The government of Mozambique recently hosted the 42nd Joint Parliamentary Assembly, a collection of African, Caribbean and Pacific countries, along with the EU, as part of the East African nation’s attempt to draw international attention to the role that Mozambique can play in the if certain security issues can be addressed with the help of other African nations and Europe.
Adding further weight to the idea that Maputo, Mozambique’s capital, can play a vital role in the world energy market, European Parliamentarian Hannes Heide said “The EU’s interests coincide with those in Africa … We have to realize that its democratic and economic development is in the direct interest of the European Union. African countries are highly dependent on wheat, cereals, fertilizers and cooking oil imports. Russia’s invasion of Ukraine has massively disrupted the (supply) situation. This shows direct European support for sustainable development is needed …That also means help with debt relief and strong support in the fight against (radical Islamic) terrorism in Africa.”
The link between food security and human rights
Food security in Africa goes hand in hand with the issue of security and, by extension, human rights and rule-of-law, as witnessed in Somalia and Ethiopia in decades past. The EU must bolster its efforts to ensure peace and stability through military training missions aimed at guaranteeing food security as a precondition for development.
Both are highly relevant issues for Mozambique, which needs investment in its highly prospective gas and energy sector. The EU, by extension, needs to develop new supply markets to diversify its energy sources by finding reliable suppliers that will replace its reliance on Russia.
Multiple challenges
The unstable political and security environment in Mozambique is still one of the main factors that cause foreign investors to balk at playing an active role in the country. An increasingly violent Islamist insurgency in Cabo Delgado, a key region for gas production, has caused delays in liquefied natural gas (LNG) projects. The implementation of a $20 billion investment led by French petroleum company Total in an LNG project has been suspended due to the security situation in Cabo Delgado. A project led by the US’ Exxon Mobile – the largest of the Big Oil companies in both production and market value – to build export terminals has also been delayed.
Mozambique recorded historically high FDI inflows in 2013, reaching more than $6 billion, but they have decreased since then. According to UNCTAD’s World Investment Report 2021, FDI inflow into the country increased by $62.3 billion in 2020, up from $2.2 billion in 2019, despite the global economic crisis triggered by the Covid-19 pandemic.
The abundance of liquefied natural gas in Mozambique is proof that the country has an abundance of potential as an energy provider, but it requires outside investment for this to be fully realized. One potential bright spot involves a deal that was signed in June with Italian energy company Eni for €8 billion for a floating LNG facility that would be manufactured in South Korea. The project is expected to produce €1.5 billion worth of gas a year, and Eni has secured a purchase contract with British Petroleum, which will buy the produced gas for 20 years.
Corruption, instability and a legacy of conflict
Improved standards of governance still elude Mozambique, despite Maputo’s attempts to implement reforms and sound economic policies that would reassure potential investors who are concerned about the security situation in the north of the country. The government’s main problem, however, is the simple fact that Mozambique currently sits 138th out of 190 countries in the World Bank 2020 Doing Business Report, for which it has done little to improve its ranking.
Corrupt local and national government officials, and the ISIS-related jihadist insurgency, continue to destroy Mozambique’s reputation in international circles, despite the fact it has the added advantage of being a part of the Lusophone world, and thus, a natural link to Europe as a Portuguese-speaking nation.
The government needs to reign in the graft that has crippled Mozambique’s development, which has been hampered not only by poor governance and radical Islamists, but also the effects of a devastating 25-year civil war that broke out only a few short years after Mozambique gained independence from Portugal, which pitted the country’s Soviet and Cuban-allied Communist government against anti-Marxist rebels, who were backed by the US, West Germany, Israel and South Africa.
The ISIS-affiliated Islamists that are currently battling the government are one of several other radical jihadists, with a myriad of incomprehensible and confusing acronyms, whose aim is to sabotage the government’s efforts to stabilize the country. Their ultimate goal to seize the energy-rich Cabo Delgado region and establish a breakaway Islamic republic.
In the last five years, the dozens of radical groups have killed more than 3,000 people and displaced well over 800,000.
Western military support is needed to prevent Mozambique from becoming a conflict-ridden basket case. Several countries – including Angola, Botswana, Rwanda, South Africa, and, chiefly, the United States have all sent soldiers, arms and military advisers to help government forces fight the insurgency. These combined forces have succeeded in helping Maputo retake some areas of Cabo Delgado.
The bulk of the jihadist rebels continue, however, to evade pitched battles and continue to terrorize civilians in towns along the coast, where the overwhelming majority of the natural gas industry is based.
With abundant natural gas reserves along its coastline, which are the third-largest in Africa, Mozambique is essentially a virgin territory when it comes to opportunities for development, particularly for Europe as it looks to free itself from its now obvious foolish energy policy regarding Russia.
Mozambique can be a reliable partner in East Africa, provided it can attract the type of foreign investment it needs as it works towards increasing its long-term political stability.
