Business news Mosambik

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1 Gabinete para o Fomento Económico Moçamique-Alemanha Southern African-German Chamber of Commerce and Industry Business news Mosambik I. GENERAL INFORMATION Mozambique: Constitutional amendments definitively approved The Mozambican parliament, the Assembly of the Republic, passed the second and final reading of a bill to amend the Constitution, allowing the election (albeit indirect) of provincial governors and district administrators, as well as mayors of cities and towns. All contentious issues had been dealt with in long discussions between the leaderships of the three parliamentary groups (from the ruling Frelimo Party, the rebel movement Renamo and the Mozambique Democratic Movement, MDM). Edson Macuacua, chairperson of the Assembly working commission on legal and constitutional matters presented the final version of the amendments, and the 223 deputies present in the chamber approved them unanimously. Up until now, the President of the Republic has appointed and dismissed provincial governors, and the Minister of State Administration has appointed all district administrators. But, as from 2019 for governors, and from 2024 for administrators, these posts will be elected. Provincial assemblies already exist, but their powers are very limited. As from 2019, however, whoever heads the winning list in the election of a provincial assembly will become the governor. Thus the voters will know that they are electing both the assembly and the governor on the same ballot paper. The provincial government is renamed the Provincial Executive Council, chaired by the Governor, and will be responsible for implementing the programme of governance approved by the provincial assembly. The same structure is replicated in the 154 districts. For the first time, there will be elected district assemblies in 2024, and whoever heads the list that takes a majority of votes will become the district administrator and will head the District Executive Council. The issue that almost derailed the constitutional amendments was: who will appoint district administrators between 2019 and 2024? Frelimo argued that the current system, whereby the Minister of State Administration appoints district administrators, should remain in force until But Renamo insisted that the provincial governors who will be elected next year should have the power to appoint the administrators. A compromise was reached whereby, up until 2024, the district administrators will be appointed by the Minister of State Administration, but after consultations with the provincial governor. The nature of these consultations has been postponed to future legislation. The amendments also eliminate the direct election of mayors in municipalities. Instead, the procedure will be analogous to the provincial and district elections. Citizens will elect the municipal assembly and whoever is head of the winning slate becomes mayor. Once in office, the governors, administrators and mayors cannot be removed by their political parties only the relevant assembly provincial, district or municipal can sack them. The grounds on which they can be sacked are not stipulated in the constitution, but are another issue postponed to future legislation. The decentralised municipal, provincial and district bodies will enjoy administrative and financial autonomy, but they must respect the unitary state, national unity, the sovereignty and indivisibility of the state, and be guided by the principles of the prevalence of the national interest, subsidiarity and gradualism. The central state will retain full authority in matters of defence and security, public order, foreign policy, the issuing of currency, and creating and altering taxes. The state will also have exclusive responsibility over energy, minerals and other natural resources. To exercise these functions the central state will have its representatives in the provinces, districts and municipalities. The most powerful of these will be the Provincial Secretary of State, who will be appointed by the President of the Republic. The amendments contain the bare bones of a decentralised structure. All the details will come in a series of laws to be passed at an extraordinary sitting of the Assembly. (AIM) Mozambique: Terror reigns in Palma after beheading of 10 people With the recent beheading of ten people, a climate of terror and fear has returned to the villages of Palma in Cabo Delgado. The incidents happened in rural settlements in dense bush, with no electricity or other infrastructure, on two different occasions. First two die were two teenagers aged 15 and 16 from the village of 25 de Junho, who had gone hunting when they ran into the armed group. In the village itself, the group, in numbers and composition not so far specified by the PRM, beheaded three further adults. By nightfall, by which time the population of the area was on full alert, the group had beheaded five other people in the village of Monjane. Police say they have strengthened vigilance in that region and according to the police spokesman, the evidence indicates that the attackers are part of the same group that killed police officers with machine guns and besieged the town of Mocímboa da Praia for two days in October 2017, and has since made sporadic attacks on villages of the rural area of the region. Weeks ago academics Anschrift Anschrift in Deutschland Telefon Telefax info@maputo.diplo.de Rua Damião de Gois, 506 Caixa Postal 1595 Maputo / Moçambique Auswärtiges Amt Für Botschaft Maputo Berlin (+258) (+258) Internet

2 João Pereira and Salvador Forquilha released a study on the attacks in the Palma, Mocimboa da Praia and Macomia districts of Cabo Delgado, in which they explain that the main objective is not the creation of an Islamic state in the north of the country. Pereira also explains that this situation derives from the feeling of marginalisation of people of Muani ethnicity. Cabo Delgado is the location of numerous oil and gas mega-projects. (DW/Voa Português) Mozambique CNE alters electoral timetable Mozambique s National Elections Commission (CNE) announced recently that it is delaying the registration of political parties for the 10 October municipal elections by a fortnight. Originally any party, coalition of parties or independent citizens group that wished to compete in the local elections had to register with the CNE between 1 and 15 June. Speaking at a Maputo press conference, CNE spokesperson Paulo Cuinica said the period for those wishing to stand candidates to register their intention with the CNE has been pushed forward to 15 to 30 June due to the postponing voter registration by almost three weeks. Voter registration was to have run from 1 March to 30 April, but was postponed to 19 March -17 May. The delay in registering parties also affects the accreditation of election agents. The agents of the competing parties and groups must apply for accreditation between 15 and 30 June. One serious problem for the CNE is that the law governing municipal elections is about to be changed, following the constitutional amendments passed by the Mozambican parliament, the Assembly of the Republic. Therefore, the CNE will continue to work with the current law but could accommodate its activities to the new law, when it is passed (at an extraordinary sitting of the Assembly that will be held in June. (AIM) II. ECONOMIC SITUATION Projects funded by international partners are now exempt from VAT in Mozambique The purchase of goods and services for public projects financed by international partners will be exempt from value added tax (VAT), the Tax Authority of Mozambique has told Lusa. Marcelo Mazivila, Taxation Director at the Tax Authority, said that VAT on the purchase of goods and services for state projects would be borne by the Government. The measure would soften the financial effort needed by companies involved in development projects, a burden that had previously made the operations of these entities more lengthy. The decision results from the implementation of the Tax Mechanism for Regularisation of VAT on purchases of goods and services, in compliance with a decree approved in November Beneficiary institutions would receive a certificate attesting to their eligibility, Mazivila said. The measure, which the Japanese International Cooperation Agency assisted in the design of, would also help prevent tax evasion and fraud. (Lusa) Mozambique: Government launches sub-national Doing Business study The Mozambican government, in partnership with the World Bank, on Monday launched a sub-national version of the Bank s annual publication Doing Business. This will be a study to analyse and compare the business environment in Mozambique s ten provincial capitals, and in four border posts. It is being financed by the British and Swiss governments, as well as by the World Bank itself. According to the Minister of Industry and Trade, Ragendra de Sousa, through the study it is intended to identify and remove the obstacles that hinder the entrance of new investors into the Mozambican market, to increase employment, and to diversify the country s economic base. He hoped that out of the study would emerge proposals for simplification of procedures and other reforms to make the business environment more attractive for investors. It would look in particular at four areas of the regulatory environment namely starting up a business, registering property, enforcing contracts, and cross-border trade. The representative of the World Bank in Mozambique, Mark Lundell, said the study will look at the experience of small and medium enterprise in their interactions with the government and in the conduct of their business. The latest such report, published in October last year, put Mozambique in 138th position out of 190 countries. (AIM) Mozambique s Tax Authority looking for more than 56 billion meticais in 2nd quarter The Mozambican Tax Authority (TA) expects to collect 56.5 billion meticais in revenue during the second quarter of the current year, of which about 39 billion will be from domestic taxes and 16 billion from foreign trade. The information was recently released in the district of Moamba, Maputo province, at a national TA meeting aimed at planning second quarter activities and evaluating the performance of the provincial delegations. The AT collected 34 billion meticais in the first three months of this year, 109 percent of its 31 billion meticais target, and the numbers already achieved would seem a positive indicator for the achievement of the 232 billion meticais annual target the institution has set itself. At the event, AT president Amélia Nakhare said that to carry out the government s agenda, the institution must continue to fully fulfil its revenue collection role. Nakhare said that while revenue collection was the AT s responsibility, success did not depend exclusively on employee performance alone, but on a combination between leaders and the base. Nakhare said a battle against corruption was pressing if goals were to be met. Changing perceptions about the institution in some segments of society was also a challenge. The meeting gathered TA employees from across, from border posts, collection points and other services, also served to discuss the mechanisms to improve the procedures for collecting revenue, as well as submitting the terms of reference of the competition for careers promotion and progression currently under preparation. (Noticias) Mozambique No agreement by September means no payments to creditors next year In March, the Mozambican government proposed that holders of government debt pardon 50 percent of the arrears, that is, US$318 of the US$636 million that should have already been paid. Now, Mozambique s finance minister has said that if there is no agreement with creditors by September, it will not be possible to make any payments next year, because the funds have to be allocated in the state budget. The creditors have asked for additional information and my advisers are working in that direction. In the document 2

3 submitted to creditors in London, Mozambique proposed a pardon of 50 percent on past interest and penalties, and changes in interest rates and the maturity of debt issuance, whose initial phase term was to have been completed in 2020 but had already been extended to In effect, Mozambique hopes to reduce debt instalments in the coming years and pay more at the end of the period, relying on natural gas revenues expected from the next decade onwards. (Lusa) Mozambique: EU provides 45 mn in aid The European Union (EU) has signed off on total funding to Mozambique 45 million, the Mozambican Ministry of Foreign Affairs and Cooperation (MNEC) said on Tuesday. The aid is in the form of non-reimbursable support and is part of the resources allocated by the EU to the country through the European Development Fund (EDF) for the Bilateral Cooperation Programme in the period, it added. The funding will be channelled through four funding lines. The figure is earmarked for the preparation of projects and institutional support to the energy sector and the programme to support public finance management. A project to support mitigation and adaptation to climate change will also benefit, at a time when Mozambique has been affected by extreme events such as droughts and floods. Part of the money will also be used to boost the second phase of the programme to support non-state bodies in civil society. The EU is part of a group of donors that cancelled direct support for the Mozambican state budget after US$2 billion in hidden debts were discovered in However, the EU continues to provide support to specific sectors. (Lusa) III. SECTORS MINERAL RESOURCES Mozambique - Parliament prepares more advantageous extractive industry law The chairman of the Committee on Constitutional Affairs, Human Rights and Legality of the Assembly of the Republic of Mozambique said recently that the body would approve a law obliging the extractive industry to provide more benefits to the country Speaking to the media at a conference on The challenges of governance of the extractive sector in Mozambique, promoted by Civic Coalition on the Extractive Industry, Edson Macuácuá said that the Assembly of the Republic would work for a more advantageous law for Mozambique in the exploitation of natural resources. The law would allow greater participation and linkage between the Mozambican private sector and the multinationals involved in the exploitation of natural resources. Aida Salomão, the executive director of the Centro Terra Viva (CTV), a Mozambican civil society organisation, said that state institutions should be better prepared to exercise greater control and regulation of extractive activity to ensure more benefits for the country and that the state must exercise effective control over the exploitation of natural resources, equipping itself with the capacity to evaluate existing resources.. The CTV executive director urged companies involved in the extractive sector to commit to generating greater gains for communities living in the areas in which they operate. (Lusa) MIREME launches environmental and social plan for gas and mining sector Mozambique The Ministry of Mineral Resources and Energy (MIREME) recently launched in Maputo its Action Plan for the Implementation of Strategic Environmental and Social Assessment for the Mining and Natural Gas Sector [Plano de Acção de Implementação da Avaliação Ambiental e Social Estratégica para os Sectores de Minas e Gás Natural]. According to the statement, the instrument launched in coordination with the ministries of Land, Environment and Rural Development and Gender, Child and Social Action, aims, among other purposes, to safeguard the environment and society, and implement pilot of social and corporate responsibility projects for the extractive industry. (Noticias) Anadarko seeks to raise $14bn to $15bn for Mozambique LNG projec Anadarko Petroleum is seeking to raise a record $14-billion to $15-billion from banks and export credit agencies for its huge liquefied natural gas (LNG) project in Mozambique, sources close to the matter said.fast-growing gas demand from China and Southeast Asia is reassuring export project developers sitting on huge untapped gas discoveries in Mozambique and elsewhere that the market cycle is turning after three years of low prices. The full amount would be the largest loan ever in the LNG sector.french bank Societe Generale, the financial adviser on the $20-billion Mozambique LNG project, has already received interest for a combined $12-billion in cover and direct lending from export credit agencies (ECAs) in China, South Africa, Italy and Japan, one of the sources said. The ECAs include Export-Import Bank of China, Export Credit Insurance Corporation of South Africa, Italy s Sace and Japan s Nippon Export and Investment Insurance, the source said. Societe Generale will launch a global roadshow on May 21 to test demand among commercial banks. ECAs typically provide large government-backed loans or insurance to support exports and domestic companies in other countries. Asian and Chinese ECAs in particular have provided billions of dollars in loans and cover to Africa s largest energy and infrastructure projects in recent years, paving the way for additional commercial bank financing. There s enough meat on the bones of the project in terms of supply deals to start sounding out banks, the first source said. In all, Anadarko has agreed commercial terms including volume and price for 5.1 million tonnes per annum (mtpa) of LNG supplies from Mozambique, closin g in on the 8.5 mtpa target needed to trigger its final investment decision on the project. Anadarko Petroleum spokeswoman Helen Wells confirmed the company had engaged with ECAs to negotiate the terms and conditions of project financing. The U.S. oil major aims to build from scratch a 17,000-acre liquefaction complex in Mozambique s remote north to chill gas pumped from the Golfinho/Atum fields in its Area 1 deepwater block, 16.5-kilometres (10 miles) offshore. It will produce mtpa of LNG in its initial phase, which can be expanded to 50 mtpa. (Reuters) 3

4 Mozambique: ENI and ExxonMobil to start natural gas extraction at end of 2022 The consortium led by ENI and ExxonMobil will begin the extraction and liquefaction of natural gas in the Rovuma basin in the last quarter of 2022, Mozambique s Minister of Mineral Resources and Energy said on Wednesday. Tonela pointed out that in March the first steel plate was cut for construction of the anchoring system of the floating natural gas liquefaction platform in the Coral South field of Mozambican exploration area 4. The Mozambican Minister of Mineral Resources and Energy also mentioned the other project to extract, liquefy and export natural gas that is about to start in the country, belonging to a consortium led by US company Anadarko. Tonela said that construction of a liquefaction plant, in this case, on land, in the Afungi Peninsula, is expected to begin by the end of next year. The project has a projected life of 25 years and provides for a total investment of about US$30 billion ( 25 billion), generating revenue of around US$53 billion ( 44.9 billion) for the Mozambican state, the minister said. The government expects the Anardko and ENI/ExxonMobil projects to create 5,000 jobs during the construction phase and 1,000 jobs in the operating phase. (Lusa) Mozambique and Great Lakes Africa Energy sign MOU for domestic use of Rovuma Basin natural gas reserves for power generation The Government of Mozambique has signed a Memorandum of Understanding (MoU) with Great Lakes Africa Energy (GLAE) to generate electric power using natural gas for domestic use at an estimated value of US$400 million. The agreement signed last Friday in Maputo, Mozambique with GLAE, a United Kingdom registered Pan African energy solutions provider, will involve the construction of a 250 megawatt gas fired electricity generating power plant. As part of the agreement, GLAE will develop, finance, build, own and operate the power plant to be fed with natural gas supplies from Mozambique s Rovuma Basin. The MoU agreement was signed by Mozambique s Minister for Mineral Resources and Energy, Dr. Max Elias Tonela, and GLAE Director, Mr. Michael Kearns. The agreement follows the result of Mozambique s Rovuma Basin domestic gas tender, the results of which were announced in January Mozambique, which has vast offshore gas resources, has decided to use some portion of the extracted gas for domestic power projects, with an aim of achieving a sustainable economic growth, including domestic energy production. The power plant in Northern Mozambique is a key regional infrastructure project. It will accelerate the development and industrialisation of several other industrial projects, which have been shelved due to the lack of a steady power supply. At 250MW, GLAE s Northern Mozambique gas fired power plant will be one of the largest conventional sources of electricity in the country. (Kass FM Kenya) Anadarko donates 100,000 water purifiers to Cabo Delgado The multinational Anadarko has donated 100,000 units of water purifier (Certeza) to Cabo Delgado Provincial Health Directorate, as part of attempts to reduce the incidence of waterborne disease in the province. The donation, worth approximately 2 million meticais, was delivered on Tuesday, with health authorities saying it will be distributed to all of the province s 17 districts. Provincial chief doctor Magid Sabuna thanked the multinational for its gesture, saying it would help control diarrhoea and prevent the outbreak of cholera. According to health statistics, the province of Cabo Delgado registered more than 5,000 cases of diarrhoea in the first four months of this year. The donation, worth approximately 2 million meticais, was delivered on Tuesday, with health authorities saying it will be distributed to all of the province s 17 districts. Provincial chief doctor Magid Sabuna thanked the multinational for its gesture, saying it would help control diarrhoea and prevent the outbreak of cholera. According to health statistics, the province of Cabo Delgado registered more than 5,000 cases of diarrhoea in the first four months of this year. (Club of Mozambique/ O Pais) Nyusi inaugurates gas terminal in Beira AIM report Mozambican President Filipe Nyusi inaugurated an oceanic terminal for domestic gas (butane or LPG) in the central port of Beira. The terminal has the capacity to fill 5,000 bottles of gas and 12 trucks a day. It will supply cooking gas to the central and northern provinces of Mozambique and to neighbouring countries. The terminal is the initiative of the publicly-owned fuel company Petromoc, and cost 38 million US dollars. 31 million dollars was financed by the Export-Import Bank of India, while the remaining seven million came from Petromoc s own funds. According to the chairperson of Petromoc, Fernando Uache, the terminal contains three reservoirs, each of which can hold 1,000 tonnes of gas. The operational costs of importing and distributing gas will now be greatly reduced, he said. Speaking at the inauguration ceremony, Nyusi said the consumption of domestic gas rose to 34,000 tonnes in He stressed the importance of gas in replacing firewood and charcoal as a domestic fuel, and thus reducing the pressure on Mozambique s forests and that one of the challenges facing the government is to install a refinery that will serve, not only Mozambique, but the southern African region, and will improve efficiency in importing, storing and consuming petroleum products. This, he said, would requires the collaboration of the Mozambican business class, which he regarded as a privileged partner in sustainable development (Aim/ Miramar) Mozambique Railways resume coal transport from South Africa after 20 year hiatus Mozambique Railways (CFM) will resume transporting coal from South Africa to the port of Matola after a 20-year interruption, a CFM source has said. Coal transport from South Africa to Matola Port using CFM locomotives was halted in 1998 because of lack of resources, CFM spokesman Adélio Dias explained. Over the last two decades, operations were conducted by South African operator Transnet Rail Freight. With the resumption of CFM services this Friday, the company predicts that the number of trains carrying coal to the ports of Maputo and Matola will increase from four to seven per day, carrying about 21,000 tons of coal per day on the Ressano Garcia line connecting Mozambique and South Africa. Rehabilitation of the 88-kilometre line is under way to ensure it can carry the increased traffic. Two bridges are to be rebuilt and sleepers replaced along a 24-kilometre section. The company s forecasts that CFM will transport about seven million tons along the Ressano Garcia line annually, increasing revenues. (Lusa) 4

5 AGRICULTURE AND FISHERY Zambézia sells more than 17,000 tons of cashew nuts The National Cashew Institute in the province of Zambézia sold 17,056 tonnes of cashew nuts in the first quarter of this year, against its planned 16,800 tonnes, the institute s provincial delegate in Quelimane, Ilídio Bacar, has revealed. The main reason for the decrease was the early withdrawal of major marketing players, combined with the rainfall at the beginning of last December, the peak period for ripening. The quality of cashews is impaired by early rain, with negative implications for price. Access also become problematic, discouraging buyers. In the last three growing seasons, the price has been attractive, so that even those who do not have cashews buy chestnuts where there is a large harvest. The average price of cashew nuts this year is meticais (just over one US dollar) a kilogram, against meticais in the 2016/17 season. (Radio Moçambique) China supports Mozambican agricultural campaign with US$10 million donation China has donated US$10 million to Mozambique to support the current agricultural campaign, the Chinese ambassador to Mozambique said in Boane, near Maputo, during a visit by the chairman of the Standing Committee of the 13th National People s Congress of China, Li Zhanshu, to the Mozambique-China Centre for Research and Transfer of Agricultural Technology. Ambassador Su Jian highlighted agriculture and food security as priority sectors of China s support to Mozambique and recalled that five major Chinese companies are present in the country, notably in agriculture, food security, infrastructure and access roads. Su also said that Chinese companies have made a contribution to developing Mozambique, thereby helping the Mozambican economy to become sustainable.the ambassador also said that the visit of the chairman of the Standing Committee of the 13th National People s Congress of China is of paramount importance, happening at a time when bilateral cooperation has been cemented at the highest level. The first deputy speaker of the Mozambican parliament, António Amélia, stressed that China has already financed training for more than 50 parliamentary officials in areas such as parliamentary management and information and communication technologies.(macauhub) Thailand wants 100,000 hectares in Mozambique to grow trees for paper production The Permanent Secretary of the Thai Ministry of Commerce this morning visited the headquarters of the Confederation of Economic Associations of Mozambique to review the state of trade between the two countries and discuss likely future partnerships between Mozambican and Thai businessmen. At present, a Thai company says it is interested in growing trees in Mozambique. Speaking moments after the meeting with the CTA s board of directors, the representative of the Thai Ministry of said the project would be one of the largest producers in the world and that in addition to the US$200 billion that her country spent on importing products from Mozambique, it is also intended to boost business through the purchase of gas to be extracted from the Rovuma Basin from (O Pais) ENH and Exxon Mobil support women farmers in Manhiça The absence of water, farming equipment and a pump are among the obstacles facing women farmers in Paquete, in Maputo province s Manhiça district. But these barriers are a thing of the past now that the small-holders have been offered state-of-the-art equipment by the National Hydrocarbons Company (ENH) and Exxon Mobil. The ceremonial delivery of these materials was directed by Minister of Gender, Child and Social Action, Cidália Chaúque, who, before the handover, visited the fields and explained how the Association of Women Farmers in the 26-hectare Block 4 works. The association, made up of 69 members including single mothers, widows and other women having agriculture as the main source of income, says its members will do everything to ensure that the gift is a lasting one. Cidália Chaúque thanked the two oil companies for their gesture, saying that it was another way to increase the incomes and consequently the food security of these families. Exxon Mobil, one of the initiative partners, said that its participation was the result of the company needing to embrace social responsibility projects, and that it felt a particular connection to it because it involved women and children. (O País) Restore state authority in shipping Mozambican Transport Minister Carlos Mesquita recently challenged the country s maritime administrations to improve their performance, in a drive to restore the Mozambican state s authority in shipping.mesquita launched this challenge after he had sworn into office Eugenio Muianga, as the new General Director of the National Maritime Institute (INAMAR).The Minister stressed the need to improve the performance of INAMAR as the national maritime authority, in questions of maritime safety, and ensuring the safe transport of people and goods at sea and in Mozambique s inland waters. Muianga replaces Carlos Isidoro, who had headed INAMAR since March He has held several senior positions in the Foreign and Transport Ministries, including deputy director of the National Maritime Administration and Inspection Service (SAFMAR), the body that preceded INAMAR, and the director for maritime affairs in the National Institute for Sea and Borders (IMAF), an institution subordinate to the Foreign Ministry. (Club of Mozambique) INFRASTRUCTURE AND ENERGY Mozambique: Repairing north-south highway a top priority Prime Minister Carlos Agostinho do Rosario recently guaranteed that repair work on the most critically damaged parts of the main north-south highway (EN1) will begin in the second half of this year. He was speaking in the Mozambican parliament, the Assembly of the Republic, at the end of a two day question and answer session between the deputies and the government, during which opposition deputies had repeatedly complained at the state of EN1.The stretches most in need of repair are from Pambara in Inhambane 5

6 province to the Save river, which marks the conventional boundary between southern and central Mozambique, and from the Inchope crossroads, in Manica province, to Caia, on the south bank of the Zambezi. To face the requirements posed by road construction and repair, the Government is prioritising approaches such as the mobilisation of financial resources on more accessible terms and conditions, and public-private partnerships, through which it can stimulate the private sector to invest in public infrastructures. Turning to the health sector, Rosario said a further government priority is to conclude the construction and rehabilitation of health units across the country.(aim) World Bank approves US$150 million grant for feeder roads in Mozambique The Wold Bank recently approved a grant to Mozambique of 150 million US dollars for the government s Integrated Feeder Road Development project. According to a World Bank press release, the money will be used to improve road access in selected rural areas in Nampula and Zambezia, the two most populous provinces in the country. The release points out that, although agriculture employs about 80 percent of the total work force and generates about 30 percent of the Mozambican GDP, its productivity remains low and is constrained by many factors, including limited rural access. The average income from farming in Nampula and Zambezia is three times lower than in the rest of the country due to poor rural access, among other factors, claims the release, adding that across the country about 6.5 million rural dwellers do not have access to a road in good or fair condition. The project will target 10 districts in Zambezia and Nampula, with high agricultural potential, and a total population of around 2.2 million, of whom about 1.5 million live below the poverty line. The money will not all be spent on tertiary roads. Some will go towards rehabilitating heavily used primary roads, notably the 70 kilometre stretch between the city of Quelimane, capital of Zambezia, and the district of Namacurra. Hence some of the grant will go towards government agencies dealing with road safety, including the National Overland Transport Institute (INATTER) and the traffic police, as well as the Mozambican relief agency, the National Disaster Management Institute (INGC). The grant comes from the International Development Association (IDA), the member of the World Bank group which provides grants and soft loans for programmes in the world s poorest countries.(aim) Mozambique - Zambézia: Families make way for Port of Macuse Seventy-three families living in the Supinho region of Quelimane district in Zambézia province are in the process of being transferred to make way for the construction of the Macuse Deep Water Port, which will be used to export coal from Tete. In order to safeguard against potential future conflicts involving stakeholders, the resettlement process of these families is being preceded by four public consultation sessions. The first two public consultation sessions involving the local community, the company and the provincial government of Zambézia were held in the Supinho region, where the infrastructure is to be built. Apart from the 73 families, 10 hectares of fields belonging to the Supinho communities will be affected by the project. A concession agreement for the implementation of the project has been signed between the Ministry of Transport and Communications and the Thai Mozambique Logistic company, and the laying of the first stone took place last year. In addition to the Port of Macuse, the project includes the construction of a 600- kilometre railway line linking the port to the coal-mining area of Chitima in Tete province. The new railway line will carry 25 million tonnes per year from 2022 to 2028, and, in the second phase, 40 million tonnes per year from 2029 on. The construction of the port will take place in several stages, including the preparation and levelling of the construction site, the establishment of offices and temporary road works, building the berth itself, laying the foundations for and installing goods handling equipment and dredging the access channel. Once completed, the port will stimulate national and foreign entrepreneurs to explore the Zambezia Development Corridor (CODIZA), linking Quelimane-Nicoadala-Namacurra-Mocuba-Milange and hinterland countries. The Mocuba-Milange road, more than 200 kilometres long, is in the final phase of being asphalted, raising expectations of development in Zambézia. (Noticias) Electricity of Mozambique is negotiating tariff readjustment with the government The public company Mozambique Electricity (EDM) announced recently in Maputo that it was negotiating readjustment of the energy tariffs with the government. According to EDM it is necessary to update the tariffs, otherwise the company will be offering power at a rate lower than the purchase price. The statements came after the Mozambican civil society organisation, the Public Integrity Center (CIP), announced that the Mozambican government and Mozambique Electricity should not stipulate energy prices, competence to do so lying with the Energy Regulatory Authority (ARENE). The CIP said, recently, in a statement released that, according to the law that created the ARENE, it is up to this entity to fix and approve tariffs and prices for energy, gas and petroleum products. Any adjustment made in any other way, in the short or medium term, will be illegal, the CIP says, pointing out that the law creating the energy sector regulator is already in force. According to NGO calculations presented in September the cost of electricity has already increased over 200 percent for large consumers and about 120 percent for domestic consumers since the last general elections, in (Lusa) Mozambique, Zambia and Zimbabwe seek to improve hydro power generation in the Zambezi basin The Intergovernmental Plan on Climate Change (IPCC), a body created by the United Nations Environment Program (UNEP) and the World Meteorological Organisation (WMO) to study the problem of climate change, classifies the Zambezi basin as having suffered the worst effects of climate change rising temperatures and reduced rainfall among the 11 largest hydrological basins in Africa. The hydrological year is considered to have been the driest in the last 35 years in Southern Africa, leading to a reduction in water storage at the Kariba dam in Zimbabwe, Kafue in Zambia and Cahora Bassa in Mozambique: 12.7 percent, 42 percent and 15 percent, respectively. Water managers and operators in the Zambezi basin, concerned about this scenario, are meeting in Maputo to identify the solutions. According to the executive manager of the Cahora Bassa Hydroelectric (HCB), Nelson Beete, last year there was an evolution in water storage capacity, but the scenario worsened this year as the level of precipitation in January and February was low. The engineer said there was good cooperation, exchange of information and coordination with Zambia and Zimbabwe in the equitable use of water to generate electricity. Beete said that the financial health of the Cahora Bassa 6

7 hydroelectric power plant was not affected and that decisions coming out of the meeting should ensure that future generations did not experience water shortage. (Club of Mozambique) TRADE/RETAIL Mozambique anticipates landmark Chinese-built suspension bridge set for launch in June A twin-tower suspension bridge with a main span of 680 meters hanging over Maputo Bay is decorating the skyline of southern African nation Mozambique s capital city Maputo, becoming a new landmark project that will ease the city s cross-sea traffic. The project, costing million U.S. dollars with 95 percent of the funding from China, is being built by the China Road and Bridge Corporation (CRBC) and set for official launch on June 25, Mozambique s Independence Day. The Project manager at CRBC Cao Changwei has been in charge of the project since construction commenced in He said the bridge will cut travel time between Maputo and the under-developed Katembe urban district to about ten minutes compared to up to three hours by ferry or driving around the bay by circumventing and that the whole bridge project also involves the construction of link roads totaling 187 km that will link southward to the border area with South Africa. According to the CRBC, the local government is planning to develop the Katembe district through various ways, including land development, tourism, commercial services, logistics and modern industries. Cao revealed that the project so far has created over 20,000 jobs, both full time and part time, for the locals. Currently, the project hires 3,788 local people compared to a Chinese staff team of 467. Meanwhile, CRBC also trained over 5,000 locals for various job posts required for the project, including welding, steel bending and machinery operation. (Xinhua) FINANCE Mozambican currency stable against the Euro, depreciates slightly against US dollar The metical remained stable against the Euro and depreciated slightly against the US dollar last week, according to the central bank s daily average exchange rates. (The US dollar is used as the calculation basis for the exchange rates of other currencies in Mozambique.) Last week, the dollar was bought in Mozambique at an average of meticais, 20 metical cents more than the previous week. Sale took place at meticais, 29 metical cents more. The daily average purchase price of the US dollar varied between and meticais, while the asking price ranged between and meticais. As for the Euro, it was bought in Mozambique last week for an average meticais, unchanged from the previous week. Sale took place at meticais Euro, five metical cents more than last week. The daily average purchase price of the Euro varied between and meticais, while the asking price ranged between and meticais. (Lusa) Mozambique: Tax Authority and Central Bank concerned about money laundering Money laundering, ignoring the exchange rate law and financial institution auditing are among matters of concern to the Central Bank and the Mozambique Tax Authority (AT). In order to mitigate these phenomena, the two institutions recently signed a memorandum of understanding and started a training course for AT officials in Maputo. At the two-day meeting, topics related to active and passive operations were delivered: Main Products, Direct and Indirect Credit, Contraventions, Risk Mitigation Techniques, Supervision and Regulation, among others. In his view, the Tax Authority and the central bank have the same aim, which necessarily entailed fiscal and financial stability, and it was therefore necessary to combine synergies so as to combat those evading the tax authorities and exchange rate control. Training is being provided by officials of the Bank of Mozambique, the regulator of monetary and exchange rate policies in the country. (Noticias) Mozambique: Central Bank publishes sanctions against Moza directors The Bank of Mozambique on Monday published the list of eight former directors of Moza Bank, once the fourth largest commercial bank in the country, whom it has fined for their alleged roles in serious irregularities leading up to the bank s near collapse in 2016.The crisis in Moza Bank, became public knowledge on 30 September 2016, when a liquidity crisis led the Bank of Mozambique to step in and sack the entire board of directors, imposing a provisional board, headed by one of the country s most experienced bankers, Joao Figueiredo. The central bank injected large amounts to keep Moza Bank afloat while it was restructured. As a result, Kuhanya, the company that manages the central bank s pension fund, became the majority shareholder. The central bank said the former directors were implicated in the deterioration of the financial and prudential position of the institution from December 2015 until the intervention by the Bank of Mozambique in September 2016.The penalties imposed include fines ranging from 200,000 to 500,000 meticais (3,300 to 8,250 US dollars, at current exchange rates), and a ban on holding office in any bank for period of between two and three years. These penalties cover all eight members of the board who were in office on 30 September While the release from the Bank of Mozambique gives no details about the alleged irregularities, the Savana piece said the inspection by the central bank, found that Moza Bank did not comply with its duty to draw up policies and procedures for managing operational risks, had not identified and measured those risks, and had not approved policies to guide the management of liquidity. Among many other alleged irregularities, there were also no contingency plans to deal with situations of shortages of liquidity, and no policy to manage conflicts of interest. The former Moza directors had 15 days to appeal against the penalties through the courts, but must pay the fines first (although the money will be returned if the appeals are successful). (AIM/Savana) 7

8 TOURISM Mozambique: Regulations on competitive air transport approved The Mozambican government recently approved regulations on competition in air transport, in order to establish good competitive practices in the civil aviation market. Speaking to reporters at the end of the weekly meeting of the Council of Ministers (Cabinet), the government spokesperson and Deputy Education Minister Armindo Ngunga, said the regulation will cover any agreement that could have an anti-competitive effect on the market, and is applicable to all economic services in the sector. After many years of an effective monopoly on the main domestic routes by Mozambique Airlines (LAM), last year the government liberalised the domestic market. LAM now faces competition from the UK-based company Fastjet, which is flying on some of the main domestic routes, including daily flights between Maputo and Beira and Nampula. Ethiopian Airlines is also expected to operate on the Mozambican domestic routes in the near future. The Council of Ministers also approved a report on the execution of the 2018 State Budget in the first quarter of the year. This showed that public expenditure between January and March was billion meticais (about 905 million US dollars), which is only 17.9 per cent of the total budget for the year of billion meticais. In the same period, the state mobilised revenue of 58.8 billion meticais, which is 18.4 per cent of the annual target of billion meticais. (AIM) More domestic flights between Maputo, Beira and Tete Domestic flights between Maputo and the city of Beira, and Tete, are to be more frequent, one of the domestic flight operators in Mozambique announced today. The statement notes that the airline started operating in Mozambique in November last year and has since been gaining the confidence of travellers with an increasing volume of passengers and exemplary punctuality 90 percent overall in the first quarter, according to the communique. The more-than two thousand kilometre extent of the country and the poor road network mean that air transport is vital, but the operating difficulties of the state-owned company, LAM, have prompted complaints, even from the president of the country himself. In such a scenario did Fastjet in November, 2017, become the first foreign company to make domestic flights in Mozambique. (Lusa) IV. TENDERS Information about tenders can be found here: V. LEGAL ISSUES - VI. UPCOMING EVENTS AND INTERESTING LINKS MOZAMREAL: MOZAMBIKE S PROPERTY FORUM, 20 June 2018, Radisson Blue Hotel, Maputo, Mozambique. The German Embassy Maputo is on Facebook follow us! Alle Angaben ohne Gewähr. Wenn Sie diesen Newsletter nicht mehr erhalten möchten, schicken Sie bitte eine Mail mit der Betreffzeile Wirtschaftsnews abbestellen an wi-s@mapu.diplo.de 8