Mozambique 20 July: Never let a good crisis go to waste
Good afternoon. As we write, the first round of peace talks with outside mediators is taking place at Mozambique’s parliament, with up to 20 participants around the table. One man who is not there is former UK Prime Minister Tony Blair, who – despite reports in the Mozambican press – was never invited to the talks.
Blair has nevertheless played a part through his Africa Governance Initiative, which “made introductions to the [Mozambique] government to assist in the peace process,” an AGI spokesperson told Zitamar this week. The apparent result is that Blair’s former chief of staff, Jonathan Powell, is taking part in today’s talks through his own mediation organisation, Inter Mediate.
SEE: Mediators arrive in Mozambique to join Renamo-Frelimo talks
The government’s concerted push towards a negotiated settlement with Renamo could well be a tactic to win favour with western donors, who withdrew financial support after the loans to ProIndicus and MAM were revealed in April.
The government is perhaps hoping that progress on peace talks could divert attention from the independent international audit that donors are calling for. IMF spokesman Gerry Rice said last Thursday that “our understanding is at this stage the government is not ready to move forward with the audit” – which for now means that disbursements cannot be made
Winston Churchill’s aphorism “never let a good crisis go to waste” seems appropriate to today's Mozambique. If the current situation pushes the government towards a lasting settlement with Renamo, it will not have been wasted. But there are signs it is having an effect elsewhere too.
At yesterday’s Council of Ministers meeting, the government agreed amendments to the country’s labour law to make it easier for well-qualified foreigners to gain employment; it’s just one example of the kind of structural reform Mozambique’s economy badly needs.
SEE: Mozambique amends labour law to encourage more foreign workers
The crisis has also forced the finance ministry to come up with a slimmed-down budget, which we reported last week is set to deliver savings of 24 billion meticais, or 10% of spending. It has since come to light that the total budget has only shrunk by 1.1%. That lowered estimate is due in large part to foreign funding tied to particular projects that is now worth more in meticais than when the budget was originally put together.
More worrying is the dramatic growth in internal borrowing to replace some of the foreign donors’ budget support, and a mysterious line item of unspecified current spending that increased more than five-fold. Online newspaper @Verdade has a theory that the 10 billion meticais for miscellaneous spending could be meant to cover MAM’s overdue $178 million repayment, if the government guarantee eventually has to be called.
SEE: Local banks fill donor hole as Mozambique budget deficit grows
As part of efforts to avoid that eventuality, Mozambique has hired an international law firm and a New York-based investment bank to advise it on its options to get out of its hidden debt mess.
SEE: Mozambique hires lawyers and bankers to advise on debt crisis
If Filipe Nyusi is doing everything he can to avoid a full investigation to find the true culprits for the deals, his administration is not shying away from undoing some of the questionable deals done by his predecessor’s government. This week, Zitamar reported on one contract that is being re-tendered two years after it was controversially awarded to a Guebuza family company.
SEE: Mozambique re-tenders Guebuza’s controversial digital TV deal
And finally, progress continues, albeit slowly, towards the Rovuma gas projects that could ultimately bring Mozambique’s economic crisis to an end. Anadarko and Eni’s plan to resettle the local population to make room for their LNG Park has been submitted to government, with approval pending.
SEE: Anadarko LNG chief in Maputo as Moz government reviews resettlement plan
Have a great week.