Mozambique 2 Nov: Tough questions

Good afternoon. Today’s newsletter comes from the FT Mozambique Summit at the Polana hotel in Maputo, where the IMF resident representative has given delegates an indicative timetable for restarting a programme with Mozambique. In the same session, the finance minister gave some pretty straight answers to some tough questions about the famous ‘hidden debts’.

SEE: Mozambique finance minister calls for owners of more hidden debts to come forward

The government is clearly trying to put its best foot forward with the international investor community - evidenced by the attendance not only of the finance minister, Adriano Maleiane, but also President Nyusi who gave the opening address.

Nevertheless, the road to agreement with Mozambique’s angry creditors will be difficult and long - probably longer than the timeframe the government is aiming for. As Zitamar News writes this morning, different creditors already have different ideas about the fairest way of getting out of the current mess.

SEE: Creditor battle brewing over Mozambique’s ‘illegal’ loans restructure

To listen to Nyusi’s speech this morning, you would think Mozambique’s main problem is that investors simply don’t understand the potential offered by its fertile land, pristine beaches, and strategic coastal location. The reality is that there are major barriers to investing in the country, not least navigating its cumbersome bureaucracy. Yesterday’s announcement that some of the foreign investment procedures will be streamlined, sounds like a step in the right direction.

SEE: Mozambique launches new agency to promote exports and investment

Electricity utility EDM was one of the state-owned companies named in the creditor presentation as being in serious financial difficulty - and this week it announced a sharp increase in its tariffs across the board, though the cheapest, subsidised rate will remain unchanged.

SEE: Mozambique electricity company hikes prices, appoints new board

Despite the company’s financial troubles, EDM also signed a 25-year deal this week with a brave Norwegian investor who will build the country’s first large-scale solar power plant in the town of Mocuba. The project leans heavily on support from Norwegian state finance and support from the World Bank, but nevertheless is a rare chink of light in Mozambique’s gloom.

SEE: Mozambique eyes financial and environmental dividend from solar power debut

Have a great week.

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