Mozambique election campaign starts, in shadow of 'hidden debts'
Mozambique election campaign starts, in shadow of 'hidden debts'
Welcome to Zitamar’s Weekly Mozambique briefing on 30 August 2019
Today’s Daily Briefing follows below.
Good afternoon. At midnight tonight, the official election campaign kicks off (see today’s Zitamar Daily Briefing below) — but President Nyusi has been busy for months already, touring the country in his official capacity, cutting ribbons on projects and speaking to rallies about his government’s achievements.
The peace deal signed last week has allowed Ossufo Momade to start his pre-campaign too, which he kicked off in northern Mozambique (Zitamar Daily Briefing, Monday 26 August). He has more time than when Dhlakama came out of his Gorongosa hideout in 2014 — and he’ll need it. Momade doesn’t have the profile or charisma of Dhlakama, and is being undermined by a breakaway group of hardline guerrillas who are threatening to disrupt the elections if they are not allowed to renegotiate the peace treaty (ZDB Tuesday).
The fairness of the election process has already been overshadowed by the controversy over the number of voters registered in Gaza province. The number of voters registered by election body CNE vastly exceeded the number of people that the statistics institute, INE, said live there. CNE has rejected an audit that the NGO CIP offered to pay for (Zitamar Live Blog). The end result of this dispute between two state entities is that the head of the INE has been forced out by President Nyusi — who probably needs the extra votes in Gaza to ensure he is reelected as President in October. Journalist Joseph Hanlon has written an excellent summary of what happened, which we have put online here.
One reason Frelimo is under pressure is the continuing issue of the ‘hidden debts’. This week it set a deadline of 6 September for eurobond holders to accept (or not) the restructure that the government agreed with the Global Group of Mozambique Bondholders back in May, with a view to closing the deal before the end of September.
SEE: Mozambique calls on creditors to accept eurobond restructure by 6 September
The timing looks inconvenient for the elections — keeping this huge debt, which has not benefited Mozambique, front of mind as people head to the polls. But there are other factors at play. Mozambique wants to regain access to international financial markets to enable the national oil company, ENH, to borrow in the region of $5 billion to finance its stakes in the two LNG projects in the Rovuma Basin — something that risks increasing Mozambique’s exposure to the gas sector, and potentially worsening the effects of the resource curse in Mozambique, as Zitamar editor Tom Bowker pointed out at a conference in Maputo this week.
But ENH may have another option, via Gazprombank, the bank controlled by Russian gas monopoly Gazprom — the world’s biggest gas company. Gazprombank told Nyusi’s delegation to Russia last week that it stands ready to help ENH fund its stakes (ZDB 22 August 2019) — the latest move in a growing Russian engagement with Mozambique, including through its national oil company, Rosneft, exploring new blocks with ExxonMobil and Qatar Petroleum
There appears to have been progress, too, with the restructure of the MAM loan, arranged by Russian bank VTB Capital, and Palomar, the financial advisory set up by former Credit Suisse banker Andrew Pearse in partnership with Privinvest. Finance minister Adriano Maleiane has now said he hopes VTB Capital will let the Mozambique state off the loan, and try and recoup its outlay through the company alone (ZDB Thursday).
Andrew Pearse has now admitted to fraud in connection with the ‘hidden debts’ deals before a judge in New York who is hoping to try former Mozambican finance minister Manuel Chang, too. Chang is still in South Africa, while the Mozambique government fights his extradition to the US (ZDB Wednesday) — claiming that it wants to try him here. That decision is due to be made in the week of the election — which could also be very awkward timing for Frelimo.
Next week will bring better PR for the ruling party, however, with the visit of the Pope next week. Nyusi’s electoral chances will be done no harm by having a photo with the popular Pope Francis, who will congratulate him on the latest move towards securing peace. There will even be an extra public holiday next Friday to mark the event — which should also improve people’s mood.
Today’s Daily Briefing is below — have a great weekend.
Agenda:
Tomorrow: Official start of the campaign for 5 October presidential and parliamentary elections
Wednesday, 4 September: Arrival of the Pope for a three-day visit to Mozambique
Friday, 6 September: Public holiday; Pope to hold mass at Zimpeto national stadium
Friday, 6 September: Deadline for holders of Mozambique’s sovereign eurobond to respond to restructure proposal
The latest from Zitamar News:
Japanese and Turkish JV plan region’s first LNG-to-power project in Nacala
The world’s largest LNG shipping company, MOL, and Karadeniz’s Karpower are planning to install southern Africa’s first LNG-to-power project in Nacala
The best of the rest:
Electoral campaign starts tomorrow (Savana, Lusa)
Constitutional Council rejects Renamo appeal over governor candidate eligibility (AIM)
FMO demands EMATUM re-restructure be stopped (Carta de Moçambique)
Electoral campaign starts tomorrow (Savana, Lusa)
Campaigning for the 15 October elections officially kicks off tomorrow. Filipe Nyusi will start his campaign in Beira, while Ossufo Momade and Daviz Simango will both start in Zambezia province, in Quelimane and Gurue respectively, though Ossufo is currently out of the country and will only start his campaign on 3 September. Meanwhile, the president of the self-styled Renamo Military Junta, Mariano Nhongo, has threatened lethal violence “if they insist on campaigning” without renegotiating the Demobilization, Demilitarization and Reintegration agreement with his faction.
Constitutional Council rejects Renamo appeal over governor candidate eligibility (AIM)
The Constitutional Council (CC) has rejected Renamo’s call to disqualify four Frelimo candidates running for governor this year, made on the basis that the candidates are not resident or registered to vote in the provinces where they are running. The CC pointed out that the residential requirement was removed in the latest revision of the electoral law, passed this year unanimously in parliament.
FMO demands EMATUM re-restructure be stopped (Carta de Moçambique)
The Mozambican civil society coalition FMO, which is leading the campaign for Mozambique not to pay the $2bn ‘hidden debts’, has urged President Nyusi to stop negotiations for the restructuring of the already restructured EMATUM debt. In an open letter to the president, FMO calls on Nyusi to respect the annulment of the EMATUM debt by the Constitutional Council — and to respect the separation of powers between his executive and the judiciary.
Restructuring this debt yet again should make little legal difference either in Mozambique or abroad. The EMATUM debt, which has been found to be illegal by the Constitutional Council and various other bodies in Mozambique, was replaced in 2016 by eurobonds whose legal status is more debatable. The restructuring currently being talked about would just convert those eurobonds for others, which would have the same, debatable legal status.
