchanging the securities for sovereign debt securities.
Source: Lusa
Banks to “think twice” about Mozambique
The recent disclosure of Mozambique’s excessive hidden debt has put a dent in investor confidence, and banks looking to lend to the country’s promising oil and gas sector are likely to approach future commitments with caution.
Following news that the country had deliberately kept the existence of loans secret from the IMF, the organisation cancelled the disbursement of the second tranche of a US$283 million emergency loan to Mozambique. The World Bank’s International Development Association (IDA) is also set to suspend its loans, amounting to US$419 million, to the country.
Other international financial institutions (IFI) are set to follow, says Robert Besseling, executive director of Exx Africa. “Both the IMF and the World Bank have now downgraded their assessment of Mozambique’s debt to high risk”, he told Global Trade Review. “That denies
20
the country eligibility status for IFI lending”.
“Because of this new high-risk debt rating, technically the World Bank, the IMF and other IFIs are no longer able to lend to Mozambique – they can only give grants. And given the huge drop in confidence and the humiliation the IFIs have suffered in Mozambique of late, it’s unlikely that they’re going to grant cash to the country”, Besseling adds. Exx Africa warned back in December 2015 that Mozambique was at severe risk of financial collapse over the next six months “as the government runs out of foreign currency and defaults on its lending commitments”, reads a media research note issued by the company.
“Mozambique’s newly-disclosed debt burden is unmanageable and it is increasingly likely that the IMF and World Bank will allow the sovereign to default on its obligations. The disclosures also throw into uncertainty the recently-concluded restructuring of the Ematum debt which was provided by Credit Suisse and VTB Bank. The prospect of a sovereign default by Mozambique in the next few months has now become likely”, the note says, adding that the company expects many small businesses and banks to go bankrupt in 2016, raising counterparty risks for foreign investors.
Nevertheless, the latest developments are not expected to have any direct implication for lending to the country’s burgeoning oil and gas sector – at least in the near future – as this is private financing organised by companies such as ENI and Anadarko.
“These loans have nothing to do with what the private companies themselves are gearing up to invest in the oil and gas
sector and LNG development, once final investment decision is signed off”, Besseling said. But he concedes that a lot of banks that are going to be lending eventually to oil and gas and the LNG sector (for which there is still no final investment decision in place) will “think twice” before committing. “There will be a longer-term implication once these companies go to market to get financing for their projects”, he says. Gabriel Buck, managing director of GKB Ventures, agrees that investor appetite will be knocked in the long term.
“There are other countries in Africa where Mozambique is going to be competing against for long term funding: so those investors that have appetite will have the same sort of appetite for other countries in sub-Saharan Africa. There is a real risk that they will divert their exposure and interest into other markets”, he said.
Yet, he stresses that the fundamentals of Mozambique, including its vast natural resources, have not changed. What does change, he says, is the decision-making process and the knock-on impact with the IMF “whether these programmes are going to be delayed and whether such delay in coming on stream will have a negative impact in the flow of hard currency revenue”.
“The changes in Mozambique further demonstrate the need for local currency financing. Having for example, export credit agency financing in local currency could have helped Mozambique on two fronts. Firstly, in ensuring that the funding is used as intended and secondly helping to mitigate the FX risk when a currency devalues against the US dollar”, Buck adds.
Source: Global Trade Review
21
Mozambique investors claim banks withheld crucial information
Investors in Mozambique’s newly exchanged bond are speaking to lawyers about bringing a lawsuit against the deal’s arrangers, Credit Suisse and VTB, after claiming that crucial information was withheld by the banks.
Mozambique exchanged government-guaranteed debt issued by Ematum into bonds issued directly by the sovereign earlier this month. Bondholders representing more than 80% of the US$850 million Ematum bonds, which were due to mature in 2020, swapped them for US$726 million of Mozambique bonds that come due in 2023. The exchange, which the banks say was undertaken to ease Mozambique’s repayment schedule, was arranged by Credit Suisse and VTB.
But at the time of the exchange, investors said they were unaware that the two banks had previously made bilateral loans to state-owned Mozambique entities, guaranteed by the government, that are due to be repaid before the new bond matures.
Investors claim that by not clearly disclosing the loans, the banks have acted dishonestly. At the moment, investors say that more has been disclosed about Credit Suisse’s bilateral arrangements with Mozambique and so they have turned their attention more towards the Swiss bank until they find out further details about VTB’s exposure.
“The day after the tender, Credit Suisse said there was another loan”, said Marco Ruijer, portfolio manager at NN Investment Partners. “They never told us in the prospectus. It was perhaps not
prudent of Credit Suisse to do a restructuring to extend the maturity from 2020 to 2023 when they themselves have a loan on the books which is maturing before 2023. It is a little bit murky of Credit Suisse”.
The Credit Suisse loan is a US$620 million facility to Proindicus, a state entity owned by the Ministries of Interior and Defence and the State Security and Intelligence Service, which comes due in 2022, according to three investors. Meanwhile, a VTB loan made to another Mozambique entity was for US$520 million, according to investors, although they do not know when it matures, with some claiming it comes due as soon as 2021.
“The fact that there is a maturity date before the bond and of around the same size as the bond that the banks have not clearly told the market is upsetting”, said a second investor that holds the Mozambique notes.
The bond exchange prospectus does say that “an affiliate of Credit Suisse Securities (Europe) Limited has a lending relationship with a wholly-owned state entity whose obligations have the benefit of a guarantee from Mozambique”.
The prospectus also outlines that there may be conflicts of interest involving the joint dealer-managers and other firms associated with the exchange, which includes dealing “in debt securities or other obligations of any type of Mozambique or state-owned entities”.
But there is no mention of the size or maturity profile of the specific Proindicus loan. A statement sent to The International Financing Review from the VTB press office said: “We do not believe
22
that there was any undisclosed conflict of interest and we are not aware of any litigation. Mozambique has multiple financing arrangements with varying maturities with different creditors not all of which are known to us.
“VTB’s lending relationships were clearly disclosed in the offer and exchange documents and in the financial press and every opportunity was made available to investors to ask further questions during the process”.
Credit Suisse declined to make an official comment. One investor said that Credit Suisse only disclosed the loan it made to Proindicus because there was a clause in the loan that said if Ematum undertook an exchange, Credit Suisse had to inform investors that they could accelerate payment on the Ematum bond.
Mozambique’s first foray into the capital markets via Ematum was already swamped in controversy before investors found out about the loans.
Mozambique’s previous government admitted to spending US$500 million of the US$850 million Ematum proceeds on defence, and not on the country’s nascent tuna-fishing industry – the intended use of funds detailed in the prospectus.
Calling in legal:
Investors say they have created an informal group to explore taking legal action against the banks.
“I believe it was illegal and there are grounds for a lawsuit”, said a third investor with a position in the Mozambique bonds. The second investor said: “Mozambique will not be the target of the suit. It’s going to be the brokers
[Credit Suisse and VTB]. Some other investors have started seeking outside council”. The investor said he has not officially sought outside council, but has had informal conversations with legal experts about the options for taking action.
In total, 84 investment houses held the Ematum bonds before the exchange took place, including major emerging market players like BlackRock, Ashmore, and Aberdeen Asset Management, Thomson Reuters data show.
Source: Reuters
CTA says public debt will increase costs
On Tuesday 26 April, the Confederation of Economic Associations of Mozambique (CTA), said that the increase in public debt will make financing more expensive, and called on the government to reveal the true magnitude of the problem.
“There is no doubt that the implications for company activity are negative, because the country’s image is tarnished by these revelations. The cost to companies and to the national economy of financing will be higher”, CTA spokesperson Eduardo Sengo told Lusa.
The revelation of secret debts contracted between 2013 and 2014 by the Mozambican government project the image of a barely serious country, and will make doing business more expensive, Sengo said.
“The credibility of the country had already been affected by the restructuring of the Ematum debt and, with the discovery of new debts, the country’s situation with regard to funding will be even more
23
serious”, he added. Sengo pointed out that the IMF’s position regarding the macro-economic situation in Mozambique is crucial to investor confidence, and that the ultimate responsibility for defining the magnitude and nature of the new debt lies with the government.
“We have to know if the new debt will be converted into public debt or remain just with the State as guarantor, as well as the maturity date and interest rates of these debts”, Sengo said.
Source: Lusa
Shelves in Mozambique’s supermarkets may soon be empty, as in the 1980’s – Economist
Economist Ragendra de Sousa warns that the suspension of support from the IMF, the World Band and the United Kingdom will influence Mozambique’s balance of trade. The suspension by the World Bank of direct financial assistance to Mozambique’s State Budget has the potential to damage the country’s ability to meet the basic needs of the population, he adds.
“Food itself forms a large part of the country’s imports”, de Sousa points out. “Direct support to the budget helped keep our international currency reserves up. With that gone, you can imagine….”
According to de Sousa, if the situation is not resolved, the country will experience a “quasi-paralysis”. The suspension of direct World Bank support for Mozambique was announced on Wednesday 27 April, two weeks after the IMF decided to halt negotiations on a loan to Mozambique following the discovery of undisclosed debts of more than US$1 billion.
De Sousa told VOA Português that he has no doubt that other donors may do the same until confidence is restored.
Indeed, following the World Bank decision, the United Kingdom announced on Thursday 28 April, that aid to Mozambique, which receives more than 40% of its budget from donors, would be suspended. With international reserves strongly dependant on direct budget support, there are bound to be implications for food imports, de Sousa explained.
“Supermarkets will go back to having the empty shelves”, as happened in the 1980s, he said, adding that he feared it would be hard to “assuage people’s anger” if there are demonstrations.
Civil society and political parties, including members of Frelimo, have demanded those who negotiated large debts in the final years of former president Armando Guebuza’s mandate to be held accountable.
“If donors and other finance suppliers insist on us going through this process”, continued de Sousa, “I don’t see how the government can stop it”. The debt scandal comes at a time when the country was hopeful that investment in the extractive industries could salvage the national economy.
De Sousa rejects the possibility of the sale of these resources in advance, which will likely turn out to be complicated, because “for this to happen, the positive opinion of the IMF and World Bank is necessary”, and without restoring the country’s credibility, no buyer will take the risk.
Source: VOA Português
24
Civil society calls for audit of public debt
Mozambican civil society organisations, grouped in the Budget Monitoring Forum (FMO), have demanded an exhaustive audit of the Mozambican public debt “in order to know the real amounts involved, the creditors and the payment period for each of the debts”.
The FMO is a coalition that contains some of Mozambique’s most credible civil society organisations, including the Community Development Foundation (FDC), the Centre for Public Integrity (CIP), and the Community Radio Forum (FORCOM).
Its statement is in reaction to the revelation that, in 2013 and 2014, the government – then headed by president Armando Guebuza – ran up debts, guaranteed by the Mozambican State, of over US$1 billion that were disclosed neither to the IMF nor to the Mozambican public. The discovery of these debts led to a crisis in relations with the IMF, which cancelled a mission to Mozambique and suspended the second instalment of a loan for US$283 million from the Fund’s SCF.
The FMO demanded that not only should there be an audit, but the government should also “publish inside Mozambique, and not merely abroad, all information about the public debt, for the knowledge of Mozambican citizens, for it is they who will have to pay the debt”. It urged the government to publicly explain its strategy for paying the debt “and announce measures to hold responsible the authors of the present crisis”.
The FMO also wants a detailed inventory of the domestic debt “identifying the
creditors, and the period in which the debt must be paid”. Domestic indebtedness results from the sale of treasury bonds at high interest rates, most of which are purchased by the banks. The FMO suggests that the State should only resort to domestic debt when strictly necessary, precisely because of the high interest paid. The statement called for “a matrix of priorities for indebtedness” so that in future no government “can contract debts for projects of debatable or doubtful viability”.
As for the National Assembly, it should ensure that no government ever again violates the limits set in the annual budget laws on the amount of debt which the government can guarantee. In 2013, the government smashed through the limit set by that year’s budget law, and nobody has yet been held responsible for that illegality.
The FMO suggests passing a “Fiscal Responsibility Law” which will punish any future violation on the limits of government guaranteed debt, and ensure that “public managers who damage the State shall be punished in exemplary fashion”.
It also calls on the Attorney-General’s Office to investigate and to “hold responsible, administratively and criminally, all those leaders involved in contracting debts in a non-transparent manner and in violation of the budget law particularly in the last five years (2010-15)”. The FMO points out that, according to the figures available, Mozambique’s public debt grew at the startling pace of over 20% a year in the past five years, reaching the nominal sum of at least US$8.1 billion. But with the transformation of the US$850 million bond issued by Ematum into government sovereign debt,
25
and the discovery of previously undisclosed debts (for the defence company Proindicus and for the Pemba Logistics Base) of over US$1 billion, the public debt has suddenly risen by a further US$2 billion.
Prior to the latest revelations, the Ministry of Economy and Finance estimated the public debt at 49% of gross domestic product (GDP). But the latest reports indicate that it has now reached the alarming figure of 73.4% of GDP.
Worse still, the structure of the debt has changed. In 2010, the debt consisted almost exclusively of soft loans. But by 2014, almost 50% of the debt was commercial loans with much shorter repayment times, and higher interest rates – and that figure, taken from an official Ministry of Economy and Finance document, was before the inclusion of the Ematum, Proindicus and Pemba Logistical Base debts. Today, when the newly discovered debts are included, well over 50% of the public foreign debt must be on commercial terms.
The FMO argues that much of Mozambique’s public debt “has been contracted to implement investment projects, the priority of which is very debatable. They are not even capable of paying for themselves, much less creating opportunities to generate expanded and diversified income which could contribute towards solving the main problems of poverty in the country: hunger, chronic malnutrition, lack of access to clean drinking water and sanitation, as well as chronic diseases”.
Source: Agencia de Informacao de Moçambique
Dubai Chamber on trade mission to South Africa and Mozambique next week
The Dubai Chamber of Commerce and Industry has finalised preparations for its trade mission to South Africa and Mozambique from 2 to 6 May as part of its strategy to reach out to the promising markets of the world (especially the African markets), and to promote Dubai and the competitiveness of its business community.
The Dubai Chamber delegation, which includes over 20 senior representatives of the private sector, will hold public sector roundtable discussions and a private sector focus group entitled: ‘Africa – Bridging the Gap’. The event will also feature a Chamber to Chamber dialogue in the presence of leading business and government leaders from South Africa and Mozambique, as well as field visits in both the countries.
Led by the Chairman of the Dubai Chamber, Majid Saif Al Ghurair, the delegation includes the president and CEO of the Dubai Chamber, Hamad Buamim; the Chairman of Essa Al-Ghurair Investments L.L.C, Essa Abdulla Al Ghurair; the President of Gerab National Enterprises, Abdullah Sharafi; the Managing Director of Al Fardan Group of Companies, Ali Al Fardan; the SVP, Business and Government Relations of Majid Al Futtaim Retail, Mohammad Al Suwaidi; the Chairman of EduHub, Rashed Bu Qara’a; the CEO of Middle East and North Africa at Standard Bank of South Africa Limited (Dubai Branch), Rassem N. Zok; and the Founder and Chairman of Invest Africa, Rob Hersov.
Buamim said that the Dubai Chamber trade mission to the southern African
26
region reflects on the organisation’s commitment to explore new markets for Emirate’s business community, despite the global economic slowdown, as challenges create opportunities. Additionally, Buamim said that the Chamber is committed to support global expansion of its members, especially in the emerging markets of the world.
He also said that the trade mission has an interesting line-up of meetings between the public and private sector representatives from the two countries as well as constructive dialogues on seizing opportunities while confronting mutual challenges. These meetings with African investors will lead to short and medium-term partnerships and joint co-operation ventures.
Buamim said that: “In line with our strategy of reaching out to the African continent, we launched the Africa Global Business Forum which concluded its third successful session last year, and we are now preparing for its fourth session next year while pursuing our approach to reinforce Dubai’s position as a gateway for global investments to and from Africa. This trade mission today is part of these efforts, which also include the opening of international offices in the continent and the organisation of the next edition of the Africa Global Business Forum in Dubai”.
Source: Emirates News Agency
President outlines opportunities with Belgian businesses
On Thursday 21 April, President Filipe Nyusi declared that he would like to see Belgium feature on the list of the major foreign investors in Mozambique, taking advantage of the opportunities that the country offers.
Speaking in Brussels at a meeting of the Belgium-Luxemburg Chamber of Commerce, Industry and Agriculture, with the countries of the African, Caribbean and Pacific (ACP) group, President Nyusi invited Belgian businesses to invest in Mozambique, saying that there can be no sustainable development without the participation of private business.
He stressed the need to strengthen bilateral co-operation at all levels, but particularly in economic and business aspects.
To date, co-operation between Mozambique and Belgium has covered such areas as health, education, food security, transport and communications and rural electrification. This, President Nyusi said, showed that relations between the two governments were “at a very high level”. He hoped that economic relations could be increased through a greater intervention by Belgian businesses in Mozambican development.
The President added that governments have the responsibility to create macro-economic and legislative frameworks that are favourable to private sector business. In Mozambique, the government was working with the business class to identify and eliminate barriers and therefore attract increasing volumes of national and foreign investment.
At the meeting, the Chairperson of the Belgium-Luxemburg Chamber of Commerce, Industry and Agriculture, Guy Bultynck, announced that a Belgian business mission will visit Mozambique in November to explore business opportunities.
Source: Agencia de Informacao de Moçambique
27
Mozambique unrest ‘a threat’ to Malawi business
Malawian industry leaders have expressed concern over the unrest in Mozambique, which they say poses a threat to local businesses in Malawi.
The continued political conflict in Mozambique between the ruling Frelimo Party and the Renamo rebels has forced thousands to flee their homes. There is a continuous rise in the number of Mozambican nationals seeking refuge in Mwanza district and some in the border districts of Chikwawa and Nsanje.
They are reportedly fleeing political conflict, primarily in the province of Tete where Frelimo led government forces and the opposition Renamo remnants are clashing. A few weeks ago, there were reports that buses and other freight vehicles were targeted by the rebels which brought fear among the business community.
Newly elected President of the Malawi Confederation of Chambers of Commerce and Industry (MCCCI), Karl Tchokhotho, expressed concern that the conflict might have a negative impact on Malawi’s trade.
Tchokhotho said that: “In terms of trade and transport from Mozambique to here there has not been any impact as of yet that we can talk about. But obviously it is a cause for concern. Mozambique is a major corridor for exports and imports to Malawi”. Renamo claims that the 2014 elections were rigged and its leader Afonso Dhlakama vowed to go back to war unless the government agreed to his demands that Renamo-sponsored governors and administrators be placed in charge of several districts and provinces, such as Tete.
The government of Malawi was forced into allocating extra land to accommodate the Mozambicans fleeing into the country and has just recently announced that it will reopen the Luwani refugee camp in Neno district to ensure proper provision of social amenities to the people.
UNHCR has stressed the right for people to seek asylum:
However, officials from the United Nations High Commissioner for Refugees (UNHCR) have been appealing to the public to respect the rights of people seeking asylum in the country.
It follows complaints by some Mozambican asylum seekers of harsh and unfriendly treatment by some Malawian nationals as they enter into the country. As a result, refugees are often forced to use alternative routes to enter the country due to harsh treatment and increased military presence along the country’s borders.
UNHCR officials have since promised the asylum seekers better health, education, water, protection services and involvement in self-reliance activities like agriculture.
Source: Capital Radio Malawi
Africans investing in Africa
After a day and a half of high-level discussions at an Africa investment conference, Arnold Ekpe, non-executive chairman of financial services holding firm Atlas Mara and former chief executive of Ecobank, sounds slightly exasperated. "African countries are not doing enough for themselves," he says. "I have been going to conferences like this for 20 years. We have to move from talk to action."
28
An elite band of companies are doing just that – with a toolkit that helps expand their operations across African borders. But Ekpe argues that Africa needs many more champions like Dangote Group, MTN and ShopRite.
Aliko Dangote, the founder of the Dangote Group, also regularly bemoans the lack of inter-African business activity. He too told the assembled investors: "We need to develop like China or Japan did. They created wealth themselves." That is easier said than done.
It's not the matter of growing the footprint or growing the empire. It's really a matter of generating additional value for shareholders. Many of Africa's 54, often small, countries, lack the skills and resources of sizeable countries such as China. Intra-continental trade also accounts for just 12% of total trade in Africa. This is low by global standards, even acknowledging the fact that it does not account for informal trade. Africa's statistics hide regional differences too: East African countries do more trade between themselves than their southern or western neighbours.
The reality is that for the likes of Dangote, investing in Africa is not easy. Terence McNamee, deputy director of the Brenthurst Foundation, says there are many stumbling blocks: "There is a facile impression that cultural affinity – the 'Africanness' of a company – would count for something across borders, whereas it is not really the case. Very often, it [is] even the opposite."
Trade barriers:
The reasons for the low level of intra-African trade and investment are numerous. They include poor
infrastructure, tariff and non-tariff barriers, a lack of financing, currency controls and restrictive visa policies. Cement magnate Dangote points out that as a Nigerian, he would need 38 visas to visit all 54 countries in Africa, substantially more than if he held a United States or British passport.
The picture is just as depressing for goods: it takes anywhere from nine to 17 days to move freight just 1,000km from Tema in Ghana to Ouagadougou in Burkina Faso. Studies have also found that a container spends on average about 16 days in African ports, compared with three or four in most other international ports. What is galling, explains Ekpe, is that little has been done over two decades to overcome these barriers. "What we need is free movement of people, a free trade area and free convertibility of currencies," he says. "It's nothing new."
The reason it is not happening is fear – of surrendering power, of being swallowed up by a more powerful neighbour and of people being displaced by foreigners. This over- rides any notion of pan-African solidarity, says McNamee. "With the exception of the East African Community (EAC), the rhetoric [on regional integration] is way ahead of the reality on the ground. I think a mind-set change must occur."
Ekpe concurs. His first challenge when he became chief executive of Ecobank in 2005 was to convince the board to embrace the concept of building a pan-African bank. "They liked the idea. They just didn't think it could be done," he recalls. But progress is being made. Through improving infrastructure and border processes the EAC has reduced the time it takes to get a container from
29
Mombasa to Kigali from 26 days to just five.
Private sector growth:
Governments must also encourage private-sector growth if they want to nurture more African champions, argues McNamee. He says they should focus on improving the conditions for doing business rather than trying to get involved in every sector. Andrew Alli, chief executive of the Africa Finance Corporation, agrees: "Governments hold on to projects such as airports, ports and power generation because of national pride and security concerns, but they should push more projects into the private sector. There is so much to do."
So how have African champions been succeeding? It comes down to understanding the local context. Gavin Dalgleish, managing director of South African agribusiness Illovo, explains: "In Africa, you take a one-continent approach at your peril." Illovo has developed processing operations in six countries, and Dalgleish says that the key to their success has been immersing themselves in each market. "You try to develop a local flavour to your business rather than continue to be a South African company," he says. "In Zambia, for instance, no one talks about Illovo. It's Zambia Sugar."
This commitment to markets involves a range of instruments: minority shareholding, employing local staff, contracting local service providers and following national agendas. "In Malawi, food security is a big issue so we got behind initiatives to grow maize. In Zambia, the key thing was developing local supply chains," Dalgleish adds.
This is especially important to overcome 'legacy perceptions' about South Africa. "We're not always the most popular investors on the continent," he says.
Stereotypes are a recurrent theme in studies: South Africans are perceived as arrogant and Nigerians as unreliable. And while West Africans tend to associate local goods with poor quality, in East and South Africa seeing 'made in Kenya' or 'made in Zambia' is a cause for celebration.
Being able to navigate, and ultimately confound, stereotypes can mean the difference between making it and failing. Woolworths, for instance, had not anticipated that Nigerians would snub South African goods for European brands. Similarly, neither Score nor ShopRite has managed to crack the Tanzanian market, which is dominated by local and Kenyan players.
Anthony Haggar, chief executive of South Sudan's Haggar Trading, says that understanding cultural differences is paramount: "For the Sudanese, the highest honour you can bestow on someone is to invite them for a meal at your house. If you are aware of this and you accept – you should accept! – to have dinner with the person, it will enhance the trust between you."
Curiously, the cultural differences associated with different language blocs, as well as differences in legal systems and bureaucracy also seem more of an issue than the languages themselves. Getting lost in translation did not seem to faze Ecobank, which invested in language courses and translators.
30
Due diligence:
Both Haggar and Dalgleish stress the importance of due diligence before making investments. Haggar says he spent 18 months making monthly trips to Ethiopia to meet stakeholders and get to know the country. For their part, Illovo executives spent considerable time and money researching a greenfield sugar project in Mali, only to see it fall through with the 2012 coup.
Better due diligence might have prevented the flop of Kenya's M-Pesa mobile-money platform in South Africa. It came up against strong competition from banks that had already developed services for low-income customers.
Despite Illovos's Mali setback, Dalgleish says that they "remain resolute in their desire to invest in Africa". As the stellar rise of African champions suggests, it makes good business sense too. Illovo's African expansion has driven the firm's growth. The demand for sugar has been "about 2% for decades globally, but it's about 3.2% across the continent. And in some markets, it's better than that," says Dalgleish.
Into new regions
Moroccan companies such as national airline Royal Air Maroc, telecoms operator Maroc Telecom and banks such as Attijariwafa Bank and BMCE Bank of Africa have made major forays across West Africa. The region now generates up to 30% of those banks' revenue. Importantly, the decision-making process has not been blindly ambitious. As Attijariwafa Bank co-chief executive Ismaïl Douiri puts it: "It's not the matter of growing the footprint or growing the
empire. It's really a matter of generating additional value for shareholders."
Africa's potential could convince African companies to invest on their continent, but Ekpe argues that there is more to intra-continental investment than cashflow. "Foreign investment has never developed a country. It has helped, but in the end it comes from domestic investment and domestic saving mobilisation," he says. "You cannot outsource development."
Haggar likes to call it 'Africalism.' "The ownership of the means to produce and distribute wealth should be African. We are too exposed to the tail- and headwinds of the rest of the world. We have everything to offer on the continent. We [could] be completely self-sufficient if we traded amongst ourselves and [had] investors."
Source: The Africa Report
Financial Services:
Former Barclays CEO teams up with Carlyle to bid for British bank’s Africa business
Former Barclays Chief Executive Officer, Bob Diamond, has tied up with the Carlyle Group, an American private equity and alternative asset management company, to prepare a joint bid for the British bank’s Africa business.
The move is expected to benefit Diamond as it will add credibility to his earlier plans for acquiring the business through his US-based investment vehicle, Atlas Merchant Capital. However, sources told Sky News that they are yet to make a formal approach to Barclays. The bid preparations are still at an early stage, the sources added. The move follows the
31
present Barclays Chief Executive Officer, Jes Staley, announcing in March this year that the bank planned to reduce its stake in its Africa business as part of a strategy to turn the bank around. Apart from operating Absa, a South African bank which Barclays bought in 2005, the British bank owns 62.3% of the Johannesburg stock exchange listed Barclays Africa Group Limited (BAGL), which has a total market capital of £6 billion (US$8.65 billion).
BAGL is one of Africa’s largest banking groups. It has majority stakes in banks across Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania, Uganda and Zambia. Apart from these, BAGL has insurance operations in Botswana, Mozambique, South Africa and Zambia and representative offices in Namibia and Nigeria.
Staley had justified his Africa strategy saying that it would allow Barclays “to deconsolidate (BAGL) from an accounting and regulatory perspective, subject to shareholder and regulatory approvals if and as required”. Diamond who helped build BAGL during his tenure in Barclays is known to have since been interested in acquiring a majority stake in it.
It was earlier understood that Diamond had spoken to some investors, amongst whom are sovereign wealth funds in the Middle East and Asia. However, now it is clear that Carlyle is the only large private equity firm to have so far shown interest in BAGL. Sources added that Diamond may seek additional investors for the bid. One likely investor is said to be billionaire Ashish Thakka who founded Mara Group, a Pan-African business services company, operating across technology,
financial services, manufacturing, real estate and agriculture industries.
Source: International Business Times
Standard & Poor’s sees South Africa’s banks up against growing credit risks
South Africa’s banks will find it tougher to turn a profit as the economy remains feeble for the next few years and credit risks rise, credit ratings agency Standard & Poor’s said on Thursday 28 April.
Consumers, squeezed by rising interest rates, unemployment of around 25% and high debt levels, are a growing headache for lenders in Africa’s most advanced economy which is forecast by the government to grow by only 0.9% this year after expanding by 1.3% in 2015.
“We continue to believe that domestic households pose the most significant source of risk for the banks because of their relatively high leverage and low wealth levels compared with other emerging markets”, Standard & Poor’s said in a report. Lending to corporates, which has propped up the financial sector as companies borrowed to grab a share of South Africa’s infrastructure spend and to expand into the rest of the continent, is slowing according to the ratings agency.
“Corporate lending will struggle to reach the average 10% growth rates accomplished over the past five years”, Standard & Poor’s said. The ratings agency sees external and domestic economic factors putting pressure on the credit costs of South African banks into early 2017.
“We expect credit losses for the top-tier banks to range between 0.9% and 1.2% in 2016 and to worsen by another 20
32
basis points into 2017”, Standard & Poor’s said. The nation’s largest four banks all reported higher profits last month, Standard Bank leading the pack with a 27% rise in full-year earnings, but warned that the year ahead could be tough, especially if South Africa’s sovereign credit rating is slashed.
South Africa’s credit rating is under threat of a downgrade to “junk” status due to policy inconsistencies and low growth, despite an austere budget tabled by Finance Minister Pravin Gordhan in February.
Source: Reuters
Minerals & Energy:
Analysis: has Mozambique already squandered its natural gas bonanza?
Mozambique has spent much of the last decade borrowing against its future. The debts are now coming due, but the natural gas that was supposed to pay for the multibillion US dollar loans is yet to come online. Has the country, through its dodgy tuna bonds, over-extended itself?
In the eyes of foreign investors, and its own politicians, Mozambique stopped being a poor country sometime in the late 2000s – even though little had changed for the bulk of its poverty-stricken citizens.
It was around then that word of a massive offshore gas deposit began to spread, and in 2011 it became official: Mozambique was sitting on a natural gas bonanza that could radically transform the lives of its population.
It didn’t matter that it would take close to a decade to set up the infrastructure to exploit the deposit. Mozambique could start making money instantly.
By using its newfound natural resources as implied collateral, Mozambique started taking on massive, multibillion US dollar loans from investors who were suddenly eager to speculate – especially with the generous returns on offer. The money taps opened, and foreign currency sloshed into the country.
A graph of Mozambique’s debt-to-GDP ratio over the last 10 years tells the story. Flat-lining since 2005 at an average of about 22%, in 2008 it angles up sharply as the government takes on more and more debt. As of earlier this year, Mozambique owed the equivalent of 58.3% of its GDP in debt.
This doesn’t have to be a bad thing. Some of the most prosperous countries in the world are heavily indebted (for example, the United States’ debt-to-GDP ratio is 73.6%; South Africa’s is 45.4%). If debt is used wisely, to fund government services and infrastructure and to kick-start a struggling economy, then a large debt burden can be a sound policy option.
This, then, is a question for Mozambique: have these borrowed billions been used wisely? And can they really be repaid?
The scandal surrounding the so-called ‘tuna bond’ suggests not. In 2013, Mozambique secured approximately US$850 million from foreign investors to help turn around the struggling tuna industry, even though the revenue forecasts were wildly optimistic. If this sounds fishy – well, it is.
“The deal immediately raised eyebrows, with donors asking questions about why a country with significant development challenges would raise its debt profile to this extent just for fishing boats. The critics of the deal were proved right when
33
it later emerged that most of the money was, in fact, spent on security”, explained Dianna Games in Business Day.
With natural gas still several years away from generating income, Mozambique is struggling to repay the money, and Mozambique has been forced to renegotiate with its debtors, striking a deal that will give it longer to pay, but at even better returns for investors. In the end, the taxpayer loses – and the tuna industry is still in the doldrums. The money that must be repaid has already been frittered away on navy boats to keep the generals happy.
Compounding Mozambique’s cash flow crisis is a swiftly depreciating currency, which makes all its debts even more expensive to service, and low prices on coal, its other major export. This has forced the IMF to intervene, at the government’s request, and led to a downgrade from ratings agencies. Suddenly, Mozambique isn’t looking quite so attractive to investors.
It doesn’t help that in the years since the discovery of natural gas in Mozambique, the price of the commodity has dropped dramatically, and new players – such as Iran – are getting involved in the market. In 2011, Mozambique thought it had won the lottery; unfortunately, the winnings are going to be a lot smaller than anticipated, making it even harder to pay off all those loans.
“Industry observers say the start date of 2020 for exports, which has already been delayed from a 2018 start, may be pushed out further due to the decline in commodity prices and demand”, said Games.
And then, this week, another bombshell: after media reports exposed the cover-up, the government confirmed that it had been hiding even more debt. Like a shopping addict hoarding credit cards, Mozambique has been borrowing money in secret.
Mozambique’s discovery of natural gas was meant to usher in a new era of prosperity for the country. And while GDP growth has been impressive over the last few years, it has been fuelled by a massive amount of borrowed money – not all which has been spent wisely. The dodgy tuna bond, and the hidden debt, suggests a government living well above its means, treating loans like free money. But money is never free, and it is ordinary Mozambicans who will ultimately pay the price.
Source: Daily Maverick/Simon Allison
Global LNG-prices jump on buy tenders and supply issues
Asian spot prices for liquefied natural gas (LNG) jumped this week, buoyed by rising oil prices, a slew of buy tenders and supply issues concerning projects in Australia and Nigeria.
LNG for June delivery in Asia traded at approximately US$4.40 per million British thermal units (mmBtu), up US$.040 from the previous week. Buying interest emerged from importers including South Korea, Egypt and Argentina, which, combined with recent tenders from Japanese end users, supported higher prices.
“Whether it constitutes a net pick-up in demand or it just happens that all demand has come to market at the same time is not clear”, a trader said. South Korea’s
34
Komipo bought a cargo at around the US$4.50 level for June delivery, traders said, although it was not clear who the seller was.
Japan’s Kansai was also expected to have picked up one or two cargoes for June/July delivery.
European gas prices rallied this week, tracking oil prices which rose to trade near US$45 a barrel by Friday and are heading for a third straight week of gains as market sentiment turned more upbeat despite persistent oversupply.
Brent has surged about 6% so far this week. “Oil has indeed rallied and I’m sure NBP was playing catch up”, said a trader, referring to European gas trading hub, Britain’s National Balancing Point (NBP).
“It’s going to push JKM (Japan Korea Marker) up so yes, certainly that impact of European gas prices is definitely there”.
On the supply side, there are some delays from Nigeria’s Bonny LNG project after the Bayelsa state government said the Gbaran Ubie facility, which supplies gas for the export terminal, had been sealed up for operating without a permit and staff had been evicted. Australia’s Gorgon LNG export terminal is expected to resume production in May or June after the facility halted output at the start of the month due to mechanical problems.
Traders remained unsure of Angola LNG’s start-up. The plant is expected to resume exports next month after a rupture on the flare line forced a shutdown in April 2014. Traders were anticipating tender results from buyers including Argentina’s YPF, India’s GSPC, Egypt’s EGAS and South Korea’s Kogas in the coming weeks.
“The raft of tenders, the fact that Gorgon is not in the mix, and the uncertainty about Angola is pushing up prices”, said a trader.
Traders noted there was limited bearish news with the exception of Russia’s Sakhalin-2 LNG plant tendering to sell five cargoes in July.
Source: Hellenic Shipping News
Mozambique has conditions to be a natural gas exporter
On Wednesday 27 April, the Chairman of ENH, Omar Mithá, said that structural changes in the global natural gas market, marked by the entry of new producers and exporters, should not stop Mozambique from preparing its entry into this market.
Mithá said that the market is going through a period marked by a relative excess of supply compared to demand, but added that statistics show that demand and energy consumption will increase, with some countries that want to exchange more polluting energies with other cleaner options, specifically natural gas.
Additionally, Mithá said that the recent increase of the amount of declared national debt will not jeopardise state involvement in the natural gas projects in the Rovuma Basin.
The National Hydrocarbons Company is still awaiting the response of banks to its request for loans to ensure the participation of the State in Rovuma projects.
“These projects are being organised in what we call project finance. You look at the project from an economic viability point of view, consider if it has a market or
35
not, if it is efficient in terms of costs. The financial model is what counts. Although there is a certain connection, from the point of view of the credit risk rating, we must take note that this is a funding model organised in a way that it isolates the project from its partners’ assets”, Mithá said.
Mithá was speaking on the side-lines of the opening session of the fifth edition of the Mozambique Mining, Oil and Energy Conference (MMEC) in Maputo, which brings together experts from Mozambique and abroad to share experiences and views on the future of the Mozambican energy sector.
Organised by AME Trade in partnership with ENH and the Geological Mining Association of Mozambique with the support of the Ministry of Mineral Resources and Energy, the event provided a platform for a deeper dialogue between regulators, investors and experts from the energy industry to promote the sustainable use of Mozambique’s resources.
Source: MacauHub/O País
Anadarko expects to reach agreement with government in the first half of 2016
On Wednesday 27 April, John Peffer, the president of Anadarko Mozambique, said that he hopes to conclude discussions with the Mozambican government in the first half of this year, and start natural gas production in the north as soon as possible.
Peffer, who was speaking during the Mozambique Mining, Oil and Energy Conference (MMEC) in Maputo, said that the US oil company had reached an
agreement with the executive on a “considerable amount” of issues in 2015, and that by the end of the first half of this year, it expected to finalise the outstanding issues.
“When this work is completed, it will be a significant milestone”, Peffer said. He declined to commit to a specific date for the Rovuma Basin consortium’s final investment decision (FID), or for the actual start of natural gas production – he merely said that he hoped it would happen “as soon as possible”.
Source: Lusa
ENI may benefit from tech savvy partner in Mozambique LNG-CFO
Italian oil major ENI could benefit from an additional partner in developing its giant Mozambique gas deposits, especially one with project-management skills in running such complex ventures, a senior company executive said on Friday.
"This contract is so big I guess we could take advantage from (having) a strong additional partner, not only stronger from a financial point of view but also (with) a capability to run such a complicated project," Eni Chief Financial Officer Massimo Mondazzi said in a conference call.
Eni has been in talks to sell a stake in its Area 4 gas development off the coast of Mozambique, containing 85 trillion cubic feet of gas - one of the richest discoveries ever. Area 4, in which Eni holds a 50 percent operating stake, will feed a series of onshore liquefied natural gas (LNG) export plants, mainly supplying Asian markets.
36
Mondazzi's comment came in response to a question whether Eni would be willing to sell more than a 15-20 percent stake in its main Mamba project if it kept operatorship in the nearby Coral development.
Reuters reported in March that ExxonMobil was in talks to buy a stake of varying potential sizes in Eni's Area 4 development, including a full operating stake.
Eni has been in talks with several buyers including China's Huadian Corp, sources have said. Coral is a floating LNG export plant and all the supply has already been sold to British major BP.
Source: Reuters
PTTEP to start Mozambique LNG project by end of year
The first phase of PTTEP’s LNG project in Mozambique’s Rovuma Offshore Area-1 is expected to be completed by the end of 2021.
PTT Exploration and Production Plc (PTTEP) expects to start the development of a LNG project in Mozambique’s Rovuma Offshore Area-1 by the end of this year, the company’s President and Chief Executive, Somporn Vongvuthipornchai, said.
According to the schedule, the first phase is expected to be completed within 2021 with an annual output of 12 million tons, he said. Of the total, 3.6 million tons will be delivered to Thailand through its parent company PTT Plc, the country’s national oil and gas conglomerate.
PTTEP acquired an 8.5% share in the project from Britain-based Cove Energy in May 2012 for US$1.92 billion. US-based
Anadarko Petroleum is the operator of the project.
The operator is now preparing gas sales agreements and project finance. Bidding for engineering, procurement and construction will soon be opened.
Vongvuthipornchai said this project will be a major LNG resource for Thailand in the future because the country would have to import as much as 22 million tons of LNG a year, up from the current four million tons a year.
Although global oil prices remain low, Vongvuthipornchai said he is confident the production cost of LNG from the Rovuma Area-1 project would remain competitive. For 2016, he said PTTEP planned to trim production costs by 10% from US$3.43 billion, including operating and capital expenditures.
It planned to cut production unit cost to US$34.22 per barrel from an average of US$39 a barrel the previous year. Last year, the company cut its operating costs by 20% and reduced capital expenditure by 30%. It also trimmed its production unit cost to US$39 per barrel from US$43.50 a barrel in 2014.
Cash cost will also be trimmed this year to US$14.50 from US$16 in 2015 and US$21 in 2014, he said.
“We have to monitor global oil prices and keep down our production costs to stay at a competitive level”, said Vongvuthipornchai. This year, PTTEP targets petroleum sales at 322 kilo barrel of oil equivalent – the same volume as last year.
In addition to cost competitiveness, the company’s strategy will focus on
37
Southeast Asia along with seeking strategic partnerships.
PTTEP is also conducting a feasibility study for investment in renewable energy.
Despite the collapse of global oil prices, PTTEP has allocated a budget for mergers and acquisitions (M&A). If it signs any M&A deals, it would have cash on hand of US$3.2 billion.
Source: Bangkok Post
India has eyes on Mozambique energy
Mozambique is one of the most poverty-stricken countries in the world yet the silver lining of the country’s economy has to be the huge resources of power and energy that the country treasures. A large part of it has remained unexplored due to the lack of labour, administration and post-war reconstruction. There are often black outs in the country which affects the economy. The State has been unable to devise long term plans to harvest the excess energy pool in Mozambique. The country is on the verge of industrial revolution and a lot will depend on how the energy sector shapes up in the upcoming years.
The failure of the public sector to channel the energy reserves has encouraged private sector investment in this regard. If the country can make most of its reserves the GDP of the country is going to shoot to the extent of three times its current value. According to recent studies, it may become one of the top five exporters of coal and natural gas by 2030. This will in turn affect the other sectors like industry, agriculture and services. The revenue generated from the export can be used to build on the infrastructure of the third world nation. African countries have
always been an area of interest for the world powers in Europe and America. But the recent trend is on new players like China, India, Brazil and South Africa showing extensive interest in this domain.
In March 2016, an energy consortium signed a co-operation agreement to construct a pipeline that will stretch from Mozambique’s massive offshore natural gas fields to northern South Africa. Though the deal is just an early step toward the pipeline’s actual completion, it could be a sign of progress to come for both countries’ energy sectors. The consortium responsible for building the pipeline comprises of ENH, SacOil, Profin and CPP. In their agreement, which builds on an initial deal struck in December 2014, the four companies committed to the funding needed to complete the project’s pre-investment and engineering studies, as well as the pipeline’s construction and operation. According to project estimates, the 2,600-kilometer pipeline will cost approximately US$6 billion.
The CPP will shoulder 70% of that total cost by securing funds from Chinese financial institutions. For the state-owned China National Petroleum Corporation (CNPC) of which the CPP is a subsidiary, the pipeline is an opportunity for the company to increase its profits from its energy assets in Mozambique. The company currently holds a 10% stake in one of Mozambique’s potentially lucrative offshore natural gas blocks. However, as is true of the rest of Mozambique’s offshore reserves, obstacles have prevented the block from being fully developed. The latest India-Africa Forum Summit concentrated on the growing Indian interest in Africa, especially Mozambique which ranks second in
38
India’s Foreign Direct Investment plans just after Mauritius.
Jindal from India operates the second largest coal mine in the Tete Province which has huge untapped resources. ICVL bought the Mozambique coal assets from Rio Tinto in 2014.
There have been some differences on the two countries regarding the Jindal ownership but extensive discussions are being held to resolve the issue in quick time. India is also trying to enhance its control over the renewable resources of energy in Africa but the country’s plans are dependent largely on the non-renewable sources of energy especially coal. This might provide a momentum to the economy initially but is likely to affect the natural balance leading to unsustainable growth. The extraction of solar energy from the African countries like Mozambique seems to be a better alternative at this point of time.
Source: New Delhi Times Bureaux
SacOil holds off signing Mozambique gas pipeline joint venture
SacOil Holding Ltd. held off joining its partners in signing a joint-venture agreement to build a US$6 billion pipeline to transport gas from offshore Mozambique to South Africa’s commercial heartland of Gauteng.
“The board felt we didn’t want to rush the process”, which should be completed in the next three to four weeks, SacOil Chief Executive Officer Thabo Kgogo said by phone on Monday 25 April, after the company issued a statement to the Johannesburg Stock Exchange. “We’re still in the project”.
A partnership agreement to build the pipeline was signed in Maputo on Friday 22 April. The new agreement builds on a memorandum of understanding between the partners signed in February.
The companies that signed the agreement were Profin Consulting (represented by its Chief Executive Officer, Olivia Machel); Mozambique’s National Hydrocarbon Company, ENH (represented by Martinho Tavares, a member of its Board of Directors); the China Petroleum Pipeline Bureau (CPP), and the China Petroleum Technology Development Corporation (both represented by their deputy chairpersons, Chen Qingxun and Yun Wei), and the South African company Progas Investment (represented by Nhlanhla Magubane).
Between them the two Mozambican partners hold 56% of what will be called the African Renaissance Pipeline. The Chinese partners hold 20%, and the South Africans 24%.
The project viability studies (estimated to cost US$45 million) will be financed by CPP. The total cost of the 2,600-kilometre pipeline is put at US$6 billion, and China will provide credit for 70% of this (US$4.2 billion). The project will be financed without any funds or guarantees from the Mozambican government.
At a press conference presenting the project, Machel said the project’s key goal is “to promote the strategic development of the natural gas sector in Mozambique, so as to ensure Mozambican control of the sector, and to allow the government to maximise revenue from the hydrocarbon resources in the Rovuma Basin”.
It is hoped that the project will create 50,000 direct and indirect jobs, ensure
39
technical and professional training and transfer technology to Mozambicans.
The 2,600-kilometer pipeline could be operational by 2020, Kgogo said last month after SacOil signed a preliminary construction accord.
The pipeline is among the projects seeking to exploit gas discoveries in the Rovuma Basin, off the northern coast of Mozambique. Anadarko Petroleum Corporation and ENI SpA have plans to export LNG, while in South Africa the government is encouraging private companies to develop 3,126 megawatts (MW) of gas-fired power.
This is one of two proposals for a pipeline from the Rovuma Basin southwards. The other project is known as “Gasoduto Norte ao Sul” (GASNOSU) and is led by the South African Gigajoule Group.
SacOil is 42% owned by the Public Investment Corporation (PIC), according to data compiled by Bloomberg. The PIC manages the bulk of the pension money of South African government workers and is the continent’s biggest fund manager. The Chairperson of its Board is Tito Mboweni, a former governor of the South African Reserve Bank.
Profin Consulting was established in July 2015, specifically to ensure Mozambican participation in the pipeline. The most well-known figures in the company are its shareholders, former defence minister Alberto Chipande and his wife Hortência Cornélio João Madanda Chipande.
According to a report published in March 2016 by Centro de Integridade Pública (CIP), Profin was incorporated and registered at the 1st Notary Public Office in Maputo, on 23 July 2015, by two
companies and natural person. Profin’s shareholders are: Chetu Limitada (with 46.7% of the shares), Phambile Investimentos, Imobiliária, Logística e Procurment, Sociedade Unipessoal Limitada (holding 18.7% of the shares), and Joice Rebeca Quilambo (holding the remaining shares).
Chetu Lda, in turn, belongs to Chipande and his wife. Each holds an equal shareholding of 50% in Chetu.
On 23 June 2015, Chipande and his wife deliberated at an Extraordinary General Meeting, held at the company’s head offices (which coincides with the couple’s residential address) on the participation of Chetu Limitada in the company Profin Consulting, SA. Chipande and his wife were represented by their daughter, Doroteia Alberto Chipande, in the act of constituting Profin.
For more please see CIP document ‘Profin Consulting, SA – a company that belongs to the Chipande family’ (www.cip.org.mz/cipdoc%5C443_CIP-a_transparencia_49_eng.pdf)
Source: Bloomberg/O País/Agencia de Informacao de Moçambique/CIP/Borges Nhamire
SADC fuel channel expansion opens opportunities for logistics partners
New routes for fuel imports to SADC countries are being enabled trough the development of several southern African ports. However, energy companies will require local networks of logistics partners to make these imports cost-effective. General Manager at logistics specialist Crossroads Distribution, Hennie van Wyk, believes there are three vital areas to get right.
40
Until fairly recently, the southern African fuel industry has been based in Durban, Cape Town and Mossel Bay (South Africa), where imported oil or locally produced gas from offshore fields is refined into various types of fuel and then distributed throughout South Africa and the SADC region. However, the completed expansion of the facilities at Matola, the port of Maputo, along with the on-going expansion of Richards Bay in South Africa, Walvis Bay in Namibia, and the central and northern Mozambican ports of Beira and Nacala, is facilitating a growing trend of SADC countries buying refined fuels on the global market and importing them directly into different SADC regions, such as Botswana, Zambia and Zimbabwe.
The new ports, with enhanced storage, safety and transportation infrastructure – and the advantage of being a lot closer to various SADC fuel markets – will allow energy companies to serve these markets more cost-effectively. However, in a challenging market that has seen some decline in volumes recently, this cost-efficiency requires a network of both international and local logistics providers to move the fuel from port to distributor. Rail might be useful in transporting fuel from ports to inland depots, but road transport from depots to retail distributors will provide flexibility without the need for multi-modal solutions.
Safety first:
Van Wyk believes that there are three criteria a logistics company must fulfil if it is to partner successfully with fuel companies operating in the SADC region. Safety is the most important. “It’s part of our DNA at Crossroads, and vital to the way we do things”, he says. From long experience hauling fuel and other
potentially hazardous cargos, the company knows how important it is to maintain an impeccable Safety, Health, Environment and Quality (SHEQ) rating.
The SHEQ standards extend beyond the design and maintenance of appropriate tankers. Crossroads also invests in continuous driver training, computerised incident reporting and on-board cameras to monitor driver behaviour, and satellite tracking of every cargo at every step of a delivery. Logistics partners need these procedures in place to ensure both the safety and quality of their service.
Capability to do the job:
“We’re very much testing the waters at the moment, with the cross-border partnerships we have already”, says Van Wyk. “In the fuel sector, we’d like to expand into Zambia and the DRC, but these are difficult markets with their own hurdles”. As Crossroads expands, the company plans to continue the growth strategy that has proven successful so far.
“It’s quite a challenge to run cross-border operations all the way up and down the SADC countries, so demonstrating your ability to do the job is the second major factor”, Van Wyk adds. “We have learnt that customers always feel more comfortable if you have a local presence in the countries you’re supplying”. He refers here to existing contracts which Crossroads is servicing in Namibia and Botswana, the latter being supplied from Matola.
He believes that Crossroads’ pickup-to-delivery tracking of loads, strategic logistics software and constant communication with customers, particularly in the event of any glitches, is the kind of capability a logistics specialist
41
needs to offer if they are to compete in this sector. Building on their experience in Botswana and Namibia, the company is now testing the waters in the DRC and Zambia, in partnership with two energy companies, to assess the opportunities for expansion in this market.
Reducing costs:
The third criterion Van Wyk mentions is cost. By transporting fuel by road from ports closer to the cargo’s final destination, energy companies can already save themselves transportation costs. Factor in the clean fuel gap – the fact that the environmental benefits of energy companies switching to greener hydrocarbon sources are reduced, or even negated completely, by the carbon costs of transporting that fuel long distances – and it is clear that regional ports closer to fuel markets make sound financial sense.
However, in order to service the market cost-effectively, it is also important that transporters have a sufficient footprint, both in ports and the destination countries.
Crossroads has also invested in new tanker technology and an operating model that ensures their cost structure benefits the client. “This is something of a niche market”, Van Wyk concludes, “but a logistics partner that pays attention to SHEQ and their ability to deliver the load on time at a competitive price, through a network of subsidiaries with local expertise, should be able to create several mutually beneficial partnerships as these new fuel channels grow”.
Source: Biz Community
Iran seals GTL deal with South Africa
On Sunday 24 April, Iran signed an agreement with South Africa over the production of gas to liquids (GTL) – an agreement that could lead to the transfer of knowledge to the Islamic Republic over the production of clean fuel.
The agreement was signed between Iran’s Research Institute of Petroleum Industry (RIPI) and South Africa’s national oil company PetroSA.
This came during the state visit to Tehran by South Africa’s President Jacob Zuma. President Zuma supervised the signing ceremony together with his Iranian counterpart, Hassan Rouhani.
The agreement also envisages co-operation between PetroSA and RIPI over the oil blending technology.
The GTL agreement appears to have been intended to provide Iran with the academic knowledge over producing clean fuel and is not expected to lead to any industrial yield.
South Africa’s Sasol previously pursued a major project to produce GTL at industrial level in Iran’s South Pars energy zone.
However, it had to quit the projects in 2005 as complications arose as a result of US pressures on foreign investors in Iran as well as certain technical hurdles.
Sasol originally planned to produce 600,000 barrels per day of GTL from South Pars Phase 14 over a period of 10 years.
As signs emerged last summer that sanctions which barred foreign investments in Iran could be soon lifted, the company once again voiced interest in
42
taking up the same liquidation project it had abandoned in Iran.
President Zuma arrived in Tehran on Sunday heading a 180-member politico-economic delegation.
A series of key agreements were signed during President Zuma’s visit to Tehran in a variety of areas including the agriculture industry, water management, as well as joint investments and the insurance industry.
Source: PressTV
Uganda picks Tanzania over Kenya for oil pipeline route
Uganda will build a pipeline for its oil through Tanzania rather than Kenya, which had wanted to secure the export route, a summit of East African leaders said.
Picking a route is vital for oil firms to make final investment decisions on developing reserves found in Uganda and Kenya, which are among a string of hydrocarbon finds on Africa’s eastern seaboard. Tanzania has found gas offshore.
Land-locked Uganda, which found oil in a western region around Hoima, said last year that it would build a pipeline through Kenya, linking its fields to Kenyan discoveries in Lokichar and on to Lamu on Kenya’s north coast. But in March this year Uganda changed tack, saying it was now planning a pipeline from Hoima to Tanga on Tanzania’s coast, prompting a last-minute push by Kenya for another switch.
Last Saturday’s summit of the East African Community bloc in Kampala – which groups Uganda, Kenya, Tanzania,
Rwanda and Burundi –confirmed Uganda would take the Tanzanian option.
Regarding the crude pipeline, “the summit agreed that two crude oil pipelines, one from Lokichar to Lamu and another from Hoima to Tanga, will be developed by Kenya and Uganda respectively”, the final communique said.
“There is no more paralysis on that matter, we are moving”, Ugandan President Yoweri Museveni said after the summit meeting. Kenyan Lands Minister Jacob Kaimenyi said the Uganda and Kenya pipelines would be developed independently.
France’s Total, one of the oil firms developing Uganda’s fields, had raised security concerns about the Kenyan route. A Kenyan pipeline could at points run near Somalia, from where militants have launched attacks on Kenya.
Britain’s Tullow Oil, with stakes in both countries, had backed the Kenyan route, saying it would be cheaper if oil from both pipelines followed the same route.
“While we have always believed that a joint Uganda-Kenya export pipeline was the most cost-effective option, we are clear that both Uganda and Kenya’s oil resources can be developed separately”, Tullow said in a statement.
The firm said it would now work with both governments on the two pipeline projects.
China’s CNOOC is also involved in the Ugandan oil finds. Projected production start dates from both countries have repeatedly been postponed, particularly because no decision had been taken over the pipeline route.
Source: Khaleej Times
43
Kenmare enters agreement for proposed US$100 million investment
Mozambique-focused Kenmare Resources has entered into a conditional subscription and relationship agreement with chemicals trading company King Ally Holdings for a proposed US$100 million investment in Kenmare.
The proposed investment would be on the basis that King Ally would hold a maximum 29.9% of Kenmare’s enlarged issued share capital on completion of a capital restructuring.
Kenmare had previously proposed a deleveraging plan, which would include a capital restructuring and equity fundraising of at least US$275 million. Of this amount, a significant portion would be used to reduce the company’s debt, with the balance to be used for working capital purposes.
The proposed investment by King Ally would form part of the US$275 million equity raising.
Kenmare had already entered into an agreement for a proposed US$100 million equity investment by SGRF – a sovereign wealth fund of the Sultanate of Oman. The miner expected to raise a further US$75 million from new and existing shareholders. Kenmare had been in discussion with its lenders regarding the deleveraging plans.
Kenmare rejected a takeover offer from Iluka, an Australian rival, in 2014, with further on-off discussions failing to result in a deal. The London-listed company’s biggest institutional shareholders include M&G Investments, the fund management arm of Prudential.
Kenmare’s largest debtholders, meanwhile, include Absa, Barclays’ operation in South Africa, and the European Investment Bank. The miner accounts for 8% of the world’s ilmenite production, with the majority of it consumed in China.
Source: Manx Radio/Creamer Media’s Mining Weekly
Mozambique braces up for its first iron-ore mining project in Tete
Mozambique’s first iron-ore mining project, in the Moatize and Chiúta districts (Tete Province), may begin as soon as 2019.
The project will cost approximately US$750 million and will be developed over an area of 20,000 hectares, excavating an estimated 750 million tons of ore over approximately 25 years.
Tete provincial director of mineral resources and energy, Grácio Cune, explains that: “after 25 years, if it is proved that there is still ore to extract, activity will continue”. Iron-ore mining is seen as a possible substitute for coal, which is currently in decline due to the fall in coal prices in the international market.
“The iron-ore project will also use coal and provide leverage for the coal industry giving some relief from the lack of markets being felt in the sector”, Cune said.
Cune believes in the project and expects iron-ore mining to benefit the whole of southern Africa. “The emergence of an iron-ore project may also lead to the emergence of other industries to consume the product. It can boost development and further reduce steel imports to the region”.
44
The project will create over 800 direct jobs in mining and processing in its operation phase, and the Tete provincial government believes this number could increase to over 2,500 during the implementation phase.
Initially, the iron-ore extraction project in Moatize and Chiúta will supply ore for Mozambique and Southern Africa Development Community (SADC) countries. But there are also plans to improve the Sena and Moatize-Nacala railway lines, “If you want to export ore, these two lines [Sena and Moatize-Nacala] may be useful”, Cune notes.
Almost 200 to be resettled:
More than 180 people will have to leave their homes if the project goes ahead – 35 families in Moatize district and 16 in Chiúta. The Tete provincial government says it is already discussing resettlement with the communities involved. “We have identified three possible resettlement areas which are currently the subject of study, evaluation and communities consultation”, Cune says.
The Association of Legal Support and Assistance to Communities (AAAJC) is one of the mediators in the public consultation process, and is already accusing the government of imposing choices on communities.
José Tomás is the association’s legal counsel and believes that procedures are not being followed. “When someone – whether a police officer or a figure of authority – forces a person to sign a document under pressure, it is not good”.
Tomas considers that the resettlement process is already flawed. He says that the Tete government, in assessing
compensation, counted only houses and no other buildings or improvements.
“As a result, in terms of compensation, you can no longer speak about the rest. Therefore, we conclude that this resettlement is flawed”, he says, condemning the provincial government’s lack of candour.
Source: Deutsche Welle
Zimbabwe’s cash crisis fuels gold smuggling into Mozambique
Zimbabwe could be losing thousands of US dollars through the smuggling of gold into neighbouring Mozambique by small scale miners who have opted to sell their produce on the black market which has ready cash. This follows the current cash crisis which has seen local banking institutions limiting cash withdrawal by depositors.
The cash crunch has forced small scale miners, who are desperate for ready cash, to snub Fidelity Printers and Refinery, a subsidiary of the Reserve Bank of Zimbabwe (RBZ).
Miners said that, despite assurances from the central bank they would get their dues, most banks have reduced withdrawal limits as they try to grapple with the situation.
The crisis which initially hit smaller banks but has spread to bigger financial institutions, has been blamed on increasing demand for cash as well as reluctance by Zimbabweans to use plastic money. Speaking at a recent stakeholders meeting which was convened by Manicaland Miners Association (MMA), small scale miners voiced their concerns over cash shortages at the Fidelity
45
Refinery. They said they were being forced to sell their gold through the black market, mainly in Mozambique, to raise money to pay their suppliers.
“It does not make sense that I sell gold worth US$10,000 to RBZ and I cannot access that money. It’s better to channel another portion to the black market so that I can get hard cash to cover other operational costs at the mine”, said one miner who said he was hard-pressed for cash as he had wages to pay to his workers.
Another miner from Penhalonga said government has to address the issue of cash shortages as this has impacted negatively on production. “The black market buyers are coming here with cash and we are forced by the situation to clandestinely remove some gold and sell to them. Government must address this crisis as soon as possible”, said the miner.
The provincial director of the Ministry of Mines for Manicaland, Christopher Dube, said the matter was being addressed so that miners could access their cash on time.
He told the miners that it was illegal to sell gold to the black market.
“We know it’s a challenge and something must be done to address the matter so that you can pay your suppliers”, said Dube. MAA Chairman, Lovemore Kasha, also confirmed that their members were facing challenges and urged the RBZ to address the situation. Imports, which have skyrocketed against the backdrop of shrinking exports, are also to blame for the cash crisis.
The central bank recently injected US$270 million since the beginning of the year, but this has not been enough to satisfy the high demand for money in the country.
Source: New Zimbabwe
Premier African Minerals buys 52% stake in Mozambique’s TCT
On Wednesday 27 April, Premier African Minerals Ltd. announced that it will buy an initial 52% interest in Mozambique-based TCT Industrias Florestais Ltd., which owns a substantial limestone deposit in Sofala Province.
Premier has raised £1.1 million through the issue of 146.7 million shares at 0.75 pence each to help fund the acquisition and for exploration costs. The total acquisition consideration amounts to US$2.1 million.
26% of the stake is being bought for US$1.1 million from Transport Commodity Trading Mozambique Ltd. and will be paid in four tranches of either cash or shares. The remaining 26% is being bought from GAPI Sociedade de Investimentos SA for US$1 million and will be paid in five tranches, the first in cash and the other four in either cash or shares.
Premier has also entered into a memorandum of understanding with TCTM, GAPI and other TCT shareholders, under which Premier has agreed to fund the limestone exploration programme and TCT’s operations through a loan of up to US$1 million.
Premier has the right to convert amounts provided under the loan into equity as and when it totals US$1 million, and when it is
46
converted, Premier’s maximum interest in TCT will increase to 68%.
“This is a particularly attractive acquisition both in the upside potential from development of the limestone and the allied operating natural resource business of TCT that is expected to positively impact cash flows and mitigate normal exploration and mineral development risk”, Chief Executive George Roach said in a statement.
“At the same time, an existing market and available infrastructure significantly adds to the early development potential of the deposit. This, together with developments at RHA where recommissioning of the vertical shaft remains on target for completion this month, adds substantially to Premier’s future”, he added.
Shares in Premier were trading down 16% at 0.860 pence on Wednesday morning.
Source: London South East
South Africa’s Eskom to spend US$23.5 billion on new plants
South African power utility Eskom is not under pressure to tap international markets to help fund its ZAR340 billion (US$23.5 billion) five-year expansion
plan, its chief executive said on Tuesday 26 April.
State-owned Eskom is building new plants and transmission lines to augment a power grid that nearly collapsed in 2008 and was forced to implement controlled blackouts, or load shedding, early last year that dented economic growth.
“Our funding for last year is complete and most of the funding for this year is done”, Eskom CEO, Brian Molefe, told reporters. “We never issue less than benchmark which is anything above US$500 million, so it can be US$750 million or US$1 billion”.
He said the timing would depend on market conditions, adding that the successful pricing of a 10-year dollar bond by the National Treasury in April was a good sign.
Eskom is building three new power plants and expects to add 5,620MW to the network by 2018.
Minister of Public Enterprises, Lynne Brown, whose department oversees the power utility, told parliament that power supply had stabilised, adding that: “for the longest of time South Africans have had their lights on and load shedding has become a distant memory”.
47
Minister Brown said the rest of Africa was a key growth area, with Eskom eyeing new business opportunities this financial year in the Democratic Republic of Congo, Mozambique and Uganda.
Minister Brown also said Eskom, which provides virtually all the electricity to Africa’s most industrialised economy from coal-powered plants, has been paying above inflation prices to secure coal, despite being the main buyer of the commodity.
“Eskom coal costs have been growing above inflation levels”, she said, adding that she hoped the cost could come down.
Eskom gets 51% of its coal from global miner and commodity trader Glencore, Exxaro, South32 and Anglo American.
To help reduce the cost of coal for Eskom, Molefe said that the utility was busy renegotiating its long-term coal contracts.
Eskom was also investigating whether it could lay claim to some of the mine assets of its coal suppliers, given the utility had helped to pay for the operations of their mines as part of historical contracts, he said.
Source: Reuters
Transport & Construction:
Transport on agenda of Mozambique-Malawi-Zambia Summit
On Monday 25 April, President Filipe Nyusi presented the Malawian authorities with projects, seeking to reduce the costs of transporting merchandise to and from this landlocked country.
President Nyusi made the proposals at a summit in Lilongwe (Malawi) at which the
other two participants were the Malawian and Zambian Presidents, Peter Mutharika and Edgar Lungu.
At a press conference after the meeting, President Nyusi said the three leaders had discussed “matters of common interest”, including maximising the use of transport infrastructures, and exploring the possibilities for electricity generation and transmission.
But he made it very clear that Mozambique will not consent to the Malawian proposal to use the Shire and Zambezi rivers for international maritime traffic. This project was conceived several years ago by the then Malawian president Bingu wa Mutharika (brother of the current President), who considered it key to lowering transport costs to the Indian Ocean.
Malawi even went as far as building a port at Nsanje on the Shire at a cost of US$20 million. The inauguration ceremony was a huge embarrassment when the Mozambican authorities blocked fertilizer laden barges that were en-route to Nsanje.
Mozambique opposes opening the two rivers to international traffic on environmental grounds. For example, to make the entire route navigable would entail constant dredging, and any major spills would be damaging to delicate river eco-systems.
President Nyusi made it clear that the Mozambican position has not changed, and that using the Shire-Zambezi waterway for international traffic is “not viable”. He suggested that the Nsanje port, now largely unused, could be converted into a dry port.
48
The most important issue, he said, is that countries of the region should complement each other, particularly in difficult situations such as the drought currently affecting much of southern Africa. President Mutharika declared that Malawi is willing to use all possible alternatives to reduce the cost of imports.
“President Nyusi was very exhaustive in presenting all the projects”, he said. “We are ready to use the Mozambican ports”. Malawi’s shortest and cheapest outlets to the sea are the railways to the Mozambican ports of Beira and Nacala.
President Nyusi was accompanied on his one-day trip to Malawi by the Minister of Foreign Affairs and Cooperation, Oldemiro Balói; the Minister of the Interior, Jaime Monteiro; and the Minister of Transport and Communications, Carlos Mesquita.
Source: Agencia de Informacao de Moçambique
China’s CHEC involved in investment of US$1 billion in the new port of Maputo
An international consortium, which includes the port company China Harbour Engineering Co., is projecting an investment of US$1 billion in a new port in Maputo Province, to serve Mozambique and neighbouring countries, including South Africa.
The project for the deep water port of Techobanine in Matutuíne district (southern Maputo Province), is being promoted by a consortium led by Mozambican company Bela Vista Holdings (BVH), and includes the China Harbour Engineering Co, and the South African public rail company Transnet.
Mozambique and Botswana initially agreed to this project in 2010, providing total financing of US$7 billion and the construction of 1,100 kilometres of rail link, with the capacity to process 200 million tons of cargo per year – ranging from general bulk to ores, fuel and passengers.
In 2011, Zimbabwe joined the project through a memorandum of understanding, providing financing from the private sector and concession of infrastructure. The following year the master plan of the project was completed and a public tender was launched to select a company responsible for economic viability studies.
Savana wrote that the plans are underway for construction of the port “which may somewhat ease the pressure on the port of Maputo and offer more competitive options for access to international markets by some Southern African countries”.
“As this is a category A project, this development will be subject to a full environmental impact study, which will result in a plan for its management, supported primarily by the project”, a source close to BVH told Savana.
An international consortium has already completed the preliminary environmental impact studies and, in response to its recommendations, the project’s promoters have decided to choose a location that is 23 kilometres from the Maputo Special Reserve for the location of the port at Ponta Techobanine.
The port’s construction works will consist of opening a 3.5-kilometre access channel, an industrial free zone, among other complementary facilities.
49
The new port will facilitate and diversify access to the sea to some countries in the region, such as Botswana, Swaziland and Zimbabwe, as well as shorten the distance to the coast from mining regions within South Africa.
A rail link through Swaziland, along the Maputo River, could help to significantly reduce transportation costs of ore produced in South Africa, “allowing for it to be placed on the Asian market at competitive prices”, Savana said.
The East African coast is one of the areas included in the Chinese business strategy of the New Silk Road, which will support the creation of new infrastructure and industrial areas.
China has taken on an important role among Mozambique’s main foreign partners and most analysts expect that role to increase.
“We expect that the involvement in the Mozambican economy of companies from Brazil, India and China will strengthen ties with these countries”, said the latest report on Mozambique from the Economist Intelligence Unit (EIU).
The China Harbour Engineering Co. is already in charge of the works of the new port of Beira, which began in September 2015.
This infrastructure in the second largest city in the country is seen as key to revitalise the country’s fisheries industry and is prepared to serve the entire production chain, including refrigeration and export of processed products.
Source: MacauHub/Savana
International companies compete for new Tete-Zambézia railway in Mozambique
Seven foreign companies are competing for the contract to build a railway linking the mining district of Moatize, (in Tete Province) to the port of Macuse (in Zambézia Province). This is according to Thai Moçambique Logística, the entity responsible for implementation of the project. The international tender, which closed on Friday 29 April, has so far received proposals from two companies in China, two from Turkey and one each from Brazil, Portugal and South Korea.
The Moatize-Macuse line will be between 480 and 500 kilometres long – although negotiations are underway with the government to add another 120 kilometres, to allow access to some existing coal concessions in Tete, which are not currently connected to the railway network. The port of Macuse has the capacity to receive vessels that allow for greater competitiveness in relation to the port of Beira, which receives ships with a smaller draft. The Macuse project is 60% owned by Thai Development Company Limited, 20% by Mozambican state port and rail company CFM and the remaining 20% by the Zambezi Integrated Development Corridor (Codiza).
Source: MacauHub
President Nyusi inaugurates Cuamba water treatment station
On Monday 25 April, President Filipe Nyusi inaugurated a water treatment station in the city of Cuamba (Niassa Province). The treatment station belongs to the government’s Water Supply Investment and Assets Fund (FIPAG),
50
and the contractor was the China Henan International Cooperation Group (CHICO).
The station cost MT680 million (approximately US$12.8 million), and the money was disbursed by the African Development Bank (AfDB).
Data from FIPAG indicated that the water impoundment, treatment and distribution system can now supply water to roughly 72,000 inhabitants of the city. In the first experimental phase, the availability of water rises from the previous 1,200 cubic metres to 3,200 cubic metres a day, and the time during which water is distributed doubles, from eight to 16 hours a day. Eventually, the amount of water treated by the station will rise to 6,630 cubic metres a day.
Addressing the inauguration ceremony, President Nyusi said that, if the government is to continue guaranteeing supplies of clean water to the population of Niassa, it needs an environment of peace. There are people “who want to put a brake on development”, he accused, clearly referring to Renamo, whose illicit militia has continued to stage ambushes on main roads in the centre of the country.
Peace is required so that water can reach other districts, President Nyusi said, and so that Mozambicans can produce to feed themselves and sell the surplus crops. “The threats must end”, the President declared. “The people want roads, and roads are not built with war”.
“We promised to bring the train to Niassa, and this we shall do without war”, he promised. President Nyusi was speaking about the branch line from Cuamba to the Niassa provincial capital (Lichinga), which has not been operating normally for decades. Once the railway is fully
operational, the cost of transporting goods to the Niassa interior will fall sharply.
President Nyusi added that by inaugurating the treatment station he had complied with a promise made to the people of Cuamba during the campaign for the October 2014 general elections.
During the campaign he had promised to conclude work begun by the country’s previous presidents. “The system we are inaugurating today was begun by president Joaquim Chissano in 2003”, President Nyusi said. “It was continued under president Armando Guebuza, and today it is completed”.
Source: Agencia de Informacao de Moçambique
Agriculture:
South African farmers look to Africa
South African commercial farmers group Agri-All Africa (AAA) has announced plans to step up agricultural investments in 11 African “priority destinations”
These include Zambia, Nigeria, DRC, Angola, Mozambique, Malawi, Ivory Coast, Ethiopia, Tanzania, Namibia and Sudan. In a position paper issued days after Agri-All SA client farmers met at Senekal Farm in the Free State (South Africa) to discuss ways to ensure the successful implementation of agriculture investments in the priority destinations, the group said the success of agro-investments would depend on consensus and co-operation between the respective governments and farmers.
“Featured in the meeting were current opportunities to make a difference in agricultural development and upliftment, as well as potential future. Focal areas of
51
investment were discussed. The client-farmers, AAA structures including three board members, diplomatic representation, and agribusiness value chain representatives, including PB Projects, Senter360, and AFGRI were represented on the Senekal Farm discussing agricultural investment opportunities and how to minimise risk and create assurance into Africa options.
“Consensus was achieved that the co-operation among the key elements and actors are essential to reach proper managed and implementable projects that will change the lives of people on the ground inclusive of commercial viability for all stakeholders.
“Charl Senekal of Senekal Boerdery, as an AAA board member, expressed satisfaction as well as willingness to support projects that are processed through the AAA value chain”, AAA said. The group said more South African farmers had joined it and expressed serious interest in setting out for new destinations, especially in West Africa where the prospects of profitable and secure agricultural investments have been buoyed by the recent appointment of Johanne Kotze as AAA director of strategic development planning, as well as Johan Jonker, as project developer for Western Africa with special emphasis on Nigeria.
“The amount of interested farmers who are contacting AAA on a daily basis have increased to such an extent that the capacity of AAA must be strengthened, as well as to give support to the AAA platforms that were formed in Zambia, Nigeria, DRC, and on the verge of being launched in Angola, Mozambique and Ethiopia”.
“Andre Botha, AAA Katanga (DRC), has said that his confidence in these structures is high as they approach business opportunities with a full social upliftment agenda which is deemed critical for sustainability of farming operations in Africa”, the group said.
Addressing the meeting, Zambian High Commissioner to South Africa, Emmanuel Mwamba, said South African farmers should take advantage of the absence of conflict, investor friendly policies, political stability and the abundance of arable farmland in Zambia to develop the agricultural sector.
“Zambia is one of the richest countries in terms of natural resources. We have huge tracts of arable land across a country of over 700,000 square kilometres, but unfortunately we only utilise about 10% of this. You can fly into Zambia today to register your company and within 24 hours the process would have been completed”, he said.
In Zambia, land and other immovable investments are guaranteed and protected against nationalisation or appropriation by the State through a Certificate of Registration issued to the investor in terms of the Zambia Development Agency Act of 2006.
Source: Independence Online
Government demands compliance with lower food prices
The government has pledged to oversee compliance with the new price list recently agreed to with fresh produce importers, in order to mitigate recent increases in the cost of food.
52
The measure, which came into force in mid-April, was adopted by the government to deal with the effects of reduced domestic production of fresh produce. However, it has not yet had the desired effect and food prices remain high.
Minister of Industry and Trade, Ernesto Tonela, has promised that the necessary monitoring will take place and practices will be put under the microscope soon.
“The work we are doing with the importers, especially small and medium-scale, will ensure that the benefits they are getting as from 14 April – the date on which the new prices came into force – will be passed on to the final consumer”, Minister Tonela said.
Source: Folha de Maputo
New director of Mozambique Cotton Institute urged to increase production
On Wednesday 27 April, Prime Minister Carlos Agostinho do Rosário challenged the new general director of the Mozambique Cotton Institute (IAM), Luis Zeca Tomo, to adopt new measures to increase cotton production and therefore gain more foreign currency for the country.
Prime Minister Rosário was speaking at the Maputo ceremony where he swore Tomo into office.
“The cotton sub-sector plays a significant role in the economic development of the country, since it contributes to foreign exchange earnings”, said Prime Minister Rosário. It created business opportunities and generated income for the households who survive on the basis of cotton production.
“The general director of the Mozambique Cotton Institute should ensure the effective implementation of the programme to revitalise the cotton value chain which the government approved in 2015”, said the Prime Minister.
Prime Minister Rosário also inducted the new permanent secretaries for the Foreign, Defence and Labour Ministries, respectively José Nhalungo, Fernando Campine and Maria da Graca Jacinto. He challenged them all to co-ordinate reforms in the public administration, and to improve the services provided to citizens.
“As permanent secretaries you should always promote a healthy work environment and good co-ordination, both with the top leadership, and with the technical staff of all areas”, said Prime Minister Rosário. He urged them all to prioritise team work, and to strive for transparency, guaranteeing efficiency in discharging their responsibilities.
Source: Agencia de Informacao de Moçambique
Other:
Coca-Cola Mozambique hit by metical drop
Coca-Cola Mozambique is feeling the effects of the depreciation of the metical against the US dollar, but says the situation will not affect jobs.
The international soft drinks company pays for imports of raw materials in US dollars and has been spending much more with the depreciation of the national currency. According to the Chief Executive Officer of the company, Benjamim Alfredo, the 350ml bottle, which costs MT15, should in fact be selling for
53
MT17, but said there were no plans to increase prices yet.
Alfredo discussed the situation during a visit by the mayor of Matola, Calisto Cossa, to the new facilities in Matola Gare. In addition to showcasing the factory, the company also handed over the two-kilometre access road it has built.
Source: O País
Government announces new statutory minimum wages
On Tuesday 26 April, the government approved the new statutory minimum wages, for all sectors of activity, with increases ranging from 1.15% to 12.5%.
The announcement follows consensus a fortnight ago on the new minimum wages in the Labour Consultative Council (CCT), the tripartite negotiating forum between the government, the trade unions and the employers' associations.
There is no longer a single minimum wage in Mozambique. Instead the work force has been divided into nine categories, each with its own minimum wage. Since several of these categories have been broken into sub-sectors, there are in fact 14 separate minimum wages.
Labour Minister Vitória Diogo announced the new monthly wages at the end of the weekly Cabinet meeting. As happens every year, the new wages are backdated to take effect as from 1 April. The new statutory minimums are as follows:
Agriculture, livestock and forestry – MT3,298 (an increase of 3.61%);
Fisheries a) industrial and semi-industrial fishing – MT3,815 (9%); b) The Kapenta (Lake Tanganyika
sardine) fishery on the Cahora Bassa lake – MT3,375 (12.5%);
Mining a) Large companies – MT6,213.67 (10.11%); b) Small companies, quarries and sandpits – MT4,907.17 (8.11%); c) Salt pans – MT4,476 (7.18%);
Manufacturing industry a) General – MT5,200 (8%); b) Bakeries – MT3,985 (1.15%);
Electricity, gas and water a) Large companies – MT6,036.71 (11.75%); b) Small companies – MT5,421.77 (11.75%);
Building industry – MT4,886.74 (9%);
Non-financial services – MT5.050 (8%);
Financial services a) Banks and insurance companies – MT8,750 (8.7%); b) Microfinance companies – MT8,400 (7.69%);
Public administration, defence and security – a 7% rise for the lowest levels (including, for example, primary school teachers, nurses, and policemen, and soldiers), and 4% for the higher levels.
None of these wage increases are large enough to keep up with the pace of inflation. According to the figures from the National Statistics Institute (INE), based on the consumer price indices for the three largest cities (Maputo, Nampula and Beira), inflation over the past year (April 2015 to March 2016) was 13.62%. This is the first time in more than a decade that the rise in the statutory minimum wages has failed to keep pace with inflation.
54
Over the past year, the metical has undergone sharp devaluation against the US dollar. The exchange rate is approximately MT53 to the US dollar (using the exchange rate for the inter-bank exchange market). Therefore, if expressed in US dollars, the new monthly wages vary from US$60 (for agricultural workers) to US$152 for workers in banks and insurance companies.
Speaking to reporters, the Minister of State Administration, Carmelita Namashalua, said that the wage increase for the public administration was “a difficult exercise” given the country’s current economic situation. She stressed the need for adopting austerity measures throughout the state apparatus – these would include reducing the use of fuel, cutting allowances, and tighter control over the payment of overtime.
“We have few funds, and these must be shared so that our public administration and other sectors can function properly”, said Minister Namashalua.
Source: Agencia de Informacao de Moçambique
Mozambique’s employers say 2016 will be economically difficult
According to the vice president of the CTA, Agostinho Vuma, Mozambique’s economy is expected to have a difficult year in 2016. Vuma said that this forecast was partly due to the El Niño phenomenon (which is affecting agricultural production and productivity in the southern and central areas), political and military tension, the devaluation of the metical and public debt.
Vuma said that the politico-military tension was having a significant effect on the transport sector, therefore it is urgent to re-launch coastal shipping (cabotage) “to be an alternative for businesses as it can play an important role in the flow of production between the country’s three regions”.
Regarding public debt, Vuma said that the decline in public investment was one of the immediate consequences, which may force private companies to lay off staff, given that the State is the main customer of these companies.
55
“If the state fails to invest, the companies will not have an income, so they will not be able to pay salaries”, he said.
Source: MacauHub
Matchedje Motors lays off 20 out of 60 workers in Mozambique
The Matchedje Motors vehicle assembly company recently said that the depreciation of the metical is one of the factors that led to the dismissal of 20 workers – a third of the company’s workforce. According to Carlos Tamele, deputy director-general of the company, the economic situation of the country is also affecting normal production.
“The materials that we import have to be paid for in US dollars. Our currency has suffered a great deal of fluctuation, and this means that we can’t get materials in time and therefore cannot produce normally”, he said. Tamele said that the unreliable power supply was another constraint. “Power outages paralyse us for hours at a time. Production is inextricably linked to time – time we waste because there is no power. As a result, we cannot fulfil the vehicle delivery commitments we’ve made to our customers”, Tamele said.
Source: O País
RBR Group Ltd finalises purchase of Registered Training Organisation
RBR Group Ltd. has closed the acquisition of its Australian Registered Trading Organisation (RTO). It also has a Mozambican business administration subsidiary, PacMoz, which is cash flow positive and self-funding. PacMoz acquired a labour broking licence in November 2015, which was a critical step
in RBR’s strategy to become a holistic labour services provider to its clients.
RBR is focusing on providing industrial skills training services through its subsidiary Futuro Skills, which is conducting training programmes in Mozambique, Australia, South East Asia and Europe. Futuro Skills is in the final stages of a submission to deliver a ‘Welding and Fabrication Skills (WFS)’ training programme for up to 1,000 disadvantaged Mozambicans.
The programme is part of a wider initiative called JOBA which is funded by the United Kingdom’s DFID, with an estimated value of US$2 million.
The company is involved in other programmes in Mozambique, including providing training for 60 new employees for a leading multinational integrated energy and chemical company.
Another project is in the coal mining region of Tete, where the client has requested a range of programmes to be delivered onsite as part of the commissioning of a new processing plant. As part of Futuro Skills’ focus on providing training services, the company is building the Matola Training Facility in Mozambique, where programmes can be customised to meet client requirements.
Office facilities and a single classroom have been completed at Matola, with catering facilities, amenities, and additional classrooms being constructed. In addition to Mozambique, Futuro Skills is in various stages of discussion to provide training services for clients in Australia, Indonesia and Kosovo near Serbia.
Source: Proactive Investors
56
POLITICS
Mozambique’s secret loans: what happens now? – Joseph Hanlon
Like a naughty schoolboy caught smoking in the bike shed who is then summoned to the school principal’s office, Prime Minister Carlos Agostinho do Rosário flew to Washington to appear before IMF Managing Director Christine Lagarde. Apparently he confessed to her that at least US$1.35 billion in loans were taken out in secret without telling parliament or donors – or, most importantly, the IMF.
At least US$2.2 billion – equivalent to all government spending for five months – has been squandered in secret on boats of dubious necessity and, it is widely assumed, on corrupt payments. So, what happens now?
There are two guiding principles which will shape whatever happens. First, Frelimo is obsessed by maintaining unity at all costs. Ever since Eduardo Mondlane was assassinated in 1969, Frelimo has realised that it can only gain and keep power by not splitting up. That means no one is expelled from the party no matter how corrupt or incompetent they are; anyone who might be a threat is given a sinecure. Disputes are settled within the party and the aim is for win-win agreements. The Ematum bond was said to benefit allies of the former president Armando Guebuza. One of the secret loans just revealed benefitted the military when the current President, Filipe Nyusi, was defence minister.
The second guiding principle is that the big multinational lenders and donors – the IMF, World Bank and EU – as well as the bigger bilateral donors, need to provide money to Mozambique. Aid officials are
mainly judged and promoted based on how much money they dispense. Despite war and scandal, Mozambique is seen as a country they can work with and which largely follows donor policies; Maputo is a pleasant place to work.
The result is a tacit agreement. During the scandals of 1990s when more than US$400 million was stolen from banks, and again with Ematum, the donors and lenders have tried to curb the most egregious excesses. But mostly they only made angry noises. In particular, they have never required Frelimo to publicly identify the culprits – those senior in the party who stole huge amounts and even ordered murders. That, in turn, has allowed Frelimo to stay united.
Despite being offended, Lagarde will not cut off Mozambique, because that would look bad for the IMF. Similarly, the World Bank and EU will argue they have large development programmes which benefit most Mozambicans, so they should not stop those. A few European donors with conservative governments might take their aid elsewhere, but most will not. The willingness to never name the crooks is because the network of patronage has been skilfully constructed; anyone who is identified will name others. That, in turn, could split the party. Both Frelimo and the donors and lenders fear that a split party could lose the next election, and most donor and lender officials would not want a government run by the present opposition. This, in turn, gives substantial negotiating power to President Nyusi, Guebuza, Prime Minister Rosário and Finance Minister Adriano Maleiane.
Source: Joseph Hanlon News
57
Frelimo veteran says that hidden debts are sovereign
On Tuesday 26 April, Frelimo veteran Alberto Chipande, who is often considered to be one of President Filipe Nyusi’s mentors, argued that the debts that were not initially disclosed by the government should be considered sovereign, and emphasised the need to find a solution to the problem.
“We have instructed the government to clarify the debt. We concluded that this debt exists, that it is sovereign and that the government must find ways to solve the debt problem”, Chipande said in statements to the press in Beira (Sofala Province).
According to O País, Chipande also said that it is up to the current government to resolve the issue, despite the undisclosed debts having been incurred by the Armando Guebuza executive.
“The government must assume the debts. In fact, the proof is that a top-level government delegation went to the US to recognise that there is a debt. We rejected the proposal of some parties to the debt being debated in parliament, because there was no clarity at that time”, Chipande said. Referring to the recent refusal of the Frelimo bench to debate the issue of debts in parliament, Chipande, who is also a deputy, said that the party in power rejected the proposal because it did not want to discuss rumours.
“We did not want to discuss rumours. It is ‘Frelimo that does, Frelimo that says, Frelimo that guides’ (‘Frelimo é que faz. Frelimo é que diz. Frelimo é que orienta’)”, said Chipande.
Source: Lusa/O País
Bar Association demands transparency over debt
The Mozambican Bar Association (OAM) has added its voice to those demanding that the government release the full details of the country’s public debt, following the revelation that over US$1 billion worth of government guaranteed debt was not disclosed, either to the IMF or to the Mozambican taxpayers.
A statement from the OAM Human Rights Commission condemned the government’s “lack of transparency” in contracting these debts.
It pointed out that the projects financed by the debts are not included in the official list of priority projects in the government’s own Integrated Investment Plan. Furthermore, the State guarantees for the loans exceeded the limit for such guarantees stipulated in the budget law.
The OAM accused the government of going beyond the powers granted to it by the Constitution, and acting in “flagrant disrespect” for the National Assembly. In addition to violating the budget law, it had hidden the very existence of large public debts, and the OAM believed that this constituted the crime of abuse of office.
The OAM regretted that the majority in the Assembly had rejected the demand by opposition deputies for the government to appear before the Assembly and explain the undisclosed debts. This was a “denial of the right to information, which is a fundamental right, on a matter of urgent public interest”.
It called on the government “in the name of transparency, legality and integrity in the management of public assets, as well as respect for constitutional norms, to
58
provide urgently, through the adequate channels, the due explanations to the people about the real public debt, its purpose, pertinence and sustainability”. In doing so, the government would be taking seriously “its job of guaranteeing the administration of the public interest and of promoting the welfare of citizens”.
The OAM encouraged the government “to continue its efforts to re-establish the image, credibility and public trust in the country among its development co-operation partners”.
It called on the relevant authorities, particularly the National Assembly and the Attorney-General’s Office, “to promote activities to restore the legality that has been violated and to hold the agents involved responsible”.
Source: Agencia de Informacao de Moçambique
“Mozambican government violated budget law in hidden borrowings” – CIP
The CIP – a non-governmental organisation dedicated to the surveillance of public finances in Mozambique – says that the government violated budget transparency statutes by concealing debts guaranteed by the State, and that the people are entitled to a full disclosure of the real situation.
“The Mozambican people deserve detailed and quick clarification of the discrepancies noted between the statements of the government and the IMF,” declares a CIP document sent to Lusa on Friday 22 April.
Urging the government to disclose the full situation, CIP says that the government has broken the Budget Transparency Act
by omitting information relating to debts from public accounts while sharing them with investors in the Ematum securities repurchase scheme.
“Neither the Ematum debt nor new debt were approved by parliament”, says the document, which describes the public debt situation in Mozambique as “disastrous”.
The CIP document goes on to say that, besides the interruption of foreign currency disbursements by the IMF, the suspension of the body’s mission will have a strong impact on the relationship between the country and other partners, warning that private sector investment may decrease.
“The expectations of Mozambican economic agents are clearly influenced by recent events”, the CIP document notes, adding that the Mozambican economy has been shaken since 2014 by a significant drop in revenue, with direct impact on the “financial health of the country”.
Source: Lusa
IMF was complacent and patronising towards Mozambique government – António Francisco
Mozambican researcher and economist, António Francisco, believes that the IMF was complacent and patronising towards the Mozambique government’s recent financial dealings right up until the moment it found out that the country had hidden hefty debts, reports Lusa.
“If the Mozambican government is at present one of the worst cases of concealment and distortion of information that the IMF has faced in Africa, I hope
59
this incident motivates it to be less complacent and patronising towards Mozambique’s ruling elite”, the researcher says.
Faced with the doubts raised by Mozambican economic researchers over time, the IMF must have been wearing rose-coloured spectacles in order to describe the growth of the economy as “robust” and “sustainable”.
“I look forward to forthcoming IMF assessments. In fact, many people will be waiting with anxiety and curiosity, for a number of reasons”, Francisco said.
In 2002, at the height of Mozambique’s “financial delirium”, former president Armando Guebuza boasted: “We’re no longer a country that is talked about, but a country with whom you talk”, notes Francisco. Now, the recent discovery of debts hidden by Guebuza’s government has worsened the risks and uncertainties significantly, and internationally, Mozambique has become an object of “disrepute and ridicule”
“We do not know how other international government partners will react to recent revelations, but I suspect they are breathing a sigh of relief, because before, the IMF was too distracted and complacent. I hope that they react with a sense of responsibility towards Mozambican society but without complacency and indulgence towards the government”, he says.
According to Francisco, the risk of social tension will depend a lot on how the government manages the crisis. “If you react irresponsibly, breaking your word and continuing to say that the problem was caused by the global crisis, then we must expect social tension”.
“Only a blind optimist, someone who behaves as if things could never get worse than they are, could entertain the idea that the national economy is on track”, said Francisco, researcher at the Institute of Social and Economic Studies (IESE) in Mozambique. He goes on to say that the hidden debt significantly alters the macro-economic analysis of Mozambique, and the IMF is not yet in any position to assess its impact. According to Francisco, Mozambique’s net international reserves had already been shaken by the US$850 million government-guaranteed loan to Ematum.
“We are facing an amazing amount of debt, allegedly for the purchase of tuna fishing boats, but here we are three years later and the boats remain stuck in port without producing anything”, he notes.
Francisco maintains that, “until proven otherwise, the country has reason to suspect that we are facing a scandalous example of highly speculative, unconstitutional and probably fraudulent credit for non-productive purposes”.
After the government’s admission of hidden debt exceeding US$1 billion, the academic says Mozambicans will have no choice but to wait and see if there are other undisclosed debts in public companies.
Source: Lusa
Government working to restore confidence – President Nyusi
On Friday 22 April, President Filipe Nyusi said in Brussels that the government is working at top speed on the political and diplomatic front to explain, with transparency, the country’s public debt, in order to restore the confidence of
60
creditors and co-operation partners, badly shaken by the revelation that over US$1 billion of government-guaranteed loans had not been disclosed to the IMF.
Speaking to reporters at the end of his two-day working visit to Belgium and to the Brussels-based institutions of the European Union, President Nyusi said that the country’s partners have recognised the merit in the way the government is seeking to deal with the undisclosed debts.
“We are facing the problem frontally”, he said. “We are opening doors so that things can be understood”. It is now clear that in the closing years of the previous government, headed by former president Armando Guebuza, there was a massive expansion in the public debt. But only one of these government-guaranteed debts was publicly known – this was the US$850 million bond issued by Ematum in 2013, which has now been converted into sovereign government debt maturing in 2023.
But in early April, thanks largely to an article in The Wall Street Journal, it became known that there were at least two other very large loans, guaranteed by the government, which had never been reported to the IMF, let alone to the Mozambican public. President Nyusi declared that transparency is a necessity in matters of public finance, and insisted that “debts must be sustainable”.
With the government working rapidly to restore confidence, he was optimistic that the executive could rely on the collaboration of its partners. He said they are willing to collaborate and have encouraged the government not to be intimidated by the problem.
“We are finding co-operation from the IMF”, he said, “to see if we can reach a solution rapidly and return to normal aid. More than ever, we are interested in ensuring that those who want to help, can have a space where they can assist with confidence”. All the country’s partners are interested in helping Mozambique overcome the problem, he said. “The interest is constructive”, he added. “The important thing is to create conditions so that the problem can be solved”.
President Nyusi made it clear that the government is banking on restructuring the previously undisclosed debts, just as the Ematum debt had been restructured. That restructuring bought the government an extra two years in which to pay off the Ematum bondholders, but at a much higher interest rate (10.5%).
Source: Agencia de Informacao de Moçambique
MDM demands parliamentary inquiry into undisclosed debts
On Monday 25 April, the leader of the Mozambican Democratic Movement (MDM), Daviz Simango, called for the creation of a parliamentary commission of inquiry to ascertain the situation of public debt.
“The MDM requires and will propose the creation of a parliamentary commission of inquiry into public debt”, Simango said at a press conference in the city of Beira (Sofala Province).
Simango said that public debt must be registered with the central bank and reported to parliament, whose authorisation should be requested for debts in excess of the legally established limits.
61
“The government is willing to explain to Brussels and send teams to the USA, but our sovereignty requires the government to explain to Mozambicans in the tribune of parliament”, lamented Simango.
The leader of the MDM argued that in a democracy, state affairs are discussed in the sovereign bodies and not in the private rooms of any political party, alluding to a statement made by Frelimo during the party’s fifth Ordinary Session of the Central Committee.
A steady stream of Mozambican organisations has begun expressing indignation regarding the impact of hidden government loans, demanding explanations from the government and a criminal investigation.
Source: Lusa
Renamo demands government explanation of debts
Renamo has once again demanded explanations from the government about the country’s public debt, following the revelation that over US$1 billion in government-guaranteed loans had not been disclosed either to the Mozambican public or to the IMF.
At a Maputo press conference on Wednesday 27 April, the head of the Renamo parliamentary group, Ivone Soares, announced that the Renamo parliamentarians have asked the government for studies which confirm claims that the public debt is sustainable.
Under the Freedom of Information Law passed in 2014, Renamo is also demanding detailed information on the bodies benefitting from government-guaranteed loans, such as the companies
Ematum, and Proindicus – a little known state company which the government now says is the national authority responsible for the protection of strategic infrastructures.
The Renamo request asks what interest rate will be paid on the loans, and the annual sums this represents. It also asks for information on the total foreign debt, and for a study on the impact of debt servicing on Mozambican citizens and companies.
Renamo’s request follows its failure, earlier this month, to call the government before the National Assembly to answer questions on the debt. The Renamo motion was defeated by the majority Frelimo Party – although a few days later it became clear that the Frelimo Central Committee did not agree with the Frelimo parliamentary group, and believed that the public is entitled to full information on the debt.
Soares told reporters that, in addition to writing to the government, the Renamo parliamentary group is making a second effort to put the matter urgently on the Assembly’s agenda. But the parliamentary sitting does not resume until mid-June, and even the Assembly’s governing body, its Standing Committee, is not scheduled to meet until 23 May.
“The Renamo parliamentary group is willing to use all legal means at its disposal to protect the interests of the Mozambican people”, and “we will continue working to obtain the necessary explanations about who decided to plunge Mozambique into debt? With whose authorisation? What are the sums involved? Where was the money spent?” questioned Soares.
62
She also urged the bodies of the administration of justice “to do their job without fear, since in Mozambique nobody is above the law”. They should not ignore “the criminal responsibility of those who acted in awareness of the illicit nature of what they were doing, but even so chose not to conform with the established law”, she said.
“There was conscious, voluntary and wrongful violation of the constitutional rules”, Soares claimed, “and consequently there was a violation of the principle of the rule of law and of the separation of powers”.
She suggested that the bank accounts of those responsible for the debts be frozen and that they be barred from leaving the country until all the details of the public debt have been explained.
Source: Agencia de Informacao de Moçambique
Parliament will discuss undisclosed debts “at the right time” – Speaker
On Monday 25 April, the Speaker of House, Verónica Macamo, said that the government should come to parliament to explain the huge rise in the country’s public debt – but “at the right time”.
Macamo was speaking to reporters shortly after receiving a visiting Chinese delegation. She admitted that Mozambicans want to know the circumstances under which the debts were contracted, and what the money was used for. She thought it important to choose “an intelligent moment” to summon the government to the Assembly “so that it can explain to us in detail how this debt was contracted, so that we can take a position on it”.
Macamo was reacting to a statement issued by the Human Rights Commission of the Mozambican Bar Association on Friday 22 April, which called on the Assembly to act urgently on the revelations that over US$1 billion of public debt was concealed by the previous government, headed by president Armando Guebuza, from the Mozambican public and from the IMF.
A fortnight ago Renamo demanded that the government be called urgently to explain itself in parliament. But on 12 April the ruling Frelimo Party used its overall majority in the Assembly to reject the Renamo demand outright. The Frelimo deputies had clearly misread the mood in the country, and calls for a full explanation of the debt have come from many quarters, including from within the Frelimo Central Committee itself.
The Central Committee met in mid-April, and according to one of its members, former information minister Teodato Hunguana, was strongly opposed to the position taken by the Frelimo parliamentary group. The Central Committee, he said, has demanded that explanations be given, “not only to Frelimo members, but to the nation. The nation has to know what is really going on. What is the scale of this? At the end of the day, we are all Mozambicans and not just members of this or that party”.
This position is causing the Frelimo parliamentarians to backtrack. Macamo promised that the Assembly’s governing board, its Standing Commission, will decide whether to call an extraordinary session of the Assembly, solely for the government to explain the debts, or whether the matter can wait until the ordinary sitting of the Assembly resumes, on 26 June.
63
But Macamo did not seem to be in any hurry. She repeated that the Assembly could not take decisions based on information gathered from the press. “We said we needed more time to collect the material, and then we will sit down and listen to the government”, she said.
Source: Agencia de Informacao de Moçambique
Democracy not compatible with armed parties
On Friday 22 April, President Filipe Nyusi declared in Brussels that democracy is not compatible with the existence of armed political parties – a reference to Mozambique’s main opposition party, Renamo, which operates an illegal militia responsible for a string of murderous attacks on the main roads in the centre of the country.
President Nyusi, who during his two-day visit to Brussels discussed the question of peace with the Belgian authorities and with European Union institutions, told reporters at a press briefing that: “everybody wants absolute peace and the best way of achieving this is not through violence”.
He noted that there was nothing surprising in the fact that Renamo refuses to recognise the results of the October 2014 general elections, won by President Nyusi and the ruling Frelimo Party, since in the entire history of Mozambique Renamo had never recognised the election results. Speaking at the European press centre in Brussels, he said that: “for anyone who knows the history of Mozambique, there’s nothing new in Renamo not recognising election results”.
He pointed out that the 2014 elections were held after an overhaul of the electoral legislation, which was rewritten to accommodate Renamo’s concerns. Despite this, Renamo still refused to recognise the results. This was the fifth general election in a row that Renamo had lost, but its reaction was to regard them all as fraudulent.
“If we reach a phase where everything is negotiated after the elections, that’s the murder of democracy”, he said. He insisted that Renamo must be disarmed, since in a democracy there are no armed political parties.
“You cannot carry out diplomacy with guns”, President Nyusi stressed. “Clearly there can be no armed political parties since that is a bad precedent for crimes that may occur in Mozambique or anywhere else in the world”.
President Nyusi reiterated his commitment to a dialogue for peace and his willingness to meet with Renamo leader, Afonso Dhlakama. That meeting should be prepared, and to that end the government had established a group of three people to prepare the framework for a face-to-face meeting.
But Renamo had not reciprocated, and has not established its own preparatory group. Instead the opposition has made any talks between Dhlakama and President Nyusi conditional on Renamo taking power in the six central and northern provinces it claims to have won in the 2014 elections. It had also demanded that any talks be mediated by the Catholic Church, the European Union and South African President Jacob Zuma.
“Why does Renamo not accept this group (set up by the government) which should
64
prepare the meeting?” asked President Nyusi. “It contains credible people who, jointly with Renamo, could prepare and discuss what should happen”.
Source: Agencia de Informacao de Moçambique
Bilateral relations with Germany will not suffer any setbacks despite military crisis in the country
On Friday 22 April, the Deputy Minister of Foreign Affairs and Cooperation, Nyeleti Mondlane, said that relations of bilateral co-operation between Mozambique and Germany will not suffer any setbacks, despite the current politico-military tensions in the country which have resulted in frequent attacks in the centre and north of the country, attributed to the former rebel movement, Renamo.
Deputy Minister Mondlane was speaking at the closing of a meeting with a delegation from the German Bundestag, which was in the country to learn about the current situation with the aim of identifying possible solutions.
“We had an extensive discussion on the situation in the country, we addressed the issues that were worrying them and we are pleased that the Chancellor reiterated the country’s commitment to participate in finding solutions”, Deputy Minister Mondlane said. According to the deputy minister, areas such as infrastructure development, education (particularly technical and vocational), and health are areas that receive special attention in terms of bilateral co-operation with Germany. In turn, the head of the federal parliamentary mission, Peter Ramsauer, pointed to peace and security as fundamental building blocks for the attraction of direct investment, which
plays an essential role in the development process.
According to Ramsauer, Mozambique should focus on returning the country to a peaceful environment as soon as possible in order to ensure growth. Ramsauer also assured the deputy minister that Germany will continue to co-operate with Mozambique and promises to fulfil its commitments.
Source: Jornal Notícias
King of Swaziland visits Mozambique
King Mswati III of Swaziland is conducting a state visit to Mozambique from 28 April to 1 May, with the aim of strengthening friendly relations and co-operation with the country.
According to a presidential statement, the Swazi monarch’s visit to Mozambique comes in response to an invitation by President Filipe Nyusi, and aims to evaluate, deepen and strengthen the historical relations of friendship, solidarity and co-operation that exists between the two neighbouring countries.
Strengthening co-operation in the framework of the African Union, United Nations and other multilateral forums, along with the SADC, to which both countries belong, also falls within the purpose of the visit.
Swaziland is bordered by Mozambique to the south, and is the only remaining absolute monarchy in Africa. It is regularly criticised for human rights violations and its royal family’s wastefulness in the face of the extreme poverty that most of the population experiences.
Source: Lusa
65
Mozambique chairs defence body of the Community of Portuguese Speaking Countries
On Wednesday 27 April, Mozambique took over the chair of the Defence body of the Community of Portuguese-speaking Countries (CPLP) from Angola, on the first day of the 18th Meeting of the General Heads of Staff of the Armed Forces of the CPLP. Mozambique takes over at a time when it faces internal political tension sliding ever deeper into military conflict. The meeting was headed by the Deputy Minister of Defence, Patrício José, who stressed the need for CPLP member states to act jointly to combat threats to stability.
Source: O País
President Nyusi receives credentials of new ambassadors
On Wednesday 27 April, President Filipe Nyusi received the credentials of three new ambassadors. The new ambassadors are Asim Al Rahmah, of the United Arab Emirates; Tito dos Santos
Baptista, of Indonesia; and Oleile Gaberone, of Botswana. President Nyusi pointed out that Ambassador Al Rahmah is the first resident ambassador of the UEA in Maputo, which “opens good prospects for co-operation”.
Speaking at the end of the ceremony, the Minister of Foreign Affairs and Cooperation, Oldemiro Balói, said that agriculture, mineral resources, transport and communication are key areas of co-operation between Mozambique and the UAE. As for Indonesia, Minister Balói said that Mozambique enjoys excellent relations of co-operation with the Asian nation.
With regard to Botswana, the minister said that it is Mozambique’s brother and fellow member of the SADC, and one of the founders of this organisation and is therefore “a country that co-operates with Mozambique in all possible areas, diplomatic, economic, social and historical”.
Source: A Bola
SECURITY
Renamo and Frelimo accused of targeting civilians in tat-for-tat violence
There is a growing threat that civilians could become ‘legitimate targets’ in the conflict between old warring factions Renamo guerrillas and the Frelimo government, an expert has claimed.
Violence has continued in Mozambique despite the international community’s efforts to keep the peace in one of Africa’s fastest-growing economies –
which is looking to escape years of poverty and conflict by tapping into its huge energy resources.
In an escalation of a simmering conflict between longstanding civil war foes which has so far resulted in at least 11,000 Mozambican refugees fleeing to neighbouring Malawi, there has been an increasing number of incidents in which civilians have been targeted, according to Joseph Hanlon, a journalist and a development researcher who has been chronicling Mozambique since 1978.
66
Renamo leader, Afonso Dhlakama, has repeatedly voiced his intentions to take over the six central and northern provinces – Tete, Manica, Sofala, Zambézia, Nampula and Niassa – which he maintains should be under Renamo control, while the government has been carrying out a number of army operations since October 2015.
Baby killed in Renamo attack:
The most recent incident resulted in the death of a baby, killed on 21 April when Renamo carried out an attack against a government car near the town of Canda, in Sofala Province.
The Gorongosa district administrator, Manuel Jamaca, told Rádio Moçambique that the district administration vehicle was ambushed on the main north-south road. The baby was killed while three other occupants of the vehicle, including his mother and the head of the Canda administrative post, were injured.
Gorongosa region, a district of Sofala Province, is currently relatively calm, the administrator said, but he was quoted as alleging that Renamo gunmen were moving through communities and attacking local leaders. Hanlon, in an update, highlighted how Renamo claimed at least 12 of its party members had been “murdered” during the first three months of 2016 in Gorongosa.
Meanwhile, in the Báruè district (Manica Province), cars and trucks are also reported to have been stopped and set on fire in recent weeks after the guerrillas were said to have dug trenches on the main EN7 road.
Frelimo ‘killed dozens’:
Government forces are also said to be responsible for a number of violent attacks, which have targeted Renamo officials, including Antonio Sautane Chulo, the second deputy chair of the Inhambane Provincial Assembly, who was seriously injured after he was shot outside his home, on 18 April.
67
On 27 March a demobilised Renamo man was also allegedly shot dead after he was dragged from a public taxi. A day later, local media also reported that two taxi-bike drivers, accused of supplying food to Dhlakama, were allegedly shot in the Renamo base of Gorongosa.
“Has the government decided that as Renamo is waging war as an armed party, its party officials can no longer be treated as non-combatants? As Renamo guerrillas escalate the war, do civilian party officials increasingly become legitimate targets?” Hanlon surmises.
Source: IBTimes UK
Renamo armed attempt to occupy Chiramba
On the morning of Monday 25 April, Renamo attempted to occupy the administrative post of Chemba (Sofala Province).
“Armed Renamo men tried to occupy the administrative post of Chemba, but were driven back by police, and actions are underway to neutralise these individuals”, PRM spokesperson, Inácio Dina, said during the weekly police press conference. According to local residents, five armed men struck Chiramba, in the administrative post of Chemba, on Monday morning, and held the chief of the area hostage.
“Heavy shooting began in front of the administrative office at 7:45hrs, about 15 minutes after the chief had arrived”, a resident who witnessed the incident told Lusa. He added that the group later “captured teachers, nurses and members of the public, to demonstrate who was in charge of the area”.
In addition to storming the Frelimo headquarters and taking down the party flag, the group took control of the local police station after driving out the only officer on duty, the resident said.
However, according to Dina, the situation is now under control as police are on the ground to ensure community safety. The Sofala provincial police commander, Alfredo Mussa, said that the operation to drive Renamo out of the area began at 02:30hrs on Tuesday morning.
The police believed that a swift operation in the middle of the night would be less likely to cause panic in the nearby communities. Mussa said that the operation achieved its goal, as the police post was taken back without shedding blood on either side.
He said Renamo had broken into medical stores in the local health unit, and had stolen all the medicines they found there. Despite the exchange of fire between police and the armed Renamo men, no fatalities or injuries were reported.
During the Renamo attack, much of the population of Chiramba had fled to safer areas, notably to islands in the Zambezi River. Mussa appealed to them to return home, and to denounce any suspicious movements to the authorities.
Chiramba is in Chemba district, and the district administrator, João Patricio, said that the government is trying to re-open all the public and private institutions that closed down because of the Renamo attack. There are only 18 state employees in Chiramba (including teachers and nurses), and many of them fled to Beira after the attack. According
68
to Jornal Notícias, the armed Renamo men had been circulating the area since last week. The party, led by Afonso Dhlakama, continues to threaten to rule the six provinces of central and northern Mozambique where it claimed victory in the 2014 elections.
Source: VOA Português/Jornal Notícias/Lusa/Agencia de Informacao de Moçambique
“Situation calm in Chiramba” – Defence Minister
The situation in the Chiramba administrative post (Sofala Province), is now “under control”, after an attack by Renamo gunmen was repelled, according to Defence Minister Atanásio Ntumuke. Interviewed on Thursday 28 April, by O País, Minister Ntumuke said the attack on Chiramba was undertaken by no more than 10 armed men, and so it was not necessary to call for back-up from the air force.
“Now there's nothing there”, said Minister Ntumuke. “There were five or 10 members of Renamo, and now the situation is under control. We didn’t need the air force to solve the problem, because it was just half a dozen people. Our defence and security forces remain there doing their normal work”.
Minister Ntumuke said the authorities’ main concern now is Renamo’s attempt to prevent the movement of traffic along roads in the central province. “They are forbidding vehicles to travel on the roads, but measures will be taken”, he promised.
Source: Agencia de Informacao de Moçambique
“No Renamo gunmen in Mossurize” – PRM
The PRM have denied that Renamo gunmen are active in Mossurize district (Manica Province). The denial follows rumours circulating in the area that early on Tuesday 26 April, Renamo burnt down a police post in Chaiva locality, and the premises where the Chiurairue administrative post is currently located. Speaking to reporters, the spokesperson for the Manica provincial police command, Elsidia Filipe, said that a police camp was indeed burnt down, but she blamed this on “unknown individuals still at large”.
“It’s not Renamo men”, she said. The incident involved a unit of the frontier guard, which had been carrying out a routine patrol. It set up camp in an area, and when the frontier guard left the location “unknown people set it on fire, and burnt down a shed”. She insisted that it was not Renamo, and described the act as “pure banditry”. The police were working to identify the individuals responsible. After some moments of tension, life in Mossurize district had returned to normal, she said. “We want to reassure the public, by telling them that the situation in Mossurize is regarded as calm. People can go about their daily activities normally because security is guaranteed”.
“There is no movement by gunmen anywhere in that district”, Filipe added. “The police are continuing to work and, in general, we can say that tranquillity has been re-established throughout Manica Province”.
Source: Agencia de Informacao de Moçambique
69
Mass grave with more than 100 corpses discovered in Gorongosa district
On Wednesday 27 April, a group of farmers discovered a mass grave with more than 100 bodies in Zone 76, in the administrative post of Canda, Gorongosa district (Sofala Province).
The grave was discovered in an area that was used for sand extraction for the rehabilitation of the EN1. The area is located close to an illegal gold mine, now abandoned due to the escalation of military violence in the region.
“The trench has about 120 bodies, some already turned into bones and others still decomposing”, one of the farmers told Lusa. The farmer did not specify if the bodies had bullet holes; however, he did mention that they suspect that the corpses had recently been unloaded by vehicles due to fresh tracks in the area.
Although there is no evidence linking this grave to the current military crisis in Mozambique, another farmer who was at the scene recalled the wave of persecution and executions for political reasons and that the region has been the scene of fighting between the armed Renamo wing and government forces.
“There are no visible traces of the military and some of the bodies are naked”, said one of the farmers.
Speaking to Lusa on Thursday 28 April, the administrator of Gorongosa, Manuel Jamaca, neither confirmed nor denied the discovery of the grave, calling on the group of farmers to contact the authorities to assist in the investigation.
However, later on Friday Jamaca denied the existence of any such grave in the area, calling the information “false”.
Source: Lusa/Folha de Maputo
Carriers suspend routes in Tete
Constant attacks on the EN1 and EN7 in Tete Province mean that coach companies have started to suspend services between Tete and Nampula, Chimoio (Manica Province), Beira (Sofala Province) and Maputo.
A Deutsche Welle Africa reporter visiting the Tete Interprovincial Bus Terminal on Wednesday 27 April, found that ticket sales have fallen drastically in recent days.
The recent opening-up of a trench across the EN7 in Barué district in Honde administrative post and the death of a Nagi Investments bus driver in March in the same region have made matters worse.
“What with the political crisis, there are no passengers any more, not even to Beira or Chimoio. There are always problems – everything is difficult. I have not sold one ticket to Beira since this morning”, says Nelson Daude, ticket vendor in the Tete Interprovincial Terminal.
As a result, coaches wait more than two weeks to get the minimum 15 passengers required to make a trip economical, reveals Nelson Bernardo, who works for a Maputo carrier. Bernardo says his coach has been held up for more than 15 days.
“We started to sell tickets again on Wednesday”, he said. “Movement is
70
very difficult, and at this time, I still don’t have enough passengers. Maybe tomorrow or the day after”.
Bernardo has a 65-seat coach to fill, and says he is waiting to fill at least 15 seats before setting off. “Just to cover the fuel. For the boss, this doesn’t yield anything”, he says.
Fear of attacks:
Daude says many companies have withdrawn their coach services from the Tete Transport Terminal because they fear their vehicles will be set on fire by gunmen.
“This is a big terminal, with coaches for Beira and Maputo. But we have just one coach for Chimoio. The others eventually abandoned these destinations – they’re just leaving the buses parked up”, Daude says.
The Provincial Government of Tete confirms this information.
But Romeu Sandoca, Tete provincial director of Transport and Communications, disputes this interpretation. “In fact, that is a complaint we have been receiving from many carriers, worrying about security issues. But government has been raising awareness, so that they may continue to trust”.
Sandoca says that there is security of movement on national roads during the day and that security forces are ensuring the continued movement of people and goods.
However, he does acknowledge that people may be afraid to travel at this
time for fear of attacks attributed to armed Renamo men.
Another aspect pointed out by carriers relates to the fact that there are long waits at places where military escorts are mandatory, particularly in the Muxungué-Save and Caia Nhamapadza sections of roads in Sofala Province.
Source: Deutsche Welle
Police threaten to repress illegal protests
On Monday 25 April, the Police of the Republic of Mozambique warned that they will prevent the holding of any illegal marches in the capital.
The warning, made by Orlando Mudumane, spokesperson of the Maputo City Police Command, at his weekly press briefing, was in response to anonymous calls via social media for demonstrations in protest of the huge government-guaranteed loans, contracted in 2013 and 2014, but which are only now coming to light.
“The police are working and are ready to repress any illegal march which might endanger public order”, said Mudumane. He noted that so far calls for such a march have been made anonymously, and condemned those who hide behind a shield of anonymity. “The police strongly condemn those individuals who use social networks to feed intrigues, rumours and above all political disorder”.
But the police would have no objection to a march that was called in accordance with the law, and would provide such a march with an escort, Mudumane added.
71
For a march or demonstration to be legal, the Municipal Council and the police must be notified at least 72 hours in advance. A source in the Council told Agencia de Informacao de Moçambique that the municipality has received no notification from anyone of the intention to hold a march.
Messages suggesting that marches will be held at the end of the month (April) began to circulate during the course of the week 15 to 22 April, shortly after the public was informed, through the media, that the previous government, led by president Armando Guebuza, had contracted hidden loans for more than US$1 billion.
Source: Agencia de Informacao de Moçambique/Radio France International
Mozambique boosts security in Maputo due to demonstration fears
Mozambican security forces were deployed to the streets of Maputo on Thursday 28 April, after rumours of planned anti-government demonstrations circulated on social media, witnesses said.
Several posts on social media in recent days said new groups were planning to demonstrate on Saturday to vent popular anger at secret government borrowing which could cripple the economy in one of the world’s poorest countries. Armoured vehicles packed with police were deployed on major street corners in Maputo although there was no sign of civil unrest, two witnesses told Reuters.
On Wednesday 27 April, the PRM warned the public not to do anything to
unsettle the “harmonious coexistence” in Maputo.
“We will not tolerate any conduct that undermines the order security and public tranquillity”, a police statement said, referring to rumours of demonstrations.
Source: Reuters
Mozambican civil society distances itself from demonstration calls
According to Folha de Maputo, civil society organisations have distanced themselves from calls to demonstrate on 29 and 30 April over the public debt issue.
Some of the pamphlets calling for demonstrations were attributed to civil society organisations that have headed such campaigns before, such as the Human Rights League (Liga dos Direitos Humanos), FORCOM and the Women’s Forum (Forum Mulher).
According to a source close to these organisations cited by Folha de Maputo, no civil society organisation has called for demonstrations, and the source has attributed the calls to “malicious people seeking legitimacy for sowing chaos”.
“When we call for a demonstration, we always call the press and announce the route of the protest from start to finish. Not having done so, this is nothing but some people trying to benefit from the situation”, said the same anonymous source. The PRM announced on Monday that it would not tolerate illegal demonstrations that put the public tranquillity at risk.
Source: Folha de Maputo
72
Frelimo warns of risk of looting during protests against debt
On Wednesday 27 April, Frelimo and two Maputo informal traders associations warned of the risk of looting and destruction in the event of demonstrations against hidden public debts.
In a press conference, the First Secretary of Frelimo in Maputo, Francisco Mabjaia, urged residents of the Mozambican capital not to join the demonstrations that have been called on social networks, warning that there is a risk that these actions may result in unrest and destruction.
“The struggle for democracy has to be made with dialogue and peace, and not through demonstrations that may result in destruction, so we appeal to the public not to join demonstrations that may affect stability in our city”, Mabjaia said.
Sudêkar Novela, president of the informal importers’ Mukhero Association, similarly warned of the risk of looting and damage to property in the event of demonstrations.
“A popular uprising has nothing to do with the looting and vandalism that could happen if these demonstrations are held”, Novel said.
Recalling the looting and damage to property that occurred during riots over the rising cost of living in Maputo in the past, Novela said that any protests over government debts would result in loss of trade and even of life.
President of the Association of Informal Economy of Mozambique, Marrengula
Ramos, added his voice to the chorus of concern, saying that his organisation is cautioning its members in the main Maputo markets not to join demonstrations, because they will offer an opportunity for looting.
“Demonstrations called anonymously are illegal and would have serious consequences for us all”, said Marrengula.
Messages calling for demonstrations over the recently discovered undisclosed debts have been circulating on social networks in Mozambique. One message called for a demonstration on Friday 29 April, and another invites Mozambicans to “paralyze the country” between 3 and 7 May when President Marcelo Rebelo de Sousa of Portugal visits Mozambique.
Source: Lusa
Foreign citizens in Maputo and Matola advised to remain vigilant, avoid large crowds
Foreign embassies in Maputo are closely monitoring the situation with regard to the possibility of protests, recommending that their compatriots, particularly those staying in Maputo and Matola, remain attentive, avoid large crowds and keep track of local media and news disseminated through the social networks.
“There are reports of possible protests against the government in Maputo in late April/early May. There’s an increased police presence around Maputo and neighbouring Matola”, reads the advice for travellers to Mozambique, in the UK government official website. “You should remain
73
vigilant, monitor local media reports, avoid large crowds and carry ID with you at all times. Make sure you have a means of communication with you at all times and that your mobile phone is charged”, adds the same source.
A statement from the Swiss embassy in Maputo sent on Thursday 28 April, also confirms that: “during the last weeks social media called for participation in demonstrations and manifestation regarding the political and economic situation of the country in Mozambique, especially in Maputo”, adding that “the senders [of these calls] are unknown”.
“For the forthcoming days, we recommend that people remain attentive and avoid large crowds. Keep track of the media coverage and news disseminated through the social networks. The embassy is in close contact with other embassies and local authorities and continues to monitor the situation closely. For next week, we will send additional messages depending on the situation”.
Source: Club of Mozambique
CRIME
MAP 1: KIDNAPPING INCIDENTS IN CENTRAL MAPUTO 2014 – 2016
74
GRAPH 2: REPORTED KIDNAPPINGS PER YEAR
GRAPH 3: TIME OF KIDNAPPINGS 2014 - 2016
0
5
10
15
20
25
30
35
2011/2012 2013 2014 2015 2016
14
31 30
21
3
0
2
4
6
8
10
12
00:01 - 04:00 04:01 - 08:00 08:01 - 12:00 12:01 - 16:00 16:01 - 20:00 20:01 - 00:00
Note: This graph excludes kidnappings in which the time of the kidnapping was not reported
75
GRAPH 4: KIDNAPPINGS PER GENDER / AGE-GROUP 2014 - 2016
*Please note: the data present in the graphs and maps is not 100% accurate owing to the high number of unreported cases and irregularities in the documentation of these events. This graph illustrates the successful kidnapping incidents ONLY and not attempted/aborted/intercepted kidnapping
ZAR58 million heroin bust at South African border with Mozambique
During the course of the week 15 to 22 April, South African Revenue Service (SARS) officials seized heroin with an estimated value of ZAR58 million at the Lebombo Border Post with Mozambique.
According to a SARS media release, customs officials stopped an Opel Corsa entering South Africa from Mozambique for a routine check on the evening of Wednesday 20 April.
“During the search process, Customs officials found 58 plastic bags containing a white substance hidden within the vehicles panels. Each bag contained approximately one kilogram of heroin”.
The suspect and the vehicle with the heroin were handed over to the South African Police Service for further investigation.
Source: ANA
16 arrested in Zambézia in 2015 for crimes against albinos
During the course of 2015 the PRM in Zambézia Province detained 16 people in connection with the kidnapping and murder of albino citizens. Cited by Rádio Moçambique, the Zambézia provincial police commander, João Maunguele, said that the arrests resulted from denunciations by members of the public of these shocking crimes. The districts with the most cases were Ile, Milange and Alto Molocue.
0
1
2
3
4
5
6
7
8
9
<18 19-36 37-54 55-72 >73
Male Female
Note: This graph excludes kidnappings in which either the gender or age of the victim was not reported
76
Maunguele was speaking on Thursday 21 April, as he briefed the Zambézia provincial assembly on the crime situation in the province. Assembly members wanted to know what the police were doing about the attacks on albinos.
He said that the police were seriously concerned at the situation and had managed to arrest 16 suspects. But he admitted that the police have so far been unable to track down any of those who had ordered the kidnapping of albinos.
The persecution of albinos appears to have originated from Tanzania. Albinos are murdered for their body parts, which are believed to possess magical properties, and are used in black magic ceremonies. Maunguele urged any members of the public with knowledge of these crimes to come forward and denounce those involved.
Source: Agencia de Informacao de Moçambique
Indian citizen murdered in Chimoio
On the morning of Saturday 23 April, unidentified assailants murdered an Indian citizen (identified as Sasi Naryanan) in the central city of Chimoio (Manica Province). According to the police, 63-year-old Naryanan was asphyxiated to death when criminals broke into his house and put cloths over his mouth and nose to silence him. The gang also tied him up.
Naryanan was the manager of an agricultural company active in the provinces of Manica and Sofala. He was living with three other Indians in the house in central Chimoio.
The killers stole three computers, six mobile phones, a briefcase containing a variety of documents, and cash.
The spokesperson for the Manica provincial police command, Elsidia Filipe, said that the murderers broke into the house through the main door. “They destroyed the door and some of the windows”, she said. “They forced their way in and began to beat the people living in the house. We think the victim suffocated because they put cloth over his mouth and blocked his nose”.
On Monday 25 April, the PRM arrested five suspects for the murder of Naryanan. The five suspects (identified as Miguel Farias, Hussene Mussa, Martinho Juma, Abacar Issufu and Molte Abacar) are all from the northern province of Nampula. When the police made the arrests, they seized ₹4,330 from the suspects. The money had been stolen during the burglary. Filipe said that the arrests were the result of police investigations launched immediately after the Chimoio police became aware of the murder.
“Through the collaboration of the community, it was possible to gather evidence leading us to conclude that these are the individuals who committed the crime”, said Filipe. “They were in possession of foreign currency stolen during the robbery”.
Investigations are underway to determine the degree of responsibility of each of the five suspects. Naryanan, an engineer from the southern Indian state of Kerala, had been living in Chimoio for the past three years.
Source: Agencia de Informacao de Moçambique
77
17 Malawians detained in Manica Province
During the course of the weekend 23 to 24 April, the PRM arrested 17 illegal immigrants from Malawi in Báruè (in Manica Province). According to reports, the 17 illegal immigrants were en-route to Johannesburg (South Africa) in order to seek work. The immigrants were discovered when the driver of the vehicle in which they were being transported refused to stop at a road block. A police chase ensued and the truck was eventually forced to stop. Upon inspection the PRM discovered the illegal immigrants on-board.
Source: Folha de Maputo
23 Malawians detained in Inhambane
23 illegal immigrants from Malawi were recently arrested at the Save checkpoint, Govuro district (Inhambane Province). The illegal immigrants were detained en-route to South Africa. Since the beginning of the year, approximately 500 illegal immigrants have been arrested in Inhambane Province.
Source: Folha de Maputo
Community Security Council established in the districts of Matlemele and Nkobe
Residents of the Matlemele and Nkobe districts (in Maputo Province) live in fear due to the crime wave currently affecting the area. On Sunday 24 April, the PRM visited the area in order to meet with the population with the aim of discussing affective solutions to the current crime problem – specifically armed robberies, burglary and assault.
A number of locals spoke on the condition of anonymity for fear of reprisals. Others told the police of how they have been victimised more than once. At the end of the meeting the community and PRM agreed to establish a Community Security Council.
Source: O País
Mozambique registers 51 prison deaths in first quarter
More than 50 prisoners died in the first quarter of this year in Mozambique’s prisons, mostly from HIV/AIDS and tuberculosis, according to the National Prisons Directorate (SERNAP).
The SERNAP National Director of Health Care, Cremilda Anly, presented the figures on Wednesday 27 April, during a visit to the SERNAP headquarters by the new Minister of Justice, Isaque Chande. “In the first three months of the year, there were 51 deaths in all the 81 penitentiaries”, Anly said. The most common cause of death was AIDS.
“25 prisoners died from HIV/AIDS”, she said, “while a further 21 died from other diseases such as tuberculosis and malaria”.Anly added that in the same period 264 cases of illness were recorded in the 81 prisons. “This data results from tests on 1,926 inmates of the prisons …1,507 prisoners were screened for tuberculosis, and in 57 cases the results were positive”, she said. SERNAP statistics show that there are approximately 15,000 prisoners in the country's prisons, of which approximately 3,000 are HIV-positive.
Source: APA/Star Africa/Agencia de Informacao de Moçambique
78
HUMAN RIGHTS, SOCIAL DEVELOPMENT AND NGO’S
Zimbabwe on alert amid Mozambique tensions
As tensions between government and Renamo reach boiling point in Mozambique, Zimbabwe is making contingency plans for a possible influx of refugees.
Speaking after a meeting with the UNHCR country representative, Robert Tibagwa, the Zimbabwean Minister of Social Services, Prisca Mupfumira, said that the country will also review rejected cases and the status of current refugees in Zimbabwe (the majority of which are from the Democratic Republic of Congo).
“We also spoke about the resurgence of Renamo activity in Mozambique and we agreed that maybe we should go together, the UNHCR and other agencies, to find out what is really happening on our border with Mozambique. We have to be in a state of preparedness just in case we have an influx [of refugees] to make sure we don’t have emergencies, which we are not prepared for”, said Minister Mupfumira.
“What we are discussing is that as government we are responsible for all people in the country. However, because of limited resources, we are not able to look after all citizens including refugees.
“Our situation in Zimbabwe has been exacerbated by the current drought that we are going through, which has caused serious challenges”, said the minister.
Tibagwa said that although there were efforts by the African Union (AU) and the international community to make sure that the Mozambique conflict ends peacefully, Zimbabwe has to be prepared.
“We want to assess the situation for ourselves and make sure that at the end of it all, we must draw up a contingency plan just in case the Mozambican situation gets worse. The AU and the international community are working hard to make sure that the situation is resolved peacefully. But it’s better to be prepared”, said Tibagwa.
Source: The Daily News
Cholera and weather concerns scare Mozambican refugees during relocation process
The relocation of Mozambican refugees to temporary camps at the well-established Luwani Refugee Camp from Kapise in Mwanza has been hampered by fears of a cholera outbreak and adverse weather conditions. The UNHCR, which is leading the relocation process, disclosed that 70% of the asylum seekers at Kapise were willing to relocate to the bigger camp for proper assistance co-ordination.
Fadella Novak-Irons, UNHCR senior emergency co-ordinator, said the reluctance to be relocated was due to the asylum seekers’ fears of contracting cholera. Novak-Irons also said that the refugees feared the high temperatures and unreliable rainfall patterns associated with the area – unlike at Kapise which has favourable weather conditions, including reliable rainfalls.
79
But she assured that the UNHCR would do an intensive awareness campaign to clarify the misconceptions.
“Discussions with the Malawian government were concluded a long time ago to relocate the asylum seekers from Kapise and other sites to Luwani, but the condition of the roads due to rains delayed the process”, Novak-Irons said.
“The situation at Kapise is overcrowded and there’s no privacy for families, that’s why we need to find a place where they can settle. But out of 10,000 we have done a survey and established that 70% are willing to relocate because there’s a misconception of heat or cholera outbreak which affected some of them in the 1990s”.
On the first day of relocation 103 asylum seekers were relocated from Kapise with the remainder to follow within the next eight weeks. Upon arrival at Luwani, refugees will be temporarily accommodated in transit tents, 100 for every 500 people, before being offered tents to live in with their families, where they would also be given plots of land to farm. Meanwhile, 10 families reportedly returned home to Mozambique, but Novak-Irons downplayed the situation, saying that they were from areas that had not been affected by war.
Source: Nyasa Times
President Nyusi announces joint refugee commission with Malawi
On Monday 25 April, President Filipe Nyusi announced that the two countries would create a joint commission to resolve the situation of Mozambican refugees in Malawi, and would seek to
establish the conditions necessary for their return.
President Nyusi mentioned the Mozambican refugees in Malawi at a press conference at the end of a meeting with his Malawi and Zambia counterparts, President Peter Mutharika and President Edgar Lungu.
“The commission will work out the details to understand the source of the problem and see how the displaced can return home voluntarily”, President Nyusi said.
“We identified aspects that should be improved, and this includes setting up a joint team, between Mozambique and Malawi, to know what kind of support is necessary”.
“We thank the Malawian government and people for their support”, he said. “It was interesting to note that, despite their own difficulties, the government of Malawi welcomed and supported the Mozambicans”. According to Jornal Notícias, the number of Mozambican refugees in the Kapise camp fell from approximately 11,000 to 5,000 due to voluntary repatriation by thousands of refugees who did not want to be transferred to a refugees centre farther from the border.
Mozambican refugees in Kapise were forced to flee the country due to clashes between Mozambican defence and security forces and the armed wing of Renamo, in the centre of the country.
Mozambique is experiencing a political and military crisis characterised by clashes between the defence and security forces and armed Renamo men and attacks along the various sections
80
of the country’s main road in the central region attributed to the movement.
The crisis was triggered by the refusal of Renamo to recognise defeat in the 2014 general elections and the movement’s demand to rule in the six provinces where it won the general elections that year.
Source: Lusa/Agencia de Informacao de Moçambique
MDM accuses government of indifference towards Mozambican refugees in Malawi
The MDM has accused the government of ignoring the plight of Mozambican refugees in neighbouring Malawi, and believes that the executive has been “absent, indifferent and increasingly arrogant” towards the problem.
According to the parliamentary group of the MDM, the Mozambican refugees in
Malawi refuse to return home until the political-military tension has been resolved.
The MDM claims that the Mozambican refugees appealed to President Filipe Nyusi to visit the refugee camps in Malawi while he was in the country on Monday 25 April, in order to explain the current situation in Mozambique. However, President Nyusi failed to do so.
Additionally, the MDM, cited in @Verdade, claims that no Mozambican families have returned home voluntarily, as some publications have suggested over the past few weeks.
In the light of this information, the MDM have accused the executive of lying about the situation via the media in order to manipulate public opinion.
Source: @Verdade
WILDLIFE AND ENVIRONMENTAL PROTECTION
Australia may take in African rhinos to prevent extinction
Wildlife groups plan to relocate 80 rhinoceros from South Africa to Australia in a bid to prevent them from being hunted to extinction.
Poaching is on the rise in Africa, driven by demand from China and Vietnam where rhino horn, used in traditional medicine, can sell for approximately US$65,000 per kilogram, according to estimates by conservationists.
Around 1,300 rhino were killed illegally in Africa last year.
The Australian Rhino Project and South Africa’s Elephants, Rhinos and People (ERP) plan to begin relocating the animals this year to establish an “insurance population”. If the project is successful, more rhinos could be flown to other “safe havens” in Texas and Florida.
“Poachers will go where it is easy to poach. It is easier to poach rhinos in Africa than in Australia or America”,
81
ERP Director, Wouter van Hoven, told Reuters.
“It’s not that we want to get the rhinos out of Africa but we need to put some rhinos into a safe deposit box”.
The rhinos will be repatriated to their natural African habitat once the population numbers have grown and levels of demand for animal horn falls, the groups said.
Conservationists and private game reserve owners have criticised the South African government for not doing enough to protect rhinos from powerful poaching and smuggling syndicates.
South Africa, home to around 80% of the world’s rhino, decided last week not to push for an end to a global ban on buying and selling rhino horn.
Animal reserve owners say a legal trade could help save the rhinos by using the proceeds for conservation.
“Now that the green light has been given to the criminals to continue poaching … the rhinos are going to be much worse off”, Chairman of the Private Rhino Owner’s Association, Pelham Jones, said.
Rhinoceros’ horns grow back if cut from a living animal, but the process has been criticised by animal rights groups, and opponents of legalising the trade say it would legitimise and encourage the use of material from endangered animals.
Source: Reuters
Africa leaders and conservationists seek end to slaughter of elephants, rhinos
The future of Africa’s elephants and rhinos depends on the ability of the continent’s nations to battle together against poaching, Kenya’s President and conservationists said on Friday 29 April, as they met at an East African summit.
Signalling its commitment to the fight against poaching, on Saturday 30 April, Kenya will burn 105 tons of seized ivory, in a bid to send a message that the real value of tusks are when they are on the live animals, which draw tourists to Africa's savannas and forests, where herds have been decimated.
From 1.2 million in the 1970s, the number of elephants roaming Africa has plunged to approximately 400,000. Poaching exceeded 30,000 animals a year between 2010 and 2012, threatening to wipe them out in some regions. The future for Rhinos, now numbering less than 30,000, is even more bleak if poaching is not curbed.
“The poachers do not care about national borders, nor do the criminal gangs who smuggle illegal wildlife parts out of the continent. There is no solution to this struggle that can be implemented by one country alone”, President Uhuru Kenyatta said in a statement before the Giants Club summit, which he addressed.
“This is a continental issue”, Ian Craig, director of Kenya’s Northern Rangelands Trust, told the gathering, saying Africans needed to build on successes made since a 2012 poaching
82
peak. “As Africa, we need to co-ordinate our efforts”.
In Kenya, 93 elephants were killed in 2015, down from 384 in 2012. But conservationists say the East African nation remains a transit point for poached wildlife parts from other countries. Leaders from Uganda and Gabon also joined the summit to outline their efforts to curb illegal hunting by poachers, who in some regions have in the past used belt-fed machine guns to mow down dozens of animals at a time.
Botswana’s President had been due to attend the gathering. It was not immediately clear why he did not turn up. While supporting the battle against poaching, Botswana has opposed burning ivory. Conservationists have called for action ranging from improved prosecution of poachers to slashing demand for ivory and rhino horn abroad, most of it coming from Asia.
“Political will, that is the key ingredient”, said Max Graham, the founder and chief executive officer of charity Space for Giants, speaking before the summit.
His group seeks to share techniques to combat poaching and protect habitats for elephants and rhinos. Ol Pejeta Conservancy has been at the forefront of these initiatives, protecting and slowly starting to rebuild Kenya’s rhino numbers. Airborne rapid reaction rangers, a helicopter with night vision and better intelligence in the local community has helped.
But it seems too late for the northern white rhino. Just three individuals of the species remain, guarded 24 hours at the Ol Pejeta site. Scientists are racing against time to work out ways on
reproductive techniques for the aging animals.
There have also been gains made in stemming international trade in ivory and rhino horn. China and the United States, two of the biggest ivory markets, announced plans last year to enact almost complete bans on imports and exports. The ivory price in Hong Kong, a major trade route to China which also announced plans for a sales ban, has fallen to about US$380 per kilogram from US$1,500 per kg in 2014, Peter Knights, executive director of WildAid which campaigns to end the trade, told Reuters.
“It is never fast enough, but it is definitely heading in the right direction”, he said.
Source: Reuters/Edmund Blair
Anti-poaching lessons from Tanzania
A multipronged Tanzanian project has reduced elephant poaching numbers by two thirds within six years. It’s a model for all Africa.
When elephant poachers enter a protected area they’re armed, alert and dangerous. Back home they’re relaxed and vulnerable. That’s where an organisation in Ruvuma (Southern Tanzania) hits them hardest. Until recently large scale poaching activities were taking place in the wildlife corridor connecting the Selous Game Reserve in Tanzania and Niassa National Park in Mozambique. It’s an area where wildlife roams between two unfenced game reserves and is highly vulnerable.
Faced with a crashing elephant population, the Ruvuma Elephant
83
Project (REP) rethought conventional strategies which were clearly failing. It has since notched up remarkable successes, which are a useful pointer for South Africa which has similar problems with rhinos. Across Africa the scale of the ivory poaching is immense, with an estimated 30,000 to 35,000 African elephants being illegally killed annually. Tanzania has lost by far the most, its elephant population having declined by about 66,000 in six years up until November 2014.
In 2009 the national population was estimated at 109,000 – by 2014 it was down to 43,000. This equates to one elephant being killed every 45 minutes in Tanzania alone. Some of the biggest declines have been in areas with the largest donor-funded projects – a real problem for future funding.
Wayne Lotter of Protected Area Management Solutions (PAMS Foundation), of which REP is a project, says in order to come up with solutions, the problem needed to be dealt with in a different manner.
“We’re built on the premise that a well informed and fully integrated multi-agency approach is the only sensible way to wage a war and expect to be able to win it”, he insists.
“Poachers spend 80% of their time, not in the parks doing the poaching, but in their communities. They talk among their friends and that’s where we focus on catching them.
“Rangers are the last stand against poaching. They represent the equivalent of the Home Guard in a war context. But if we’re to win this war, the front line
need not be in the bush where they’re engaged.
“You must have people infiltrating those areas, plain clothed, working undercover, just mingling, going to pubs, making friends and talking. You pick up leads there. We make 80% of our arrests outside of the bush”. REP also partners with Tanzania’s National Task Force which leads intelligence-led operations targeting buyers and high level traders in urban areas. And this is followed by thorough professional case preparation and prosecution.
The strategy is paying off. In comparison to the preceding six years, by the end of 2015 elephant decline in Tanzania was reduced by two thirds. During that year over 1,000 poachers were arrested (many in Dar es Salaam and other cities), the top three ivory traders were put behind bars, 288 suspects were prosecuted (45 receiving prison sentences of 16 years or longer) and 46 firearms and 40 vehicles transporting ivory were seized.
REP works to build good relationships with communities, fostering relationships between them and protected area authorities. As trust grows, so do detection levels.
It’s not often that local people are happy with national parks as neighbours, says Lotter. “You have elephants and other herbivores that graze your crops. You’ve got leopards and lions that kill your goats and your cattle.
“Villagers get killed by elephants. At night there are encounters with hippos. Locals are not getting any benefit from the wildlife”. So REP built trust by seeking solutions. Elephants don’t like
84
hot chilli and fear bees, so the project helped locals grow chillies which are smeared on sisal ropes surrounding crops. And it provided bee hives which, when placed every 15 metres, form an anti-elephant barrier. An added advantage is that chilli is now a cash crop and there’s honey available for use or sale.
Since 2011 when REP began, over 200 game scouts have been trained in basic anti-poaching skills and case preparation and are paid for doing patrols. “It’s an income that’s better than local employment opportunities”, says Lotter. “It isn’t really big bucks but it’s sustainable money”. The Ruvuma successes are an object lesson in the need to root out the causes rather than focussing on the symptoms. Given the decimation of rhinos in the Kruger Park and elsewhere, it’s a way of operating that South Africa needs to integrate into its anti-poaching strategy, and fast.
Source: SA Breaking News/Conservation Action Trust
Swaziland unveils plan to legalise rhino horn to pay for anti-poaching efforts
The kingdom of Swaziland has made a surprise proposal to legalise the trade in rhino horn in order to pay for anti-poaching measures.
In a leaked document addressed to the Convention on International Trade in Endangered Species (CITES), Swaziland’s anti-poaching body said it wanted to sell the country’s 330 kilogram stockpile of horn collected from naturally deceased animals and confiscated from poachers.
It said the sale to the traditional medicine markets of the Far East would generate US$9.9 million, which would be used to protect the tiny landlocked country’s 73 white rhinos from poaching.
Swaziland proposed to sell a further 20 kilograms each year, raising US$600,000, by harvesting horn from living herds. Rhino horns regrow after being cut.
The CITES Management Authority of Swaziland, which made the proposal, said the 39-year-old ban on trading rhino horn had failed. It cited the poaching crisis in neighbouring South Africa, where 1,175 rhinos were killed in 2015.
“At present 100% of the proceeds from the sale of rhino horn are taken by criminals, while rhino custodians pay 100% of the costs of rhino protection and production yet they desperately need funds to cover these costs”, said the authority.
Contacts directly involved in the drafting told The Guardian that they had formally lodged the proposal with CITES. It will now be formally discussed and voted on at the CITES Conference of Parties in Johannesburg (South Africa) in September. The bid is likely to fail, because the majority of parties have little appetite for a legalised trade, preferring to focus on dampening demand in the Asia.
The wildlife trade watchdog TRAFFIC said it had been completely surprised by the move and said there were major legal hurdles to its implementation. Namely, even if the country legalised the sale of its own horns, it would be illegal for anyone to buy it.
85
“There is still significant uncertainty as to how existing markets would be affected by any legal trade in terms of supply-demand dynamics. Such a sale might well stimulate further illegal trade and thus compound the ongoing poaching crisis”, said a spokesperson.
While it is unlikely to bring about a legal trade, Swaziland’s proposal ensures the issue will be prominently discussed at the biggest global talks on the illegal wildlife trade.
“Demand reduction and education, cited as new measures to be tried, are not new at all ... these have not been effective”, said the proposal.
The document said the move had been precipitated by the withdrawal of an expected proposal by South Africa and claimed there was near consensus about this issue at a recent meeting of SADC. Of the 12 countries, only Botswana disagreed.
Rhino horn is a highly lucrative, illicitly traded commodity in China and Vietnam where it is considered to have medicinal properties. In fact it has none.
Source: The Guardian
How to steal an ivory stockpile
Zimbabwean parks employees allegedly managed to steal ivory from the Hwange stockpile since 2012 and export it to international trafficking syndicates. Oscar Nkala finds out how they operated.
One reason for the tight security around the Main Camp headquarters inside Hwange National Park in Zimbabwe is that it contains an ivory warehouse
which holds more than half the country’s accumulated ivory stockpile of 70 tons.
Here, all chips and pieces of rhino and elephant ivory recovered from poachers, poached animals, culling programmes, cases of natural death and, of late, elephants routinely slaughtered to feed the public at government functions are received, registered and issued with serial numbers. Until 5 October 2015, the ivory warehouse in Hwange National Park was run by a three-man team made up of game rangers Masimba Nyoni and John Pedzisai as registry and tracking clerks, and senior parks ecologist Edwin Makuwe as store manager.
Their duties included receiving and recording new ivory on a tracking form which requires precise details, including where the piece was sourced, how, when and by whom.
Prior to acceptance into the warehouse, the ivory is measured, weighed and allocated a unique serial number that starts with a source-code. This is a two-digit number which identifies the specific zone or rangeland of a game park from where the ivory was sourced.
For example, the source-code for ivory from the Sinamatella section of Hwange is 20. The form also lists the cause of death or manner used to acquire each piece.
As station manager, Makuwe’s duties included certifying that such records were correct, and signing movement, translocation and export permits for all ivory entering or leaving the warehouse.
In this capacity, he was solely responsible for signing export approval
86
permits for all the ivory exported legally from Hwange on behalf of the Parks and Wildlife Management Authority. By design, the system sounds fool-proof, seeming to cover all the tracks from the sourcing to the disposal of the ivory.
Court case:
However, in October 2015 Makuwe and his two subordinates were arrested on charges related to the theft of ivory from the warehouse. A police investigation linked the three to ivory smuggling after 62 tusks were intercepted at the Harare International Airport destined for China.
While inspecting the ivory stash, detectives discovered that at least four of the tusks had serial numbers which identified them as property of the Main Camp ivory warehouse.
Under interrogation, a Chinese smuggler allegedly involved in the deal showed detectives a fake parks authority export permit that was signed by Makuwe, purporting to be acting in his capacity as certifying authority of the Parks and Wildlife Management Authority.
After checking with the parks authority, detectives found that the export had not been authorised by the government and that the buyer was not a legal representative of the Chinese government, as he had claimed in statements and sworn affidavits.
The legal case was short-lived: Makuwe was not asked to plead to charges of fraud and was released on US$600 bail in October. He and his alleged accomplices have not appeared in court again.
How to steal serialised ivory:
Six months after the arrests, Oxpeckers visited Hwange National Park and discovered that while Zimbabwe’s ivory tracking system is indeed fool-proof from the outside, available evidence seems to suggest that it can be fooled and defeated from within.
In Hwange, Oxpeckers spoke to a senior member of the Special Investigations Unit, an arm of the Parks and Wildlife Management Authority that investigates internal crimes. He spoke on condition of anonymity for fear of reprisal.
He explained how, since 2012, the Hwange trio had allegedly managed to steal and export ivory undetected by manipulating the registration system.
The alleged theft was engineered through a double registration system that gave one serial number to two identical pieces of ivory booked into storage, he said.
“They would allocate one serial number to two identical pieces of ivory. They would then steal the excess piece and destroy the duplicate record. That way, no audit ever detected the anomaly, and I swear they would still be exporting today if the Chinese man had not blundered in Harare [airport]”, he said.
“To facilitate the theft, Makuwe would issue fake export permits and use parks security personnel and police units to guard the vehicles transporting the ivory all the 880 kilometres from Hwange to the buyers in Harare on the pretext that these were legal exports by the authority”.
87
Transportation:
One feature that quickly comes to the notice of many who drive on Zimbabwean highways these days is the high number and density of police roadblocks where drivers are stopped for spot checks on their cargoes and motor registration, insurance and licence plates.
The detective explained how the trio managed to beat the police checks, moving large quantities of ivory on fake permits through the 34 24-hour checkpoints along the 880 kilometre route from Hwange to Harare.
“After documenting and packaging the export-bound ivory, Mafuwe was authorised to call the police commander in Hwange to get an armed escort to accompany at least one of his subordinates who would do the necessary paperwork upon delivery of the consignment to Harare”, he said.
“In Zimbabwe, the police are required by law to escort all precious state cargo and they don’t have to ask questions when requested to provide that service. So the police never knew they were escorting stolen ivory straight into the hands of a syndicate until the three explained [during the police investigation] how they did it”, the detective said.
The investigation was dropped due to the influence of senior parks authorities from Harare who intervened to protect the trio, allegedly to shield others involved in the ivory export scam at the Parks and Wildlife Management Authority headquarters, according to another detective involved in the case.
Defeating the system:
In the small town of Dete, which lies on the northern edge of Hwange National Park, a former detective who was part of the Criminal Investigation Department (CID)’s elite Minerals and Border Control Unit explained how the investigation was defeated from within.
The detective retired in February, for reasons unrelated to the case. Like the parks detective, he asked not to be named for fear of victimisation from his employers and retribution from the ivory trafficking syndicates.
“I was drafted into the investigation two days after the Chinese man was arrested in Harare. We went to Main Camp and seized all documents relating to the registration and export of ivory”, he said.
“I cannot give you all the details, but by 8 October 2015 we had obtained all the evidence for a water-tight case which appeared to implicate some senior parks bosses and Ministry of Environment, Water and Climate officials who are based in Harare.
“Sometime in October 2015, we received a call from the bosses in Harare ordering the entire police team to hand over all information and rough pads, including the notebooks we had used in the investigation, to the CID Special Investigations Unit at police headquarters in Harare, which would take over the investigation given the sensitivities of some of the names we had turned up.
“That was the last we heard, and when I met one of the accused weeks after he had returned to work in November 2015,
88
he told me the investigation had been called off by parks top brass in Harare”.
The retired detective confirmed that charges had not been dropped against Makuwe and his alleged accomplices, but that the investigation against them was stopped abruptly after his initial court appearance in October 2015.
“The accused persons were transferred from Hwange to other stations in a country-wide re-deployment of game rangers in January this year”, he said.
A public prosecutor at the Hwange Magistrate’s Court said on 19 April 2016 that the case against the trio is still pending and referred Oxpeckers to a records clerks, who said she was unable to find any dockets associated with the case.
Parks and Wildlife Management Authority spokesperson Caroline-Washaya Moyo confirmed that the trio were charged with manipulating the records of the registration data capture system to create loopholes which facilitated thefts.
However, she professed ignorance about why the trial of the Hwange trio ended. She was also unable to say whether the three had returned to work after their arrests or were transferred from Hwange, as reported by The Herald in December 2015.
Attempts by Oxpeckers to track down the Hwange trio proved fruitless as the parks authority declined to provide information on where they were deployed following a re-shuffle that saw 35 senior game rangers dispersed from Hwange to stations in other national parks across the country in December.
Internal corruption:
In a telephone interview from Harare, Minister of Environment, Water and Climate, Oppah Muchinguri, told Oxpeckers that internal corruption was facilitating the leakage of state-owned ivory by employees working with, or for, international syndicates.
“The investigations we have conducted since late last year prove that there was indeed a lot of ivory theft from within the parks authority itself”, she said. “The markets included Chinese people, some of whom sometimes buy ivory legally from government sales.
“There are also several game rangers who have been arrested for poaching through the use of cyanide poisoning or shooting elephants in Hwange.
“We know of cases where poached ivory has been legalised by issuance of fake registration and export permits by officials in charge of the ivory stores in Hwange, Matopo and Gonarezhou National Parks.
“It is unfortunate that the criminal elements in our regional offices work for bosses who manage and protect the criminal syndicates from the comfort of their offices here in Harare”, Muchinguri said.
She declined to provide further details, but said the government has started the process of cleaning up corruption and the structures that sustain it from within the parks system.
Source: Oxpeckers/Conservation Action Trust
89
PRM arrest suspected poachers in Inhambane
Two Mozambican nationals were recently arrested in Vilanculos (in Inhambane Province), on charges of poaching. During the arrests the PRM confiscated two ivory tips, totalling 15 kilograms, and a vehicle (registration ADQ 241 MC).
According to the police, the arrests were made possible thanks to a successful undercover operation in which an officer pretended to be a buyer who was interested in purchasing the ivory from the two men at a price of MT150,000. The suspected poachers were arrested when they left Govuro district bound for Vilanculos in order to make the sale.
According to one of the detainees, he was unaware that the two ivory tips were illegal and that it was against the law to sell them. He told the PRM that one of the ivory tips weighs eight kilograms, while the other weighs seven. He and his accomplice were instructed to sell the ivory for MT10,000 per kilogram. He was then to receive MT2,000 for his participation, and the remaining money was to be delivered to the man who hired them to sell the ivory. The identity of the mastermind has not yet been uncovered.
The detainee told the police that he was going to use his share of the sale to pay for his children’s school fees.
Source: @Verdade
HEALTH
Mozambique “Number one suicide nation in Africa” – WHO
Mozambique is the most suicide-prone country in Africa. This is according to the World Health Organization’s (WHO) first global report on suicide. It says suicides kill more people than conflicts, wars and natural disasters.
There are 1.5 million violent deaths a year in the world, and 800,000 of those are suicides. Suicide and attempted suicide is considered a crime in 25 countries, mostly in Africa, in South America and in Asia. The most suicide-prone countries in Africa are Mozambique, followed by Tanzania, Burundi, South Sudan and Uganda.
NOTICE
In order to support the campaign to save the Rhino please support the Focus Africa
Foundation by liking the Focus Africa Foundation Facebook Page at: Focus-Africa
Foundation as well the Focus Africa Foundation Website at www.focus-africa.org
The Focus-Africa Foundation is solely dedicated to the support of the Joaquim Chissano
Foundation Mozambique Wildlife Preservation Initiative and the re-introduction of the rhino
to Mozambique (extinct in this country since 2013)
90
The most suicide-prone countries in the world were Guyana (44.2 per 100,000), followed by North and South Korea (38.5 and 28.9 respectively). Next came Sri Lanka (28.8), Lithuania (28.2), Suriname (27.8), Mozambique (27.4), Nepal and Tanzania (24.9 each), Burundi (23.1), India (21.1), and South Sudan (19.8).
Next were Russia and Uganda (both with 19.5), Hungary (19.1), Japan (18.5), and Belarus (18.3). The UN agency said that its goal is to cut national suicide rates by 10% by 2020.
One person commits suicide every 40 seconds – more than all the yearly victims of wars and natural disaster – with the highest toll among the elderly, the United Nations said on Thursday 21 April. In its first report on suicide, the WHO blamed intense media coverage when celebrities kill themselves for fuelling the problem.
“Suicide is an amazing public health problem. There is one suicide every 40 seconds – it is a huge number”, said Shekhar Saxena, director of WHO’s mental health department, at the presentation of the report in Geneva. Some of the highest rates of suicide are found in central and eastern Europe and in Asia, with 25% occurring in rich countries, the report says. Men are almost twice as likely as women to take their own lives. Common methods are hanging, gunshots, and the use of poisonous insecticides – particularly in rural areas.
“Globally, suicide rates are highest in people aged 70 years and over. However, in some countries, the highest rates are found among the young”, WHO said. “Notably, suicide is the
second leading cause of death in 15-29 year-olds globally”.
Alexandra Fleischmann, one of the report’s co-authors, said part of the blame lies with the publicity given to suicides by famous people, such as Hollywood actor Robin Williams.
WHO, which called suicide a major public health problem that must be confronted and stemmed, studied 172 countries to produce the report, which took a decade to research. It said that in 2012 high-income countries had a slightly higher suicide rate – 12.7 per 100,000 people, versus 11.2 in low- and middle-income nations.
But given the latter category’s far higher population, they accounted for three-quarters of the global total. Southeast Asia, including North Korea, India, Indonesia and Nepal, made up over a third of the annual figure. WHO cautioned that suicide figures are often incomplete, with many countries failing to keep proper tallies. In addition, “there are many suicide attempts for each death”, WHO chief, Margaret Chan, said.
Source: Reuters/Interaksyon
Funding for construction of new Nampula General Hospital secured
Health Minister, Nazira Abdula, who has been in Nampula inspecting activities in the health sector since Thursday 21 April, recently announced that Middle Eastern Arab countries will finance the construction of a new general hospital in the province. Minister Abdula said that the new hospital, which is in the project-planning phase, will meet requirements that the current facilities cannot fulfil,
91
and promises to be a major improvement in the provision of health care for people in the country’s northern provinces.
The minister noted that financial approval has already been secured for the proposals of the companies that will build the hospital, and said the project design would soon be shared with the provincial government for approval and implementation.
“We have secured financing. We are now involved in the project design and then we will share it with the province to find out whether it satisfies the Nampula government’s criteria”, she said. Source:
Agencia de Informacao de Moçambique
Substantial decline in mortality from malaria
Although the number of reported cases of malaria in Mozambique increased last year (2015), there was a substantial decline in mortality from the disease, according to Health Minister Nazira Abdula.
Speaking in the northern city of Nampula, at an event marking World Malaria Day, Minister Abdula said that 6,418,516 cases of malaria were recorded in 2015, compared with 5,820,340 in 2014 – an increase of just over 10%. However, in 2015 there were approximately 2,400 recorded malaria-related deaths (most of them children), which is a decline of 26% on the 2014 figure of 3,245.
Minister Abdula said that the high number of malaria cases remains a major concern for the government. The level of absenteeism from school and from work that malaria entails holds up
the economic and social development of the country, and maintains the cycle of disease and poverty.
“Despite the knowledge we have of malaria, and although there were some improvements last year, it remains a killer disease and one of the major public health problems in our country”, she added. According to Minister Abdula, major strides had been taken in malaria prevention. In 2015, there had been mass distribution of mosquito nets in 41 of the country’s 151 districts, reaching roughly 95% of the population of those districts. 19 districts were covered by house to house spraying against mosquitoes, and 92% of the population living in these areas had been protected. 85% of pregnant women attending ante-natal consultations benefitted from mosquito nets.
As for anti-malarial drugs, Minister Abdula said that Mozambique has adopted artemisinin combined therapy, which not only cures patients, but helps prevent the malaria parasite from developing drug resistance. “These therapeutic combinations have been associated with studies on resistance carried out routinely by our research institutions.
These medicines, she explained, are distributed down to community level, where they are administered by community health workers, who are trained to diagnose malaria. There are encouraging signs internationally that malaria is on the decline. Globally, deaths from the disease fell by 60% between 2000 and 2015, and cases of malaria declined by 37%. Over this period an estimated 6.2 million lives
92
were saved. But in 2015, there were still 214 million cases of the disease and 438,000 malaria deaths, 90% of them in sub-Saharan Africa.
Source: Agencia de Informacao de Moçambique
‘Goodbye Malaria’ aims to eliminate Malaria by 2030
Malaria is one of the biggest killers in sub-Saharan Africa, especially among children below the age of five. Mozambique has the highest toll for Malaria-related deaths in the continent and it was therefore important for Sherwin Charles and his partners to start Goodbye Malaria there.
Goodbye Malaria has partnered with the University of Pretoria and the Mozambican Ministry of Health in opening the Centre of Excellence (CoE) in Namaacha, Mozambique. The aim of the centre is to help alleviate cases of Malaria in Mozambique and neighbouring countries, such as South Africa, and ultimately eliminate it by 2030.
Source: SABC
‘Malaria bond’ set to play innovative role in fundraising
In January, the UK government and the Bill & Melinda Gates Foundation announced funding of £3 billion over the next five years for the battle against malaria. Such donor support will remain crucial, yet other and quite innovative forms of funding projects could also come to play a vital role.
One is the so-called development impact bond, or DIB. The idea of issuing
a DIB to raise money to fund the fight against malaria was born a few years ago. At that time, the Roll Back Malaria campaign engaged Dalberg, a global development consultancy, to structure a malaria bond and study its feasibility.
“We got the endorsement from Roll Back Malaria that this was an interesting model to test so we looked at how to pilot that in Mozambique”, says Barbara Kong, a senior investment principal at D. Capital Partners, the Dalberg subsidiary that has structured the bond.
The first malaria bond has yet to be issued but, with a goal of raising US$3.5 million, so far the bond has secured a commitment from Nandos, the restaurant chain, which has pledged funding of US$1.5 million.
As with social impact bonds, DIBs raise funds from private investors. The bonds rely on “outcome funders” – governments, international donors, companies – who commit to paying returns to investors when a programme’s goals have been reached. “Outcome funders only pay for the result once it’s achieved”, says Kong.
The results might take the form of fewer incidences of people going into hospital and lower demand for medicine. Also, incomes rise when people are no longer falling ill, which means they also have more disposable income to spend on consumer goods – outcomes that could also be tracked, explains Sherwin Charles, co-founder and chief executive of Goodbye Malaria, a public-private consortium established to help launch the malaria bond.
While DIBs are in their infancy, those behind them believe the model lends
93
itself to combating malaria. In order to trigger returns to investors, goals must be met that require assessment of the impact of measures.
“Funders are starting to become more aware of using data”, says Aunnie Patton of the University of Cape Town. She leads the innovative finance programme at the university’s Bertha Centre for Social Innovation and Entrepreneurship.
While traditional funding is often directed towards individual programmes – from drug research to the provision of mosquito nets – the DIB allows for holistic approaches to eradication that might include several forms of intervention.
Although it was corporate funding rather than a bond that financed it, Dalberg’s three-year pilot programme that concluded last year in several small districts in Mozambique demonstrated that this co-ordinated approach reduced the prevalence of malaria by 70%, approximately in line with global targets. It is this approach that the Goodbye Malaria consortium intends to scale up once funding is raised through a DIB.
Charles argues that malaria bonds could provide funding for the elimination of malaria in places where the disease is lower on the list of government or donor priorities.
Investors are expressing interest, says Patton: “Being able to eradicate malaria and get a financial return is incredibly attractive”.
However, Charles reports that the Goodbye Malaria consortium faces problems given the difficulties that
confront some potential investors. “A lot of mining companies are in malaria areas”, says Charles. “[But] because of the downturn in their business, they don’t have the money to invest as an outcome funder”.
Kong says while it may take time to secure outcome funders, and DIBs will not remove the need for donor funding, the underlying rationale for the financing model is strong.
“It can help mobilise new sources of funding from the private sector”, she says. “The focus on outcomes brings in more efficiency”.
Source: The Financial Times
Update: giant rats helping control TB in Mozambique
A technology that relies on trained African giant pouched rats – named HeroRATS – to sniff out tuberculosis (TB) and diagnose the disease faster than conventional diagnostic methods is helping save lives in Mozambique and Tanzania. Mozambique and Tanzania are among 22 high-burden nations suffering from TB, with 58,270 and 63,151 new cases of the disease detected, respectively in 2014, says the WHO.
The rat technology is being used by Belgian non-governmental organisation, APOPO, for speedy and cost-effective testing of TB in the two countries’ prisons, allowing patients to receive prompt treatments. According to APOPO, the project is benefitting from a two-year US$80,000 funding from the United States Agency for International Development (USAID) awarded in 2015.
94
Charlie Richter, US director of APOPO, says the pilot project is aiding a diagnostic accuracy study of the technology in high risk populations, such as prisons, adding rigorous scientific evidence towards WHO endorsement.
“The HeroRATS are presented with a row of 10 suspect TB sputum samples. When the HeroRAT detects TB, it hovers over the sample for three to five seconds”, Richter says. “All rat-indicated positive samples are then confirmed by LED microscopy or Xpert MTB/RIF, the WHO recommended technology for identifying suspected cases of TB”.
A single HeroRAT can check approximately 100 sputum samples in just 20 minutes, compared to conventional methods of microscopy, which would take a laboratory technician two days or more and still miss many of the true positives, Richter says. Early studies show that the rats are able to correctly identify 70% of TB cases and 81% of those without the disease.
It takes about nine months to fully train a TB detection rat, but once trained they can screen thousands of sputum samples every month. “We have trained 59 TB detection rats in our training and research centre in Morogoro (Tanzania), nine were then transported to Maputo (Mozambique)”, adds Richter. “Of these, 30 are still active in Tanzania and eight in Maputo. The others are either retired or died from natural causes”.
The project has screened over 300,000 TB samples, resulting in a 45% increase in TB detection at partner clinics.
Richter said that without HeroRATs, the clinics would have incorrectly diagnosed 50% of symptomatic TB positive patients as TB negative.
In the future, APOPO plans to test the rats’ abilities to detect other diseases such as cancer. APOPO hopes to roll out its TB programme in at least six countries by 2020 in Africa and Asia –Bangladesh, Cambodia, Democratic Republic of Congo, Ethiopia, India and Kenya, but cites funding and establishing partnerships as challenges.
Jeremiah Chakaya, a physician and chest specialist with the Kenya Association for the Prevention of Tuberculosis and Lung Diseases, says work with rats to detect TB has been going on for a long time. The idea, he explains, was spurred by the superb sense of smell of these rats which had been used to detect land mines after the Mozambican civil war.
“The rats pick up in their smell a group of chemicals collectively called volatile organic compounds (VOCs)”, says Chakaya, noting that the rats alert an observer that there are TB-associated VOCs in a sample.
The same principle has been used to develop machines called electronic noses. “My suspicion is, it is the electronic noses that will move forward to commercialisation, if the technologies prove their worth. Rats may be cumbersome to place in a clinical laboratory but not impossibly so”.
Source: SciDev.Net
END