Business News Mozambique

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1 Gabinete para o Fomento Económico Moçambique-Alemanha Southern African-German Chamber of Commerce and Industry Business News Mozambique I. GENERAL INFORMATION Mozambican Beira Peace Summit delivered resolution on Forgiveness and Reconciliation The first National Summit on Peace and Reconciliation, which took place in Beira from 30 th to 31 st of January 2017, has produced a resolution with a commitment to reconciliation and effective forgiveness among Mozambicans. The Deputy Minister of Justice, Constitutional and Religious Affairs, Joaquim Veríssimo, made a statement to this effect at the opening of the event, adding that each participant should be a daily bearer of peace and tireless disseminator of the results and recommendations of the summit in their families and communities as a real contribution to the exercise of citizenship. The produced resolution which proposes concrete solutions and condemns the high rates of political violence and intolerance in the country was signed by the main stakeholders and participants of the event. According to Artemisa Franco, coordinator of the Platform for Peace and National Reconciliation at COREM, the general objectives of the event were to reinforce the spirit of peace, national reconciliation and unity of the nation, to pray for the divine and spiritual healing of souls, to identify challenges and inspire the spirit of cohesion, collaboration and ways of improving dialogue and broadening ongoing peace efforts, and to develop a collective understanding of the future of Mozambique free of political-military conflicts, and with values based on respect, social justice and human rights. Franco said that it was hoped that the summit would also serve to boost an open national dialogue between various segments of society, especially among the main political contenders, namely the government and Renamo. The governor of Sofala, Helena Taipo, the German ambassador, Dr. Detlev Wolter, and the representative of the president of the Beira Municipal Council, José Manuel, also spoke at the opening of the summit. Helena Taipo highlighted that Sofala was chosen to host the summit as the province most affected by the conflict and the region where the leader of Renamo is based. In turn, Ambassador Dr. Wolter encouraged the Government of Mozambique and Renamo to continue to do everything possible to achieve peace, that the Mozambicans so deserve. German government supported the organization of the Summit with a funding of 110,000. The summit ended with the presentation of resolution on Forgiveness and Reconciliation (Notícias / O País / Press release from the German Embassy). Peace talks consensus document going to parliament soon Mozambican president Filipe Nyusi said recently that the consensus document emerging from the peace talks with Renamo, the country s largest opposition party, would be submitted to the Assembly of the Republic soon. Filipe Nyusi was speaking during a New Year reception for the diplomatic corps at the Ponta Vermelha palace in Maputo. The administrative decentralization of the country and the integration of Renamo men into the armed forces are the main points on the negotiating agenda. In his speech, the Mozambican head of state said that the decentralization package would be accompanied by the restructuring of the Defense and Security Forces, as a way of guaranteeing the integration of members of the Mozambican National Resistance (Renamo). In addition to the peace talks, Filipe Nyusi highlighted in his speech the complexity of 2017 for Mozambique, highlighting among the problems the suspension of donor support to the State Budget due to the discovery of loans contracted in secret by three public companies in 2012 and 2013, worth more than US$2 billion. President Nyusi said that his executive was aware of the urgency of clarifying the matter of the so-called hidden debts (Lusa). PGR files complaint with Administrative Court for accountability of public officials, companies involved in hidden debts Mozambique s Attorney General s Office (PGR) announced recently that it would seek the financial accountability of public officials and state-owned companies that contracted US$2 billion in debt between 2013 and In a statement, the PGR said that on January 26, the Public Prosecution Service submitted a complaint to the Administrative Court with a view to the financial accountability of public officials and state-owned companies involved in the signing and management of contracts of financing and goods and services supply. The decision is based on the preparatory documents of proceeding No. 1/PGR/2015 of 12 August on the public debt contracted by Proindicus, Ematum (Empresa Moçambicana de Atum) and MAM (Mozambique Asset Management) through external financing with state guarantees. The PGR announcement notes that a number of facts that might involve financial infractions have been found throughout the investigation, which is part of Kroll s audit report, as well as the report of the 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 2 Parliamentary Inquiry Commission to investigate the debt situation. The Public Prosecutor s Office states that it continues to collect evidence at national and international levels, with the assistance of foreign countries to which requests for mutual legal assistance have been addressed in the framework of international cooperation, despite the occurrence of certain delays in the satisfaction of the requests jeopardizing a speedy outcome of the process. Mozambican analysts say that the recently announcement by the Attorney General s Office (PGR) on the investigation into Mozambique s hidden debts does not add anything new. The respected Mozambican economist Roberto Tibana said that it was not a concrete breakthrough, it was a strategy to save time, considering it an extremely incompetent attempt to show service, which does not exist. Fernando Lima, political commentator and chairman of the media group Mediacoop, called the announcement something to entertain public opinion, because in perhaps the most important thing [the criminal offences], nothing happened (Club of Mozambique / Lusa). Presidents of Mozambique and Zimbabwe want to strengthen economic cooperation The presidents of Mozambique, Filipe Nyusi, and Zimbabwe, Emmerson Mnangagwa, proposed taking a bilateral economic cooperation to a new level in Maputo recently, pointing out that relations between the two states should generate results beneficial to their populations. Presidents Nyusi and Mnangagwa advocated a step-change in bilateral cooperation during the Zimbabwean head of state s working visit to Mozambique, his first taking office following the removal of Robert Mugabe in November. Investment in roads, ports and railways were taking place to better allow Mozambique s neighbor to access the sea, he continued. Filipe Nyusi also noted that Mozambique wanted to remain a secure and predictable source of energy for Zimbabwe s economy by providing a reliable electricity supply. For his part, Emerson Mnangagwa stressed that the two countries were natural allies because of their geographical proximity and historical ties, demonstrated by the fact that figures in Zimbabwe s independence struggle, including the current head of state and his predecessor, Robert Mugabe, had lived in Mozambique. Emmerson Mnangagwa argued that cooperation should generate benefits for both countries, urging governments to commit to the implementation of bilateral agreements. Mnangagwa s visit to Mozambique forms part of a Southern African Development Community (SADC) initiative addressing the political situation in Zimbabwe, following the removal of Robert Mugabe from the presidency by military intervention last year (Lusa). II. ECONOMIC SITUATION World Bank lowers Mozambique s 2018 growth forecast to 3.2% The World Bank has made a sharp downward revision of Mozambique s economic growth forecast this year to 3.2 percent of GDP, a cut of 2.9 percentage points from June s forecast. World Bank experts write in the Global Economic Prospects report that the costs of servicing debt remained unsustainable in Mozambique and Chad, stressing the need for governments in this and other lowincome countries to continue their efforts to mobilize domestic revenue and rationalize public spending. In the document, released recently in Washington, experts say that Mozambique grew 3.1 percent in 2017, and will grow 3.2 percent this year and 3.4 percent in the next two years, representing a downward revision of 1.7 points to 2017 and 3.3 percentage points to the 2020 growth forecast made in June. The report makes several references to Mozambique, highlighting the high public debt and the strengthening of the metical due to the increase in exports. With regard to the African continent, the World Bank says that a modest recovery is underway, supported by an improvement in commodity prices, namely oil. The World Bank predicts growth in 2017 has reached 2.4 percent, after a sharp slowdown to 1.3 percent in 2016, and for this year [2018] the estimate of economic expansion points to 3.2 percent. Growth, however, should not mean slowing the pace of the reforms the World Bank says are needed to tap the potential of the African continent. Globally, the World Bank revised its growth estimates upwards to 3.1 percent in Last year it had forecast a 2.8 percent economic expansion for this year. The upward revision from the previously forecast 2.8 percent growth for 2018 is driven by higher-than-expected economic activity in 2017, which grew 3 percent against the 2.7 percent anticipated six months ago, according to the six-monthly Global Economic Prospects report released in Washington (Lusa). Bank of Mozambique cuts prime rate to 25.75% The unitary benchmark rate for the Mozambican financial market will decline from 27 percent to percent this February, the central bank has said in a statement. The 1.25 percent drop in the prime rate is the largest since it came into effect in June 2017, and comes at the suggestions of business people and international partners, in order to boost the economy. The creation of a single Mozambican prime rate was agreed in May 2017 between the central bank and the Mozambican Association of Banks to eliminate the proliferation of benchmark rates in the cost of money. The aim is for all credit operations to be based on a single rate, plus a spread, which will be added to or subtracted from the prime rate according to risk analysis, depending on the individual contract and bank. Since it was established at percent, the benchmark rate has fallen by 2 percent (Lusa). Mozambique Tax Authority: 2017 target exceeded by more than 16 billion meticais The Tax Authority of Mozambique (AT) collected gross revenue of more than 202 billion meticais last year [more than US$3.4 billion at current exchange rates], percent of its pre-defined target. The amount collected exceeds the 2017 target set by the state budget law by around 16 billion meticais [around US$305.5 million at current exchange rates]. The 202,253, thousand meticais revenue does not include capital gains tax of US$352.7 million resulting from the sale of shares of the Italian multinational ENI in Area 4 of the Rovuma Basin in Cabo Delgado to the North American oil and gas company Exxon Mobil. In a press release, the AT justifies the positive performance with the political stability that the country is experiencing, saying it had allowed the resumption of economic activities and the normalization of the business environment for the private sector. Another contributing factor was the increase in the price of raw materials in the international market, which stimulated the recovery and increased

3 3 production in the extractive industry. Good performance in sectors making significant contributions to the national economy and fiscus, such as agriculture and forestry, transport, information and communications, trade and repair services and fisheries, was also decisive for the increase in state revenue. Measures adopted by the Tax Authority in relation to the analysis of the companies accounts procedures relating to previous periods, raising awareness of taxpayers in order to comply with their tax obligations and carrying out auditing and supervision campaigns, had also contributed. Better supervision of the marketing of products covered by the sealing process was another factor in achieving the goals, the AT maintains, explaining that measures improved revenue from excise duty (Notícias). Debt crisis has resulted in a contraction in Mozambique s real economy The debt crisis is the main feature in any analysis of Mozambique, with the African Development Bank emphasizing the enormous effects of the country s financial default. Exports of coal and agricultural production are to constitute the mainstay of a projected growth of 5.3 percent this year, but the debt crisis has resulted in a contraction of the real economy, says the African Development Bank (AfDB). The AfDB stresses the enormous impact of the financial default that the country incurred in The AfDB analysts write that in the financial crisis following the 2016 disclosure of secret debts worth nearly 10 percent of GDP, the debt-to-gdp ratio reached an estimated 125 percent at the end of 2016, while the metical registered 40 percent devaluation against the U.S. dollar and inflation suffered a 10-fold increase to 19.8 percent. The analysts also write that public arrears to the private sector are estimated to exceed $500 million (4 percent of GDP). The private sector is further strangled by high credit rates (on average 35 percent for a oneyear commercial loan) and depressed private consumption. The result is a contracting real economy, except for the primary sector and some services. The AfDB notes that Mozambique has yet to recover from the economic downturn that started in The combination of declining prices for traditional export commodities, persistent El Niño drought effects, internal military confrontation and large decreases in foreign direct investment (FDI) nearly halved the past decade s 7 percent GDP historical average growth to 3.8 percent in This drop was compounded by the 2016 governance crisis, which reduced external financing and donor support. In the African continent as a whole, the AfDB forecasts growth of 4.1 percent, noting that recovery has been faster in non-resource dependent countries and advocating debt development financing (Club of Mozambique). Russia s VTB bank wants Mozambique to negotiate debt restructuring The president of the Russian VTB bank said recently that he wanted to meet the president of Mozambique to convince him to negotiate the repayment of the African country s debt, while at the same time asserting that there were no irregularities in the hidden loans. In 2016, Mozambique acknowledged that about US$1.4 billion of government-guaranteed loans were not accounted for in public accounts or reported to donors and international institutions providing financial aid to the country. Since then, the country has stopped meeting its financial obligations not only on sovereign debt, but also on loans contracted through VTB, among others. It went into default, and saw its rating downgraded by rating agencies and budget support suspended by donors and by the International Monetary Fund (IMF). In the interview, Kostin said there have been several audits by UK financial authorities, and no evidence of irregularities has been found by VTB, the largest Russian bank. Last summer, VTB criticized the findings of the Kroll consultancy audit report on Mozambique s hidden debt, concluding that US$200 million had been paid to arrange lending to public enterprises. Despite the controversy in Mozambique, and with the retreat from European operations because of sanctions, VTB wanted to expand operations in Africa, Kostin said, and pointed to Angola as an example (STV / Lusa). III. SECTORS MINERAL RESOURCES LNG in Rovuma basin: Anadarko project in final evaluation stages The president of the National Petroleum Institute (INP), Carlos Zacarias, says that the government is still evaluating the Rovuma basin natural gas project development plan presented by the American company Anadarko. The approval of this plan, which is expected to happen in the first half of this year, is considered crucial to the final investment decision of a project estimated to be worth approximately US$25 billion. Recently Zacarias explained that the intention was to evaluate whether the plan was in compliance with the legislation in force and best industry practice. Unlike the Eni project designed to produce just 3.3 million tonnes, the Anadarko plan is expected to generate 12 million tonnes of liquefied natural gas, and requires a correspondingly larger investment. Zacarias explained that to secure financing for the project it was first necessary to close long-term contracts, which is what the US multinational is doing. As a result of this work, Anadarko already has a buyer PTT of Thailand, one of the companies in Area 1 and was in advanced discussions with buyers from Japan and other Asian countries. Zacarias also spoke about the Eni project and recalled that this operator had already secured the necessary financing for the Coral-Sul gas liquefaction project. Zacarias said that the government had been giving all necessary support so that Area 4 as well Area 1 projects were implemented according to schedule (Notícias). Anadarko discussing Mozambique LNG supply with Chinese buyers Anadarko Petroleum Corp. is in talks to sate China s increasing appetite for liquefied natural gas from its planned development in Mozambique. It s in discussions with a variety of Chinese counterparts including national oil companies and emerging independent LNG buyers, Anadarko said. Increasing consumption makes China a long-term strategic market for the Anadarko-led Mozambique

4 4 LNG project. China s record-breaking gas demand could help spur investment decisions on projects to export LNG from East Africa, according to Emma Richards, a senior oil and gas analyst for BMI Research. LNG prices were buoyed as Chinese imports rose almost 50 percent in the first 10 months of 2017, making it the world s third-largest buyer after Japan and South Korea, according to data compiled by Bloomberg New Energy Finance. While Eni SpA has signed off on its $7 billion floating Coral project in Mozambique, Anadarko needs more sales and purchase agreements to justify a final investment decision on its own development in the north of the country. Anadarko has already lined up SPAs for about 2.6 million tons a year of the more than 8 million tons it s targeting. Richards of BMI said that Mozambique s favorable central geographic location means the country is well positioned to meet the needs of customers in the Atlantic market and Asia-Pacific markets, in particular tapping into the growing demand for energy in China. Onshore facilities to chill the fuel from discoveries off northern Mozambique were initially targeted to reach production this year. BP Plc signed a 20-year contract in 2016 to buy all the LNG from Eni s Coral project. Last year, Exxon Mobil Corp. bought 25 percent of another of the Italian explorer s developments in the African nation and will lead the construction and operation of its onshore facilities. A decision over Tanzania s proposed onshore LNG project is likely years away. Operators such as Statoil ASA have highlighted the country s need for the completion of laws related to the sector (Bloomberg). Mozambique Norwegian Statoil abandons natural gas exploration talks in Area A5-A After more than two years of talks with the Mozambican government, Norwegian oil company Statoil has decided to abandon negotiations over the exploration and production of natural gas in Mozambique. A company spokesman said that with the outcome they achieved after more than two years of negotiations, and the current business environment, Statoil has made the decision to disengage from the negotiations. According to their website, the Norwegian oil company has failed to reach an agreement with the Mozambican government on the conditions for exploration and production of natural gas in t in Area A5-A, and its interests will be passed on to Italy s Eni (Lusa). Mozambique ratifies US$28 million donation to strengthen mining and gas sectors The Mozambican government has ratified a US$28 million Mining and Gas Technical Assistance Project donation from the World Bank s International Development Association (IDA). The Council of Ministers spokeswoman Ana Comoana said that the money will help improve mining cadaster systems, surveys, interpretation and production of geographic data in areas with potential. The resolution ratifying the donation agreement was approved at the cabinet meeting recently. Launched in 2013, the Mining and Gas Technical Assistance Project aims to strengthen the governance of key institutions to manage the mining and hydrocarbon sectors in Mozambique. The actions extend until 2021, with a total value of US$58.1 million. Technical and institutional capacity building is also planned in the areas of mining and gas exploration. Mining production has been one of the most important engines of the Mozambican economy in recent quarters, with coal and graphite especially drawing attention. Natural gas exploration megaprojects in the Rovuma Basin are expected to start production within five years (Lusa). Mustang secures A$19.95m from US investor for Mozambique mines ASX-listed Mustang Resources has secured A$19.95-million in funding from US institutional investor Arena Investors and announced a rights issue to further advance its projects in Mozambique. Arena has agreed to invest the funding through an unsecured convertible note facility, to be drawn down in seven separate tranches, each with an 18-month term. The first A$1.9- million will be received upon signing of the convertible note deed with the convertible note to be issued under the company s existing placement capacity. The second tranche of A$3.8-million may be drawn by the company four months after the first tranche issue date, while A$2.85-million will be drawn down in each of the remaining five tranches, with three to four months minimum between them. Meanwhile, Mustang also announced on recently that it was offering its shareholders a one-for-five no renounceable rights issue to eligible shareholders on the designated record date to raise up to A$4-million at an offer price of 2.6c apiece. Mustang chairperson Ian Daymond said the funding arrangement and the proposed entitlement issue would provide the company with the assurance of substantial capital to continue the development of its Montepuez ruby project and the ability to accelerate the advancement of the high-grade Caula graphite project. Both projects are located in Mozambique (Mining Weekly). Indian task force to study feasibility of making methanol from coal at Mozambique and India The government of India has constituted a task force to study the feasibility of producing methanol from coal, and using coal gas as a replacement of natural gas in steel production. The development assumes significance as the country is aiming to achieve crude steel capacity of 300 million tonnes (MT), which will require extensive mobilization of natural resources, among others. The 15- member task force under the chairmanship of Niti Aayog member V K Saraswat has secretaries of coal and steel ministries. According to the government of India the task force is constituted to explore the feasibility of producing methanol from coal at Mozambique and India, replacement of natural gas by coal gas through gasification process in steel plants, and carbon dioxide capturing from steel plants into methanol liquid fuel. The terms of reference of task force include examining the feasibility of transporting methanol to India and convert it into olefin, paraffin and other chemicals. Asserting that the deliberation of task force will become reference point for project feasibility, the steel ministry said that the task force shall submit the report within 60 days of formation. Under the National Steel Policy, the government has set a production target of 300 MT by The government had earlier expressed hope that the steel production capacity will be much higher in the next fiscal from the present 126 MT (The Times of India). Mozambique s gas-rich north faces specter of further attacks Sporadic attacks by gunmen in northern Mozambique will probably continue but are unlikely to hurt investment in the region s sizeable gas resources, Control Risks Ltd. said, after seven people were killed in raids recently. Police have arrested more than 300

5 5 people since the first significant attack on Oct. 5 in the nearby city of Macimboa da Praia, which the government blamed on a radical Islamic sect. Police haven t said the latest attacks are linked to that group. Eni in June signed off on the construction of its $7 billion Coral South gas project off Mozambique s coast near Palma, while Anadarko has yet to make a final decision on its involvement as it seeks to lock in buyers for the bulk of its planned production first. The recent violence probably won t affect decisions, as it is unlikely the groups can carry out a sophisticated attack on gas facilities, Duggan said by phone. Worker safety is Anadarko s top priority, the company said in response to ed questions. Eni didn t immediately respond to an seeking comment. There s no indication that the companies will be targeted, said Duggan. He also said that the assailants ability to carry out any large-scale attack is doubtful and thus far they ve seen no intent from their side to do that. Duggan concluded that the main impact will likely be a heightened concern around issues such as transporting personnel (Bloomberg). AGRICULTURE AND FISHERY Mozambican farmers bemoan German Agrarian Action exit German Agrarian Action, present in Mozambique for 40 years, is to withdraw from Zambezia, leaving families that benefited from their assistance there worried about the end of the German project cycle. According to Ema Reis, head of the German Agrarian Action (Acção Agrária Alemã AAA) in Zambézia, the organisation is to leave Mozambique, where it has been present for 40 years. In the Zambezia cities of Quelimane and Nicoadala alone, 1,500 families were covered by the organisation s projects. In Namacurra, Mopeia and Luabo, in the extreme south of the province, AAA has developed projects in the areas of agriculture, livestock, commerce and savings. AAA regional director Ema Reis however leaves with a sense of fulfilment. Reis is optimistic on behalf of beneficiary groups, saying that they set off with a good knowledge base acquired through the projects. The beneficiary families say the project has significantly improved their diet. In addition to vegetables and goat meat, they have learned to produce other varieties of food, farmer Regina Chá-Verde says. Anabela Raimundo is also worried about the AAA s departure. She says that she is already missing the AAA, and that she hopes the Mozambican government can help her to continue learning. According to Reis, the AAA has helped reduce the rate of malnutrition in beneficiary families by 80 percent by teaching them how to produce, process and consume new foodstuffs (DW). Sugar production soars in Mozambique Investment over the last five years in the resuscitation of the Mozambican sugar industry, valued at about 800 million dollars, has seen production skyrocket from 90,000 to 450,000 tons a year at the present time. The sugar sector was one of those most affected by the recent armed conflict in Mozambique and is currently one of the most important to the economy as a whole, exporting an average of about 240,000 tons of sugar annually. The executive director of the Association of Sugar Producers of Mozambique, João Jeque, says that this is a result of investment in Mozambique s four sugar factories: Marromeu and Mafambisse in the central province of Sofala, and Maragra and Xinavane in Maputo. Jeque added that, in addition to the increase in exports, the sector also has an important social dimension, employing more than 200,000 workers. Last year, sugar supplemented with vitamin A was produced for the first time (VOA Português). Chókwè irrigation opens up to private investors To fully exploit the potential of the Chókwé irrigation system, Chókwè Hydraulics (HICEP), the entity responsible for the management of the undertaking, is working to attract new domestic and foreign private investors with knowledge and capacity in the transfer of production and land levelling technologies and the installation of machinery, among other initiatives. HICEP chairman Soares Xerinda said that a joint venture between China Power and Bing Tuan intends to rehabilitate 3,000 hectares for the current agricultural season and to modernise the irrigation system over an area of 1,500 hectares for greater efficiency and higher yields, particularly of maize and beans. The partnership will extend to the provision of mechanised services, technology transfer and institutional training to HICEP. The project was prepared and submitted to the Ministry of Agriculture and Food Security in May last year, and is in the process of being processed for approval, Xerinda says. Green 2000, a mixed capitals company, will level land and participate in seed production and fish farming. Agrotech, another partner called in to help make irrigation more profitable, will provide technical assistance and easier financing to farmers as well installing machinery and supporting fish production. Chókwé irrigation producers are reported to have grown more than 100,000 tonnes of crops last year. The previous season was characterised by severe drought, with little water for irrigation. The return of normal water supply has created new momentum for farmers and other stakeholders in the value chain, and provided encouraging agricultural results. In their search for financial selfsufficiency, HICEP managers are themselves working on their own production of corn, vegetables and beans. As a result of the recent acquisition of a rice processing unit from MIA in partnership with the private sector, rice production will come to the fore this year (Notícias). Mozambican Government limits fishing on Cahora Bassa Lake The Mozambican Ministry of the Sea, Inland Waters and Fisheries has warned that it will only licence a further 50 boats to fish for kapenta (Lake Tanganyika sardine) on Cahora Bassa lake, in the western province of Tete. At a press conference in Tete city recently, at the end of a visit to the province, the National Director of Operations in the ministry, Leonid Chimarizene, said that the fisheries sector has been receiving many requests for licences from owners of boats that have been fishing illegally for kapenta. He said that 250 boats are already licensed, and his ministry will licence just 50 more, bringing the total to 300. He believed the rush of illegal fishermen to obtain licences was due to the drive by Ministry inspection teams against illegal fishing. He said the Ministry has explained the situation to the illegal fishermen, and has suggested that they undertake other activities on the lake, such as

6 6 aquaculture. Aquaculture is also profitable, he added. The Ministry s inspectors had identified 92 boats that are illegally fishing for kapenta. Only 50 of these would be licensed and the others will have to do some other activity, warned Chimarizene. Foreign operators, from Zambia, Zimbabwe, Tanzania and Congo, did not fish kapenta directly, he said, but purchased the fish from the illegal Mozambican operators (AIM). INFRASTRUCTURE AND ENERGY German company builds mini pay-as-you-go solar grid in Chiloane, Mozambique German company CRONIMET Mining Power Solutions plans in partnership with Mozambican company MOTSE to build a mini solar energy distribution grid with a pay-as-you-go system on the island of Chiloane, in Sofala province, the company said in a statement posted on its website. Under a Memorandum of Understanding signed with the Mozambican Energy Fund (Funae) the two companies plan to finance and build the mini-grid and guarantee the production of 200 megawatts of electricity, which is enough to supply electricity to homes, public institutions, commercial entities and water extraction pumps. The island of Chiloane is located approximately 1,000 meters off the Mozambican coast, with a population estimated at 3,000 people, who to date have used car batteries to meet their energy needs. The three entities involved in this project CRONIMET Mining Power Solutions, MOTSE and Funae will set up a consortium to build the mini-grid under a public-private partnership. The partners hope that this pilot project on Chiloane will demonstrate the economic viability of pay-as-you-go solar mini-grids financed and managed by private entities, thus launching a new business with the capacity to provide electricity to more than 5 million people through 60 similar projects (Macauhub). Two new plants to convert natural gas into electricity in Nacala-a-Velha Two new 400-megawatt power plants generating electricity using natural gas are to be built in Nampula s Nacala-a-Velha district, places the region firmly in the orbit of large investments. Nampula governor Victor Borges explained that the project, which will start this year, will be spearheaded by a foreign-owned company called Nacala Power, which will respond to the challenges of the central government energy matrix by increasing the availability of electricity in response to demand from the industrial sector in particular. The gas to be converted into electricity, which will then be sold to the company Electricidade de Moçambique (EDM), which has already expressed an interest, will be imported in the instance from producer countries in Asia. However, imports will later be replaced by product from the Rovuma basin in Cabo Delgado, in the north of the country (Club of Mozambique / Folha de Maputo). Malawi Mozambique power interconnector advancing Electricity Supply Corporation of Malawi (Escom) has said the 400 kilovolts Malawi Mozambique power interconnector is advancing as it has now reached a stage of identifying a contractor. This was said on the sidelines of the arrival of 28 trucks carrying diesel power generators to be installed in Blantyre. Escom Board chairperson, Perks Ligoya, said much as the corporation understands that generating power from diesel generators is expensive, the parastatal is still advancing on the Malawi Mozambique power interconnector. Ligoya said funding for the project has already been identified, what remain is to identify contractors for the job. He also said that the interconnector is not only going to connect Malawi with Mozambique, but all the other SADC member countries. He further said apart from the Aggreko agreement, there are a lot of Independent Power Producers (IPPs) that will sign agreements with Egenco (The Times Group Malawi). Vale s exit from the line of the Sena compromises CFM s economy The removal of Vale company freight from the Sena rail line will result in the loss of half of the cargo currently carried on the route, with an economic impact of US$45 million on the annual revenue of Ports and Railways of Mozambique (CFM). At the beginning of December 2017, Vale, Moatize coal mine concessionaire in the central province of Tete, announced that it would no longer use the Sena line and the central port of Beira to export coal, and from this year would concentrate all operations on the Nacala logistics corridor. The company intends to increase its 12 million tonnes of coal volumes from last year to around 17 or 18 million tonnes this year, volumes which, according to the company, can be very well accommodated in the Nacala logistics corridor. The Sena line and the port of Beira coal terminal have a capacity for 20 million tons a year, but the port access channel can only accommodate ships of up to 40,000 tons. Also in the centre of the country, Augusto Abudo, executive director of the CFM said that the Machipanda line rehabilitation project had so far got as far as analyzing the awarding of the financing of the works, within the framework of a tender launched for this purpose. The capacity of the Machipanda line is 1.5 million tons a year, but, due to the economic situation in Zimbabwe, volumes currently transported have been in the order of 200,000 tons. CFM expects to transport a grand total of 400,000 tons of freight this year (O País). Essar Ports still planning to invest in Beira The ports arm of the Indian Essar group claimed recently that it will invest 500 million US dollars over the next 30 months to expand capacities at two existing Indian projects, at Hazzira and Salaya, and to build a new coal terminal in Mozambique. The new terminal will be in the central Mozambican port of Beira. Essar Ports in August 2017 signed a 30-year concession agreement with the Mozambican government to develop the Beira coal terminal as a Public Private Partnership (PPP) project. According to the Indian company, the project will be executed on a Design, Build, Own, Operate and Transfer (DBOOT) basis through a subsidiary, New Coal Terminal Beira, SA (NCTB SA), which is a joint venture of Essar (which will own 70 percent) and Mozambique s publicly owned port and rail company, CFM (which will own the remaining 30 percent). The project is intended to enhance the coal handling capacity of Mozambique by 20 million tonnes a year, in two phases of 10 million tonnes a year each. The problem for Essar is that the

7 7 demand for coal handling facilities in Beira has declined. The main coal exporter is the Brazilian mining giant Vale, which has switched all its coal exports away from Beira to the new port of Nacala-a-Velha, on the northern Mozambican coast. Competition from Nacala-a-Velha cut coal exports through Beira by more than half in The initial forecast was that Beira would handle five million tonnes of coal in 2017, but the final forecast for the year cut this figure to two million tonnes. The Indian companies operating mines in Tete province (Jindal and ICVL) are still using Beira, but their operations are on a much smaller scale than those of Vale. The switch was not unexpected. Vale had invested heavily in a new railway from the Moatize coal basin in Tete province to Nacala via southern Malawi, and in a new custom-built coal terminal at Nacala-a-Velha. One of the main advantages of the switch is that Nacala Bay is a natural deep water harbour that does not require dredging and so can accommodate ships of any size, while Beira requires regular dredging. Essar s investment will make sense only if Beira continues to handle all Jindal and ICVL exports, and any surplus that Vale cannot send to Nacala. Competition is set to become tougher with plans for a new railway from Moatize to the coast of Zambezia province, where a new deep water mineral port will be built at Macuse (AIM). Mozambique Rehabilitation of the Chiveve River in Beira: Second phase kicks off in March The second phase of the green infrastructure s rehabilitation of the Chiveve River, aimed at establishing a healthy ecosystem and increasing biodiversity in Beira starts in March. The Chiveve River is the city of Beira s lung, draining waste and rainwater and passing through several neighborhoods (urban and suburban) on its way to the sea. The first phase of the rehabilitation, unique in Southern Africa, began in 2012 and was inaugurated by the prime minister in January Financed by Germany, this phase is intended to contribute to the greater resilience to climate change on the city of Beira s part. The green infrastructure layout will be about five kilometers long, stretching between Maquinino, Ponta-Gêa and Goto, in the administrative post of Chiveve. Civil society has been invited to participate in the project. A considerable part of the nearly seven thousand plants involved will be imported, mangroves will be conserved (O País). TRADE/RETAIL Mozambique Exports in Tete reach more than 18 billion meticais Tete province earned more than 18.8 billion meticais in 2017 from the export of various products, particularly coal, electricity, tobacco, maize, cotton, fish (tilapia and kapenta), wood and maize flour. According to Tete Provincial Director of Industry and Commerce, João Feliciano, most of the products were exported to South Africa, Germany, Turkey, Argentina, Belgium, Singapore, Portugal and Romania. According to Feliciano, the figure represents a growth of 10 percent compared to 2016, an increase influenced by the rise in the volume of exports of tobacco, wood and fish from the Cahora Bassa reservoir. He said that the growth was influenced by increased production of food products like corn flour. They also produced more bran and animal feed. The inclusion of data from the bakery industry, as well as the increase in the volume of tobacco processed, were also decisive factors in increasing industrial production. Tete province currently has a total of 2,236 industrial units. Last year, 40 new small and mediumsized companies were licensed (O País / AIM). Mozambique, Zimbabwe strengthen customs cooperation Mozambique and Zimbabwe s revenue authorities have agreed to strengthen cooperation in various customs areas such as training and institutional capacity building. To this end, the Director-General of the Customs of Mozambique, Aly Malá, and the Commissioner-General of the Zimbabwe Tax Authority (ZIMRA), Happias Kuzvinwa, signed a memorandum of understanding recently, establishing mutual and administrative assistance to ensure better customs control at the main borders between the two countries. According to a statement, at the event to formalize the deal in Machipanda, in Mozambique s central Manica province, Aly Malá said that in the light of the memorandum several cooperation actions will be carried out, including information exchange and field investigations, allowing the achievement of results conducive to improving the quality of services provided to citizens. Malá also said that the memorandum will strengthen bilateral cooperation on matters of interest to both countries, in the areas of internal taxes and foreign trade, especially training, institutional capacity building, modernization of tax administrations, technical assistance, among other aspects of public interest. Trade, from the point of view of the parties, takes place more easily and, to that end, it is important that there is direct communication between the parties on the basis of which they have made the memorandum of understanding. Zimbabwe Tax Authority Commissioner-General Happia Kuzvinwa said the act would cement relations between the two countries with the aim of increasing and improving travel facilitation and creating a cooperation platform to facilitate commercial exchanges. According to the official, in the past the parties had cooperated, but the document now initialized opens up more space and, in Kuzvinwa s view, will greatly improve the institutional communication (APA). FINANCE Bank of Mozambique gives assurances that the country s banking system is solid Mozambique s banking system is stronger after interventions at two institutions that were in a troubled situation, the governor of the central bank said recently at the opening session in Lichinga, Niassa province, of the Consultative Council of the Bank of Mozambique. He noted that in the adjustments made to the mechanism for conducting monetary policy, they adjusted the regime for setting up obligatory reserves on a daily basis to a medium basis and signed a tripartite agreement with the banks and the Mozambican Association of Banks, with a view to standardizing the calculation basis of the interest rate, by introducing a single through the institution of a single index benchmark. Rogério Zandamela added that in terms of exchange rate policy, the benchmark

8 8 exchange rate was introduced, establishing the principle of a single exchange rate, with the aim of ensuring greater transparency and credibility of the rates practiced in the foreign exchange market. The governor also said that, as a result of many of the measures implemented in recent times, Mozambique s external position had improved, both in terms of the balance of payments and international reserves, reflecting the country s ability to honor its foreign commitments. Zandamela also said that the current account deficit had been reduced by US$1.740 billion and that gross international reserves increased to US$3.3 billion, enough to cover seven months of imports of goods and services, excluding those of large projects, compared to three months of coverage at the end of 2016 (Macauhub). Maputo city government signs loan agreement with Barclays Mozambique Around 60,000 state employees and agents in Maputo City can now benefit from medium- and long-term insurance loans for various purposes from Barclays Bank Mozambique. The project is covered by a memorandum of understanding signed recently by Manuel Guimarães, permanent secretary of Maputo city government, and Pedro Carvalho, chairman of Barclays Retail and Business Banking. The agreement aims to make it easier for state employees to obtain financing for various purposes such housing, consumer goods (including vehicles), academic and professional training and others. Carvalho said that the memorandum represented added value for the employees, because it would answer for all, depending on the needs and salaries of the individual. He explained that, to guarantee the effectiveness and scope of the project, loans would be granted for periods ranging from 30 days to 25 years. A Barclays press release of the event reveals that all employees belonging to institutions supervised by or subordinate to the government of the city of Maputo are eligible (Club of Mozambique / Notícias). TOURISM Mozambique to host global tourism forum Mozambique s Ministry of Tourism and Culture says the country is considering to host the World Tourism Forum, a global event that brings together experts, enthusiasts and high level players in the tourism industry to promote investment in the sector. The ministry expressed its intention at the end of the visit by the president of executive board of the World Tourism Forum, Bulut Bagci who was leading a high profile delegation to Mozambique to evaluate the possibility of holding the World Tourism Forum Africa Bagci s visit included a tour of various hotel establishments and conference centers as well as a meeting with Mozambican Prime Minister Carlos Agostinho do Rosário. The organizers of the World Tourism Forum intend to build a long-term relationship whose first phase would involve hosting of the event in Mozambique and generate up to $1.4 million in revenue. Bulut Bagcı is the founder of LinkLine Group, the President of Executive Board of World Tourism Forum and the President of Executive Board of the Association of Young Tourism Leaders. He is a member of other multiple non-executive boards and is often invited as a guest speaker to various international events and conferences (Club of Mozambique / APA). Mozambique on the list of the 18 best destinations for 2018 The Thrillist Travel website recently released its list of the 18 best destinations for long vacations in Mozambique features on the list of destinations to visit, and is described as a place that combines leisure, adventure and culture at affordable prices. The website is known worldwide for providing varied tips for readers who like to visit new places, sample exotic cuisine and visit historic places. The list of destinations for long journeys in 2018 takes into account the offer of beautiful places, prices, flight access and the opinions of readers and travel experts. Top of the list is the US city of Louisiana in New Orleans, followed by Russia, and, in third place, Iceland. Colombia, Malta, California, Hamburg and Jordan occupy places four through eight respectively (Club of Mozambique /Thrillist Travel / O País). Mozambique ready for Single African Air Transport Market With the launch recently of the Single African Air Transport Market (SAATM) in Addis Ababa, Ethiopia, on the first day of the 30th African Union Summit, African skies have been open to airlines across the continent. Deputy Minister of Transport and Communications Manuela Rebelo, who is part of the Mozambican delegation led by President Filipe Nyusi, explained that the launch of SAATM was an important step taken by the continent towards its economic integration, a challenge for which Mozambique was prepared. The launch of the initiative was witnessed by representatives of the International Civil Aviation Organization (ICAO), the African Civil Aviation Commission (AFCAC), the African Association of Airlines (AFRAA), the International Air Transport Association (IATA) and Boeing, in a demonstration of commitment to the effective implementation of SAATM. The declaration on the establishment of a Single African Air Transport Market as a flagship project of the AU 2063 Agenda was adopted in 2015 in compliance with the 1999 Yamoussoukro Decision, which provides for full liberalization of access to air traffic between African states, free exercise of traffic rights, the elimination of restrictions on ownership and full liberalization of frequencies, tariffs and transportation capacities. For the time being, the airspace is open in 23 countries which, to date, have joined the single aviation market, namely Mozambique, South Africa, Benin, Botswana, Burkina Faso, Cape Verde, Congo Brazzaville, Côte d Ivoire, Egypt, Ethiopia, Gabon Ghana, Guinea Conakry, Kenya, Liberia, Mali, Niger, Nigeria, Rwanda, Sierra Leone, Swaziland, Togo and Zimbabwe. SAATM poses a major challenge to African states and airlines, a fact acknowledged by the Deputy Minister of Transport and Communications, who admitted that Mozambique Airlines (LAM) will not be able to take full advantage of this opening of the market, because it does not have the equipment to meet the challenge. But little by little, it will be able to fly to other spaces. At the outset, the opening of the market might seem to jeopardize smaller companies, but Manuela Rebelo says that it was clear in air transportation that no one survived alone (Notícias).