For the period of 16 to 31 March 2017, there were 56 critical incidents in Mozambique, resulting in 22 deaths. Truce between the Mozambican government and the RENAMO rebel movement remained intact, providing a clean path to a political resolution to the conflict pitting the two groups. While both the security services and RENAMO officials agree that violence has largely disappeared, there have been small pockets of violence that both parties are trying to contain. The biggest incident has been the killing of a RENAMO official in Tsangano, Tete province. RENAMO blames parties tied to the government, including the ruling party FRELIMO as being the behind killing. Elsewhere in Murrupula, Nampula Province, RENAMO detained a teacher, suspecting him of collaborating with the security services. He was released after President Nyusi and RENAMO’s Afonso Dhlakama discussed the case over the phone. In short:
¨ Mozambique is confronting a host of moderate security issues on its borders. The landlocked country of Swaziland, to the west of Mozambique wants a redrawing of its borders with both Mozambique and South Africa, while a dispute over fishery resources in Mozambique’s northern Niassa province is affecting relations between Mozambique and Malawi. Additionally, the families of the 28 Mozambican citizens that are currently in police custody in neighboring Malawi are calling on Maputo to intervene to secure their release.
¨ On the public health front, Mozambique remains affected by a hard-to-contain cholera infection, which authorities say it continues to spread with over 1,400 cases, and latest data from health authorities reveal that 154,000 new tuberculosis infections are recorded every year.
¨ On the labor front, there have been several strikes affecting the public transportation sector in Maputo and Sofala, as well as in the television sector. In the transport sector, the strikes were a response to a new increase in fuel prices, while strikers of the Mozambique Independent Television stopped working due to unpaid wages.
¨ On the economic front, Mozambique missed a $119 million payment that was due Tuesday, 21 March on a loan to Credit Suisse Group AG. This was the second debt repayment the government of Mozambique failed to make in as many months.
¨ The independent Mozambican Public Integrity Center (CIP) has been raising a series of concerns on the way the Mozambican government deals with taxes and foreign company contracting. Among its complaints, it raised concerns about the way the authorities computed the capital’s gain tax involved in Eni-ExxonMobil share transaction. The capital’s gain tax was set at $350 million.
Mozambique’s main incidents of 2HMarch 2017
Looking Ahead:
Political/Security:
Mozambique’s politics is characterized by a relatively prolonged period of stability. The truce agreed by the government and the RENAMO rebel group has been largely respected. As we look ahead, we project that both parties will continue on their direct negotiations, but pockets of violence will seek to derail their talks. So far, we see two major gains in the ongoing peace process: The first is the continued relative calm that has been imposed by the two parties since late December. The second is the slow improvement in trust-building initiatives, including direct calls between the President and the head of RENAMO. However, on the negative side, there has been no major breakthrough yet on a final settlement to the crisis. Lack of tangible solutions could prove to be a liability for the two parties and could trigger a loss in confidence when the dry season resumes. Mozambique must speed up its peace process or risk facing new challenges ahead.
On the security front, we continue to see opponents of the peace process likely deploying new efforts to block any political settlements, with possible FRELIMO attacks on RENAMO, and vis-versa. As the rainy season comes to an end, violence could resume, in particular in central Mozambique.
Social/Human:
The past fortnight’s labor strikes are a harbinger of what to come, as we predict an escalation of unrest in the coming months. The broad imposition of austerity measures on almost all sectors of society and the economy promises major disruptions, including as a result of the gradual reduction of fuel subsidies and their resulting price increases. These prices increases affecting the energy sector will have ripple effect on all sectors of the economy, with direct impact on household spending. While the general mood of the population remains negative, it has refrained so far from taking to the streets, a situation that could change very rapidly, in particular if the government decides to increase food prices, as we anticipate.
Meanwhile, the country is also facing escalating problems on the public health front, in face of a hard-to-control cholera outbreak, persistent tuberculosis, and other health issues. The country’s water crisis and drought will continue to weigh in significantly and negatively on the outlook.
Economy:
Despite optimism for a recovery amid growing activities in the oil and gas sector, Mozambique will struggle in managing the transition to a more stable environment. It will face a variety of pain points that it must handle, including firstly its inability to repay its debt. Ongoing negotiations with lenders could help in the medium and long runs, but for the foreseeable future, its two loan payment defaults will mean less money available for the time being. Mozambique has managed to get small bilateral support from select countries, but these assistance initiatives remain largely inconsequential. The positive news remains on the oil and gas sector, which continues to give authorities hope of recovery in the second half of 2017. However, lack of transparency on how oil and gas sector-related transaction are performed provide very little visibility on what to fully expect in the long run.
Full report available upon request at MEARisk@outlook.com.
