African countries are in a developmental conundrum; they have seen economic reversals in the wake (and arguably because) of the World Bank and yet African countries, at least for the foreseeable future, need the World Bank – owing to a paucity of alternative lenders in the present. In its assessment of the outcomes of World Bank involvement in Africa’s development, this paper emerges with a mixed picture.
While the institution’s policy prescriptions saw large-scale failure in the form of cumulative debt, GDP declines and impoverishment in many African countries (for example Liberia, Nigeria, the DRC/Zaire and many others), it also succeeded in some (the two success stories often touted are Ghana and Uganda). But it would also be illegitimate to pin the failures purely on the World Bank. Ultimately, there are states – for example the DRC/Zaire, the Central African Republic/Empire of the 1980s, among others – wherein substituting the funder, and even removing the structural adjustments (which were not even wholly applied in some countries) would not have resulted in a less bleak picture. Indeed that they needed to go to the World Bank in the first place is proof enough that the countries in the region were mired in economic problems that preceded involvement with the institution.
Thus this article concludes that the World Bank has hitherto hampered development in Africa; but with the help, in many instances, of African leaders, who fostered unreceptive neopatrimonial environments and mismanaged the loans, at the expense of African citizens. Ultimately, however, it is not too late as there is nothing in this setting which does not lend itself to reversal.
‘Accelerated Growth’, Structural Adjustments, and Lost Decades: The World Bank and African Underdevelopment, 1979-Present
Despite remarkable performance in the 1960s, African economic development slowed down in the 1970s and stagnated in the 1980s, Africa’s so-called lost decade. In turn, the African states’ attempts to reinvigorate economic growth through state-led investments and import substitution industrialisation strategies were unsuccessful. And then, unable to raise funds locally, shunned by commercial banks abroad, African states opted for rescue by the International Monetary Fund and the World Bank. In effect, Western donor institutions took over as Africa’s bankers. Thus Senegal in 1979 became the first African state to obtain a loan from the World Bank predicated on structural adjustment programmes (SAPs). Soon, others followed suit. Despite their desires, and domestic pressures (interestingly, this was not always the case; as in Dar es Salaam there was virtually no opposition to austerity measures because some 90% of the population had been living off the private, informal market), to do otherwise, by 1980 some thirty-six African governments signed up; many were either on the verge of, or beyond, bankruptcy.
These structural adjustments, today so synonymous with the World Bank, included currency devaluation, elimination of subsidies, market liberalisation through removal of tariffs and quotas, decreased government spending, privatisation, low regulation of foreign enterprises and raising of agricultural prices that had been artificially kept down by governments. The idea had been to enact a series of radical economic reforms to shift African states from the state-centred approach (which had once been lauded even by the west) of the 1960s, and to give the markets a bigger role. Echoing the language of Ronald Reagan, then recently elected President of the United States, the appointer of the successive World Bank presidents, government was no longer to be looked to as the solution to economic problems, government was deemed to be the very cause of these problems.
Because of their emphasis on expenditure cuts, public support for infrastructure, education, social services, as well as for research and extension, while not attaining reciprocal agreements from the corresponding western states, these sectors suffered and rural areas, with their high proportion of poor people, were particularly hard hit. Stein argues that SAPs, as promoted by the bank as a result of their neoclassical roots, were basically a-institutional and therefore ill-equipped to promote market and institutional development in Africa. The outcomes of this were immediate and prolonged. For many scholars, the spread of the Ebola virus in West Africa in 2014 was as a result of the neoliberal orthodoxy imposed on Liberia in the 1980s which championed rolling back expenditure on, and privatisation of, health services under direction from the Berg Report, Accelerated Growth, prepared under the auspices of the World Bank. The outcome, in a situation where there was a lack of state capacity with regards to health services (precisely due to the World Bank’s directives) and no will on the part of the private interests to invest in a “clientele” which could not afford the treatment, was the transnational proliferation of what could have been a containable outbreak. Less severely, Tanzania’s medical and educational systems had ceased to function in all but name with school enrolment down from 98% (in 1981) to 76% in 1988.
Further, between 1991 and 1995, Africa’s annual real per capita GDP growth averaged at 0% for all Enhanced Structural Adjustment Facility (the below market price lending facility that funds poor states in exchange for the adoption of World Bank-directed structural adjustments) countries, whereas non-ESAF developing countries experienced, on average, 1.0% annual real per capita GDP growth. Far worse was the fact that between 1991 and 1995, sub-Saharan African countries which had adopted ESAF programs experienced an average annual 0.3% decline in terms of per capita incomes over the period of adjustment. The shrinkage is also attributable to the decline in purchasing due to World Bank-mandated structural adjustments which necessitated austerity and currency devaluation.
And in 1996, the World Bank, in response to demands for action to address the external debt crisis of poor countries, ushered in the Highly Indebted Poor Countries (HIPC) initiative. More than 80% of the countries identified by HIPC as needing debt relief were African. But the debt relief would come, in a familiar way, with conditions attached; in order to qualify for debt relief under HIPC, countries had to participate in structural adjustment programs. The HIPC program has been criticised for providing too little actual debt relief and providing it too slowly while at the same time opening up African markets to Western corporations with whom they could not yet compete due to the infancy of their own markets.
To the extent that SAPs failed to promote growth, no improvement in poverty can be expected from growth effects. The impact on poverty and food security arising from the shifting of relative agricultural prices has been mixed, but in general in Nigeria, South Africa, Kenya and Egypt, for example, the winners have been net surplus producers of agricultural products among rural households, particularly those with export crops, while the losers have been net consuming poor households and the urban poor.
What of Africa’s Leaders?
It is not only the conditionality which determine the success of World Bank involvement in Africa, but also the conditions under which these are introduced; national leadership being the key one since the loans are granted to states and not private entities.
One of the few leaders to actually implement structural adjustment was Jerry Rawlings of Ghana in the 1980s and 1990s. Coming into power through a coup in 1982, he embarked on a wholesale reform, accepting market disciplines and a reduced role of the state. He increased cocoa prices, he devalued the Ghanaian cedi, import-licensing systems were abolished, and about 60,000 public sector employees were retrenched, and Ghana’s prized Ashanti Goldfields was privatised. Despite doubling of debt between 1983 to 1988, in that period, cocoa exports increased in just three years from 155,00 to 220,000 by 1986. Equally significant, food per capita rose, and inflation fell from 123% to 40% between 1983 and 1990; increasing the Ghanaians’ buying power. Similarly, Uganda through PRSP policies reduced its GDP-debt ratio from 58.3% in 1999 to 2.1% in 2009.
Even these so-called miracles, in any case 2 out of 54 African states, have been lacklustre and are disappointing on the whole – Ghana’s GDP in 1998 was still 17% less than its 1970 levels, and Uganda’s low debt has been due to donations. And some question whether these results have clearly been linked to SAP-related macroeconomic policies. Yet, it is probable that Ghana’s GDP would be even worse without the role of the World Bank, and in a more corrupt country – such as in post-Nyerere Tanzania cited above where bribery and corruption were rife – the donations and loans received by Uganda to reduce its debt-to-GDP ratio could have been imprudently managed and not made a difference.
The issue of whether the overall disappointing performance of SAPs in Africa is due to incomplete and “half-hearted implementation”, inappropriate policy components of the SAPs, or adverse external factors lies at the heart of the debate. A review of the available studies suggests that in most cases a combination of these three factors was at work – Africa has over 50 states after all. It is certainly true that there was incomplete, half-hearted, and “stop-and-go” implementation, that there were deficiencies in the sequencing of measures, lack of coordination of policies and inappropriate policy design, and that the markets for primary products, Africa’s main export, deteriorated in the 1980s and 1990s but it is clear that the failures were in large part due to World Bank failure in vetting the countries to be granted loans, and inabilities to affect penalties for mismanagement of funds. Qualification for loans, in other words, should have been predicated on more than just a state being a Western ally during the Cold War, or the anti-terror ally today. And here lies the problem, neopatrimonialism, in such places as the former Zaire, CAR, Nigeria, Malawi and numerous others, ensured that the funds were misused, and yet the World Bank failed to recognise this, or when it did, it did not hinder it from continuing to give the loans – which in turn went into “white elephant” projects. Indeed, a shadow review by ActionAid concluded that the Bank does not have an effective plan for ensuring accountability even in the wake of the Operation Policy and Country Services unit.
Where to From Here?
In at least two African countries, the World Bank has been a facilitator of development; and in those countries where there has been debt and negative growth in spite of World Bank presence, it is still possible that matters would be even worse in its absence, as it has been one of few institutions willing and able to make concessional loans. Furthermore, World Bank granting of loans has been found to positively increase attractiveness of receptor states in the short run and causes other funders to be more willing to make investments. SAPs during periods of falling growth or no growth appear to reinforce underlying expectations for the future; they are associated with positive expectations.
And to conclude, it has to be noted that essentially, the failures of the World Bank in the continent have also come about as a result of the World Bank’s own internal structural inconsistencies as well as an unreceptive climate within countries. For example, some scholars have argued that the content of PRSP, its ideological underpinnings, and the global context in which it is situated seem to involve contradictory impulses for national ownership, governance and poverty reduction in Africa. We may go so far as to say that the institution is essentially a paradox; it is a neoliberal institution, and yet is itself state-owned – and therefore prone to serving national interests – and, moreover, despite its profession of market-orientation, it is a lender to governments as opposed to private entities; and thereby buys out of key classical liberal truisms such as competition and room for incentives. Equally pertinent, African countries themselves need to own up the other end of the equation because they are the recipients of the funds. In the wake of the 1990s Asian crisis and recovery through World Bank assistance (especially in the case of South Korea which managed to pay back its loan ahead of schedule), it is clear that the bank can be a partner for recovery and growth provided there is prudent assimilation of these funds. But before these funds can be granted, there ought to be a revisiting of the process so as to ensure the loans do not end up in imprudent hands in the first place. Perhaps then, and only then, the World Bank can continue to facilitate development on the continent. Wedded into this is the responsibility of not only African but World Bank leaders to make the bank more responsive – something which previous presidents such as James Wolfensohn and incumbent Jim Yong Kim began to grasp in their various “listening tours” around prospective recipient states.
Peacebuilding in Northern Mozambique’s Insurgency: Ways Forward
Abstract: Cabo Delgado, once heartland of the Mozambican national liberation struggle, is turning into an epicenter of conflict and instability, which threatens neighboring countries and regional stability. Armed conflict with Jihadist extremists is exacerbated by privatized security forces and a lack of tangible regional solidarity and security coordination.
Large offshore gas deposits act as an additional driver of conflict while peacebuilding initiatives are still at the very beginning. Extremists aligned with ISIS are emplacing an ecosystem for transnational illegal activity- just as the major gas project development can bring real peace dividends to the impoverished province. In view of escalating violence, it is time for the international response to shift gears and invest in peacebuilding besides counter-insurgency assistance and security sector reforms, including for regulating the activity of private military and security companies. In a new paradigm of partnership with the government, joined-up cooperation, including withfuture gas customers across the Indian Ocean could buttress the response to the escalating violence.
Conflict Trajectory- Armed violence has steadily escalated in Cabo Delgado province of northern Mozambique since 2017. In the last two years, the Jihadist insurgency of “Ahlu Sunnah Wa-Jama” (ASWJ) has gained momentum beyond rural areas. In August 2020, insurgents took control of Mocimboa da Praia town on the northern coast. The complex attack on 25 March against the densely populated city of Palma targeted a staging area for the large offshore gas development project. As a result, the leading energy firm involved in the gas project, Total Company of France, stopped operations and withdrew its personnel from the area. Experts estimate that currently some 60% of sub-districts in the province are no longer under effective government control. The humanitarian fallout from the fighting is catastrophic:700,000 persons are displaced and around a quarter of the provincial population. The fighting has caused2,800 casualties so far, reportedly more than half of them civilians, according to ACLED humanitarian statistics.
Government Response-The government struggled to keep the insurgency at bay after initial denial of the problem. In 2020, the government took steps to reorganize its security posture in Cabo Delgado and created a joint task force against the terrorists. Mozambique and Tanzania concluded an agreement to form a joint defense and security committee in mid-January 2021 for the purpose of intelligence sharing and coordination.
There has also been a growing readiness to accept foreign military advisers and trainers, while local militia groups were used in parallel. The US and former colonial power Portugal have recently agreed to provide trainers for Mozambican forces. The EU has stepped up planning for a possible EU Military Mission to assist the government, after the SADC neighboring states fielded a recent assessment.
However, Mozambique has been adamant against foreign troop deployments, in keeping with its non-aligned tradition and to safeguard national sovereignty. The SADC regional block started to deliberate about a joint security response in late 2020. However, the recent SADC troika summit meeting on 8-9 April devoted to regional security challenges remained inconclusive.
Reforms in Mozambique’s security sector have been incomplete since the end of the civil war 1977-1992, which has debilitated the army in front line roles against violent extremists. Anti-terror legislation was adopted only in 2018 when the insurgency already began to make itself strongly felt. Security governance is further complicated by Mozambique’s reliance on private military and security firms (PMCs/ PSCs), including from Russia and South Africa (Wagner Group, Dyck Advisory Group/DAG) which failed to rout the Jihadists. In northern Mozambique, these para-military actions have drawn strong criticism from human rights organizations such as Amnesty International. There is testimony accusing security company employees of indiscriminate violence.
Significance of Transnational Extremist Threat- Already in July 2019, the ASWJ insurgents pledged allegiance to the ISIS branch in Central Africa ISCAP which operates in Congo DRC. Their fighting strength is believed to be around 2,000 in Cabo Delgado province. ASWJ publicly committed to applying Sharia Law as agents of a “government of God”, like ISIS in the Middle East and the Al Shabab militia in Somalia. ASWJ has also accused the ruling FRELIMO Party in Mozambique of corruption. In March 2021, the U.S. imposed sanctions against leaders of ISIS-ISCAP and counterparts in ASWJ as terrorists.
Counter-terrorist experts believe that ASWJ which is also locally known as ‘Al Shabab’ (‘Ansar al-Sunna’ or simply as ‘mashababos’)has mostly homegrown origins. However, there are indications that at least some of the leading ASWJ cadres are in fact from Tanzania. Polarization between Mwani and Makonde ethnic groups in provincial sub-districts of Mozambique also plays a role in the violence.
There are growing concerns that the insurgency could spill over into neighboring provinces of Mozambique, especially Nampula and Niassa. Experts have pointed out that there is a risk of expanded territorial control and illicit revenue streams (from timber, precious stones, and heroin smuggling). This might give the insurgents access to more sophisticated arms. The illegal gold mining business is supposedly bankrolling the insurgency against government control measures.
Spillover into Tanzania across the shared border has already occurred. Security analysts are pointing to an expansion trend of ISIS and Jihadist violence in Africa as their new frontier. Cabo Delgado could replicate the violence in the Sahel region and add a trans-continental dimension to extremism by expanding to the Indian Ocean seaboard. In this view, ASWJ- ISCAP could pose a critical threat to the more developed economies in neighboring South Africa and Tanzania as well as for international shipping and trade.
Hydrocarbon Pull Factor in Mozambique’s Insurgency-Cabo Delgado province is a majority Muslim area in Mozambique with a history of government neglect and under-development. Youth unemployment is staggeringly high as well as the levels of illiteracy among youth. The province has also emerged as a national hotspot for COVID-19 infections, due to IDP movements and the influx of persons from across the border in Tanzania where virus controls have been lax.
By contrast, the 20bn USD offshore LNG gas project in the province represents the largest private investment in Africa’s energy sector. Totalenergy firm of Franceaims to produce 13 bn tons of LNG gas annually from 2024. Despite the recent setback, Total has stated that the project remains on track.
The lucrative hydrocarbons development and expected funds flows act as an additional driver of extremist violence, competing with the reach of government authorities. Some sub-contractors might end up paying protection money to the Jihadists, although control of gas wells is not realistic for AWSJ.
Configuring Peacebuilding against Violence in Cabo Delgado- Militarized responses to the insurgency have proven ineffective so far and only made matters worse. Therefore a concerted and multi-dimensional effort is needed to engage in peacebuilding, dialogue and civilian-led security sector reform development with provincial focus. President Filipe Nyusi’s new Agency for Integrated Development of the North (ADIN) is a welcome step towards participatory development planning and giving populations more of a voice in their socio-economic future.
Within the ambit of civilian peacebuilding, there is a need for inclusiveness in Mozambique’s security governance. It is important to ensure control over the private military and security firms in the counter-terrorist campaign. Normative frameworks for private military and security companies in warfare, e.g. the ICoC Voluntary Code of Conduct and the 2008 Montreux Document governing state use of mercenaries, should be localized for the situation in Cabo Delgado. In addition, focused deradicalization and extremist prevention actions specifically targeting youth are required. Specialist counter-terrorist skills training is a critical element in reforming the Mozambican security forces.
Despite generous EU development assistance to the country, the insurgency has so far received little attention in Europe, where Mozambique and Cabo Delgado province are perceived through the lens of humanitarian concerns after successive cyclones, or as an exotic tourist destination. The situation in Cabo Delgado was discussed in the European Parliament in September 2020. Cabo Delgado also featured in a parliamentary hearing in Berlin later that year about current levels of German engagement in conflict-affected areas of Africa. Given the high stakes of the insurgency which is no longer just a side show on the African continent’s conflict map, leading European states might come together to pool their expertise and assist the Government of Mozambique in peacebuilding. A mapping of peace constituencies in Cabo Delgado province is a critical first step, as well as assessing the social media landscape with youth and young women. Comparative insights are available from youth counter- radicalism programs in Tanzania and work with women as peacebuilders by German political foundations in Mozambique, as well as support and expertise from UNDP with Japanese funding commitments for peace support in 2020.
Coordination of these inputs and conflict sensitive implementation alongside the humanitarian relief effort in the Triple Nexus (humanitarian, stabilization and development dimensions) are overdue. Through the established and experienced UN country team, modalities can be found to move from business as usual to shaping the international response in a more focused and impactful way, strengthening local dialogue efforts from Mozambique’s Civil Society, faith leaders and advocacy umbrella groups formed in Cabo Delgado.
In the medium term, innovative development cooperation centered around the expected gas flows from Mozambique to emerging markets in Asia across the Indian Ocean holds promise for scaling up the development response. It is possible to establish structured ‘reverse trades’ of skills training and technology transfers for learning together in the global energy transition through 2050 for decisively improving the situation in Cabo Delgado.
The challenge of COVID-19 in Africa
Since its emergence in December last year, covid-19 has spread rapidly around the world, flooding the health system and weakening the global economy. As a result of the epidemic, the virus has spread across the African continent. So far, nearly 48 countries have been affected, but the impact has been felt from the beginning of the crisis. With the spread of covid-19 on the African continent, Africa has responded rapidly to the epidemic, and the number of cases reported so far has been lower than people had feared. The experience of past epidemics, that is, age structure, certainly works, and so does the response of all actors: the state, civil society, regional organizations… However, the economic and financial impact of the epidemic is enormous. Nevertheless, the challenges are still great due to the strategy adopted by the government, public support for the measures taken, the resilience of the health system, economic impact, cross-border cooperation, etc… In recent years, African countries have done a lot to improve the well-being of the people on the continent. Economic growth is strong. The digital revolution has begun. The free trade zone has been decided. But the epidemic threatens progress in Africa. It will exacerbate existing inequalities, hunger, malnutrition and vulnerability to disease. Demand for African goods, tourism and remittances have declined. The opening of the free trade zone has been delayed, and millions of people may fall into abject poverty.
The African continent has some advantages
However, the continent’s unique demographic structure suggests that it may not be as affected by the epidemic as the rest of the world. In fact, globally, people over the age of 65 are the age group most likely to be complicated by the epidemic. In Africa, a very young continent, only 4% of the population belongs to this age group (20% in France, 16% in the United States and 11% in China). This will make Africa’s experience different from that of its aging European and Asian neighbors. Another factor of hope that has been repeatedly mentioned is the climate of the African continent, which will not be conducive to the spread of the virus. However, so far, this theory has not been supported by any data.
Moreover, the health crisis we are facing is not the only one that has affected the African continent in recent years. For example, since 2013, the Ebola epidemic has killed tens of thousands of Africans, providing crisis management experience for the affected countries. After discovering that Asia, Europe and the United States have been seriously affected by the virus, this may partly explain why many countries on the African continent have taken swift and severe measures, such as checking airport temperature, closing borders, closing airports, closing airports, closing airports, etc. Suspension of international flights or isolation measures. The virus spread rapidly in Europe before it really affected Africa, which is why some African governments responded highly to the crisis.
However, some inherent factors in the African continent hinder the implementation of certain preventive measures, which are of the same scale as those in Europe, Asia or the United States. Social distance is complex in a continent where nearly 200 million people live in crowded shantytowns or are used to living in harmony with their families. In addition, some Africans live in a water shortage environment, especially in remote urban areas, which makes simple (effective) gestures (such as washing hands regularly) difficult.
Finally, measures to limit the employment of citizens may endanger the survival of many people, since half of the population lives on less than $2 a day, has no savings or wealth, and the informal sector accounts for 85.8% of employment. It should also be noted that the large-scale spread on the continent is worrisome because it is estimated that the health systems of African countries are at different levels, but most of them are not able to cope. They lack not only medical staff, but also equipment, especially for the treatment of people living with HIV. Respirators are not enough for patients. The African continent, in particular, still faces treatable but in many cases fatal diseases: AIDS, tuberculosis and malaria. The burden of covid-19 on the medical system often hinders the treatment of these other diseases.
What is the impact on African economy? It’s hard to say. However, the impact was felt even before the first pollution case was announced. In fact, intra African trade currently accounts for less than 18% of the continent’s trade, which means that Africa’s economy is heavily dependent on trade with the rest of the world. In addition, the industry of the African continent is mainly concentrated in raw materials. Due to the crisis, the prices of raw materials have been seriously affected. Some of Africa’s major economies are still heavily dependent on exports of resources such as oil or minerals. The global crisis has led to a collapse in the prices and demand for these raw materials, although their exports account for more than a quarter of the total exports of 25 countries and 55% of Africa’s GDP.
Border closures also make it impossible for these countries to rely on tourists to restore their economic health. The epidemic may help to redefine the relationship between African countries and external actors. Finally, most of these countries do not have the capacity to deploy economic support or stimulus plans on a scale comparable to that of western countries to limit the impact of the crisis. In this regard, we understand that despite the collapse of tourism, Egypt is one of the most resilient economies on the African continent. Thanks to “strong domestic markets and the authorities’ strong response to fiscal and monetary policy”, the country even feels luxurious to be one of the few countries to achieve positive growth (+ 3.5%) in 2020.
SADC Counts on EU and US for Security Funding in Mozambique
The 16-nation Southern African Development Community (SADC) is counting funding from the United States and European Union (EU) to support its proposed military deployment (3,000 troops) in Cabo Delgado, northern Mozambique, according to Andre Thomashausen, professor emeritus of international law at the University of South Africa (UNISA).
Thomashausen said that Pretoria “is desperately seeking” ways to strengthen and rehabilitate its military operational capabilities through the intervention in northern Mozambique and “SADC wants this entire operation to be funded by support from the European Union and, to some extent, the United States. SADC is envisaging a role for the European Union of financial rather than logistical or human resources support.”
SADC technical assessment mission has proposed sending a military intervention force of 3,000 troops as part of its response to help fight the militant insurgency in Mozambique. In terms of military assets, the SADC assessment team proposes that 16 be sent to Mozambique, namely two patrol ships, a submarine, a maritime surveillance plane, six helicopters, two drones and four transport planes.
On April 28, Southern African ministers have agreed to deploy a regional force in Mozambique. But the Southern African leaders meeting that was scheduled for April 29 to assess the security situation and offer the final approval for deployment of SADC military force was postponed due to unavailability of South African President Cyril Ramaphosa and Botswana President Mokgweetsi Masisi.
Botswana is the current chair of the SADC division, which is tasked with promoting peace and security in the region. Botswana President Mokgweetsi Masisi is quarantined due to Covid-19. Ramaphosa was busy giving testimony to an inquiry into corruption under his predecessor Jacob Zuma.
Botswana and South Africa along with Zimbabwean President Emmerson Mnangagwa, are the current members of the SADC security organ troika. The three would have met Mozambique President Filipe Nyusi at the summit to decide whether to accept the proposed intervention plan.
The insurgency broke out in Mozambique’s northeast in 2017 and the rebels have stepped up attacks in the past years, with the latest March 24 heinous attack left more than 2,800 deaths, according to several reports, and about 714,000 people displaced, according to government sources.
The worsening security situation is a major setback for Mozambique. While it hopes to reap nearly US$100 billion in revenue over 25 years from LNG projects, the state failed its pledge to maintain and enforce security after several warnings. Now French energy group Total declared force majeure on its €20 billion liquefied natural gas (LNG) project following the insurgent attacks. The gas project located about six kilometers from the city that suffered the armed attack in March.
In an official release, the Paris based Total officials said considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure. The suspension of work arising from the “Declaration of Force Majeure” will remain in force until the government restores security in a verifiable and sustainable manner.
Besides that, Mozambique is rocked with frequent kidnappings. In a recent interview with Lusa, the president of Confederation of Economic Associations of Mozambique (CTA), the largest employers’ association in the country, Agostinho Vuma, said that kidnappings targeting entrepreneurs and their relatives are a negative feature of the country’s business environment.
In addition, a report by ratings agency Standard & Poor Global also said militant attacks in Mozambique’s Cabo Delgado province still pose a “significant threat” to production facilities associated with one the biggest natural gas discoveries in the world.
S&P, which ranks Mozambique’s foreign debt at CCC+, seven rungs below investment grade, said it expected economic growth in the country to recover in 2021 on higher mining output, especially linked to liquefied natural gas (LNG) production.
But that rebound was subject to completion of the gas projects in the face of mounting security risks, as well as risks of droughts and flooding. Mozambique was battered by two massive cyclones in 2019, and another hit its shores in this year.
“If this project comes on stream as expected by 2024-2025, it will benefit Mozambique’s economic outlook, and support wealth levels that are currently very low by global comparison,” said S&P. But most benefits will materialize beyond our current forecast horizon as gas production will likely come on stream in 2025 given the delays experienced in 2021.”
The ratings firm project gross domestic product (GDP) to expand 2.5% in 2021 after last year’s 1.25% contraction. It however sees economic growth to average 5.5% from 2022 onwards.
With an approximate population of 30 million, Mozambique is endowed with rich and extensive natural resources, but remains as one of the poorest and most underdeveloped countries in the world. It is one of the 16 countries, with collective responsibility to promote socio-economic and political and security cooperation, within the Southern African Development Community (SADC).
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