Domestic Politics

Government’s negotiations with Renamo continued slowly. Renamo head Afonso Dhlakama talked with Mozambican president Filipe Nyusi, mainly on the telephone. They developed a good rapport, and on 7 February agreed a decentralisation deal giving increased power to provincial and municipal assemblies, but no directly elected governors and an end to directly elected mayors. Instead, there would be a ‘head-of-list’ system in which the head of the party list for the municipal and provincial assembly would become mayor or governor. Thus the party with the most seats automatically gained the post of mayor or governor. Until then, governors had been appointed by the president, so for the first time Renamo had an opportunity to govern a province, in something that looked like power sharing. The changes were incorporated into a constitutional amendment approved by parliament on 24 May. Some power sharing was a concession by Frelimo. But the constitutional amendment said that in addition to the governor and mayor, there would be a representative of the central state as well, apparently with equal status, keeping power centralised. Both Frelimo and Renamo had become afraid of mayors who developed their own power bases, but they agreed on the head-of-list system, as heads of lists were named by parties centrally. The change was initially opposed by parliament and civil society, which preferred direct elections.

Afonso Dhlakama had been shot at several times and fled to the remote Gorongosa base for security. When he had a diabetic crisis, a helicopter could not get there in time, and he died on 3 May. Ossufo Momade, a former secretary general of Renamo, a member of parliament since 1999, and a general in Renamo’s army, was named on 4 May as coordinator of the party’s political commission, effectively the acting leader of Renamo. In June he moved to Dhlakama’s base on Gorongosa, less on security grounds but more to satisfy the military wing: “I do not feel safe in the city. Therefore I prefer to live with my colleagues. Here I feel protected”, he told ‘Canal de Moçambique’ on 6 June.

Momade continued the talks with President Nyusi, and the two met in Beira on 11 July and reached an agreement on demilitarisation and integration of Renamo forces into the government military and police. On 15 August, four joint working groups were established, on military matters, disarmament and reintegration, incorporation into the army and police, and monitoring and verification. It was also agreed that 14 Renamo officers incorporated into the joint army after the 1992 peace agreement would be given senior posts; four would be directors in the general staff, and ten would have senior but lower level posts such as brigade and battalion commanders. After Renamo submitted its list, all were given higher ranks – some had not been promoted in 26 years. But it was only on 11 December that the first three were given senior posts, and then only on an ‘interim’ basis. Hardliners in both Frelimo and Renamo opposed the peace talks, and there was substantial mistrust, forcing the presidents to negotiate personally, while military and civil authorities were pusillanimous in implementing the accord.

Pressure mounted on long-term ruling party Frelimo over corruption and the linked issue of rising inequality and a failure to reduce poverty. Its popularity waned, and it fared less well in municipal elections held on 10 October, pointing to a much closer race in the national elections on 15 October 2019. Across the 53 municipalities, turnout was 60% on 10 October, significantly above previous municipal elections (46% in 2013, 46% in 2008, and 28% in 2003). Turnout in the capital, Maputo, was 63% compared to 50% five years before. Nationally, Frelimo won 52% of valid votes, Renamo 39%, and the ‘Movimento Democrático de Moçambique’ (mdm; Democratic Movement of Mozambique) 8%, with small parties and citizens’ lists gaining less than 1%. The opposition won 9 of the 53 municipalities, including three major cities. Renamo won Quelimane and Nampula, while mdm held Beira. Renamo won seven municipalities in its heartland, Nampula, but unexpectedly gained one victory each in previously safe Frelimo towns in the two northern provinces of Niassa and Cabo Delgado. The new head-of-list system, where the mayor comes from the biggest party, meant that in six municipalities, the mayor lacked a majority in the municipal assembly. This would require an agreement with at least one other party in order to govern effectively.

There were unexpected, unprecedented, and blatant thefts of the election by Frelimo in at least four municipalities. The politicised electoral machine, with parties having places in proportion to seats in parliament, meant that all city and district election commissions had a Frelimo majority. In five municipalities the Frelimo majority held a meeting without Renamo and mdm representatives being present, held a count or recount, and declared a Frelimo victory. The municipalities were Matola (twin city to the capital Maputo and Mozambique’s largest city), Moatize, Alto Molocue, Monapo and Marromeu. In the Mozambican system votes are first counted in the polling station and results posted on the door, so it is possible to do a parallel count, and the national election technical secretariat (stae), which runs the elections, did a parallel count in most municipalities, which it posted on the web. Its count showed Renamo victories in Alto Molocue and Monapo. A local Facebook newspaper in Moatize held a parallel count showing an overwhelming Renamo win. In Marromeu, after 29 polling stations had completed counting and a parallel count showed a Renamo victory, the police confiscated the ballot papers from 10 polling stations and, after a secret count, Frelimo was declared victorious. Only on Marromeu the Constitutional Council ordered that the voting be rerun in eight polling stations on 22 November. In all eight polling stations, observers reported a large Renamo victory; police took the ballot papers, and Frelimo was declared winner. For all five municipalities, the Constitutional Council rejected protests and awarded victory to Frelimo. stae comes under the National Elections Commission, but its Frelimo majority rejected both the protests and stae parallel count to award victory to itself. In part, the problem was the interpretation of the law. The electoral law follows a principle that any protest must first be made at the lowest level – if a decision is made at a meeting, the first protest against the decision must be at the meeting. This has been interpreted by the courts to mean that if an election commission member is illegally excluded from a meeting, they must protest at the meeting they cannot attend. Most legal challenges were rejected because that had not been done, even though it was impossible. This was upheld by the Constitutional Council, and the Frelimo majority in the National Elections Commission said they could not override the courts and thus could not consider Renamo’s evidence of fraud.

The small insurgency in northern Cabo Delgado province continued. From the first attack on 5 October 2017 until the end of 2018, there were more than 50 attacks, with at least 200 dead and hundreds of houses sacked or burned, or both. Nearly all attacks were carried out by small, poorly armed groups – with machetes and one or two guns – within an hour, so that the attackers could escape before a military response. A few people were killed, usually decapitated by machete, and houses burned. Most attacks were on small villages or settlements, but in December the insurgents began to attack road traffic. Troops were sent to the province and people arrested. An unconstitutional secret trial of 189 people began on 3 October. “Security forces have allegedly arbitrarily detained, ill-treated, and summarily executed dozens of people they suspected of belonging to an armed Islamist group”, reported hrw on 4 December.

The insurgents claimed to be Islamic fundamentalists in “a movement that has slowly built a resilient and diverse economic base in Mozambique, recruiting young men not only through the offer of wages or bounty but by providing them with capital to enter into both the illicit and licit economies”, explained Simone Haysom in a report of the Global Initiative Against Transnational Organized Crime, published on 25 October. Initially, young people had been recruited into mosques and madrasas (rather than an armed movement) with the offer of business loans. These loans could be invested in any sector. Some had bought new boats for fishing, some had started small shops selling food and consumer goods, and others had established themselves as car repairmen or vendors of building materials or electrical tools. Some had become artisanal miners or smugglers. Then, in 2017, recruits had been required to sell their new assets and join the jihad. Many had done so; those who had not, were targeted and some beheaded. Clearly, while there were external links, the recruiters were building on local poverty and widening inequality. Cabo Delgado was one of the poorest provinces, and there were few formal sector jobs, yet young people who now had primary education did not want to be like their parents, farming only with a hoe. The rapid expansion of gas exploration and mining enriched the elite and brought in many foreigners with high salaries and expensive cars and trucks. The insurgents blamed their leaders, Frelimo, government and religious, for keeping them poor. In a speech in Memba, Nampula, on 8 December, President Nyusi warned citizens not to be enticed by false promises of jobs in Cabo Delgado. Memba is one of the poorest districts, and the president was, in effect, admitting that with little development and no jobs, it was easy for Islamic militants to recruit young men with the promise of work.

Foreign Policy

Frelimo had always tried to balance support from many different countries, and it continued to maintain good relations with the United States, Russia, China, all of its neighbours, and Asian and European countries. China became its most important partner, especially for funding infrastructure projects. That country confirmed a $ 60 m loan for a new Chongoene International Airport in Gaza; the airport would probably be another white elephant, but China wanted to support Frelimo in its heartland province. Meanwhile, former foreign minister Leonardo Simão, in Beijing in September, at the China/Mozambique Business Forum, confirmed negotiations for Chinese involvement in a $ 3 bn rail and port project, also at Chongoene, linked to Chinese heavy sands projects along the coast. The chair of the Standing Committee of China’s Thirteenth National People’s Congress, Li Zhanshu, visited Maputo in May. President Nyusi visited China 1–4 September and met with Chinese president Xi Jinping. In September finance minister Adriano Maleiane visited China in an effort to change the terms of Chinese finance from loans to investments. Industry minister Ragendra de Sousa led an important delegation to the Macao trade fair in October to attract Chinese investment, especially in agriculture and petrochemicals. Debt restructuring agreements with China and India were announced by prime minister Carlos Agostinho do Rosário in March. Debt repayments to both were delayed from 2028 to 2033. Mozambique’s debt to China was $ 2 bn and to India $ 177 m.

Foreign minister José Pacheco visited India and Thailand in December to promote further investment. Companies in both countries were part of the consortia developing Mozambique’s giant gas fields. India became Mozambique’s largest export destination, taking a third of Mozambican exports in 2017. On 20 May, India’s high commissioner to Mozambique, Rudra Gaurav Shresth, said Indian investment in Mozambique could reach $ 13 bn over the next decade.

Despite China’s importance, Frelimo continued to be more comfortable dealing with Vietnam. The third mobile telephone company, Movitel, was a successful joint venture between the Frelimo party and the Vietnamese military. Politburo member Tran Quoc Vuong was in Mozambique 3–5 December and signed a new cooperation agreement between the Vietnamese Communist Party and Frelimo.

In October an agreement was signed with the Russian company Rosneft and the us firm ExxonMobil for offshore oil and gas exploration. The agreement was highly political and followed meetings in March in Maputo and in May in Russia between foreign ministers Sergey Lavrov and José Pacheco. ExxonMobil said it was withdrawing from partnerships with Rosneft because of us sanctions against Russia. Lavrov had told Mozambique that “economic interests should not be defined by political issues” and had pressed Mozambique to sign. China was one of Mozambique’s “main partners in the fields of infrastructure and agriculture”, said Pacheco, “but there’s a room for Russia to become good partners with us”. The Russian government-owned vtb Bank was involved in the $ 2 bn secret debt, which was also subject to political negotiations. On 24 January the president of vtb, Andrey Kostin, said that he wanted to meet the president of Mozambique “to convince him to negotiate”.

As regards diplomacy with Western countries, Switzerland continued to play a special role. Its ambassador, Mirko Manzoni, was chair of the contact group for peace negotiations between Renamo and the government, and continued to be central in moving those talks forward after the death of Dhlakama. President Nyusi visited Switzerland 25–28 February, to discuss the peace process and encourage investment, but also to raise the issue of the role of Credit Suisse in the secret debt. Nyusi was in the United Kingdom in April for the Commonwealth Heads of State Summit, where he also met British secretary of state for international trade Liam Fox, who pledged £ (gbp) 2 bn in investment. Nyusi met former uk prime minister Tony Blair in Maputo on 14 February. Blair’s Institute for Global Change had a presence in Maputo. Nyusi went to the Vatican to see Pope Francis on 13 September. The pope agreed to visit Mozambique in 2019, an election year, when the Catholic Nyusi will be standing against a Muslim leader of Renamo, Ossufo Momade. President Nyusi was in the United States 23–28 September, in part to address the un. The Nordic countries have supported Frelimo since the independence wars of the 1960s and the government has always tried to keep good relations. President Nyusi visited Norway 13–15 November to discuss peace, promote continued aid, ask for continued technical support in oil and gas negotiations, and discuss how a sovereign wealth fund works. Mozambique on 26 April signed an epa between six countries of the sadc and the eu. The agreement entered provisional application in the country on 4 February, as it also did in South Africa, Botswana, Namibia, Swaziland, and Lesotho.

Keeping good relations with neighbours has always been a priority. Botswana’s president Makgweetsi Masisi visited Mozambique on 16 April and 1–2 November. During the year discussions continued about the deepwater port of Techobanine and a 1,700 km rail link connecting the port to Botswana via Swaziland and South Africa. But because of the long distances, the $ 600 m project was probably not economically viable. Mozambique rebuilt its relations with Angola, reflecting changes in government in both countries, and an Angolan government delegation visited Mozambique in November. Mozambique and Tanzanian police signed on 15 January an agreement to cooperate on terrorism, migration, and cross-border crime, including drugs and natural resources. In October Tanzania said it had arrested 104 militants suspected of trying to establish a base in Mozambique. South African president Cyril Ramaphosa visited Mozambique on 17 March as part of his tour of neighbouring states. Ugandan president Yoweri Museveni paid a state visit in May. He visited the Military Training Centre in Montepuez, where he and 28 other Ugandans had trained in the late 1970s in preparation for the war to overthrow Ugandan dictator Idi Amin. Kenyan president Uhuru Kenyatta visited Nyusi in Maputo on 28 March. President Nyusi attended the extraordinary au summit on 20 March in Kigali and signed the agreements to launch the AfCFTA and the protocol on free movement of persons and residence. The treaty still needed to be ratified by at least 22 countries.

Fraud and embezzlement also impacted on external relations and resulted in the prosecution of citizens by us authorities. Former finance minister Manuel Chang was arrested at O. R. Tambo International Airport, Johannesburg, on 29 December on a us extradition warrant, based on us court action in the $ 2 bn secret debt. The grand jury indictment in the us District Court of the Eastern District of New York alleged “a brazen international criminal scheme in which corrupt Mozambique government officials, corporate executives, and investment bankers stole approximately $ 200 m in loan proceeds that were meant to benefit the people of Mozambique”, according to Assistant Attorney General Benczkowski. Of that, $ 150 m went to Mozambican officials and $ 50 m to the three Credit Suisse staff. Two other Mozambicans were charged but not arrested (Mozambique has no extradition agreement with the United States). One was Teofilo Nhangumele, described as “acting in an official capacity for and on behalf of the Office of the President of Mozambique”. This was the first time that an official finger had pointed at the then president, Armando Guebuza. The other was António do Rosário, a senior official in the ‘Serviço de Informações e Segurança do Estado’ (sise; the secret service), and the head of the three sise-owned companies that took the secret loans, Proindicus, Ematum, and mam. Also mentioned but not named were three “Mozambican co-conspirators”, who were not charged, which meant they had cooperated with the fbi and us authorities and had admitted receiving bribes. One was said to be a relative of a senior official and another a senior official of the Ministry of Finance and a director of Ematum. Arrested at the same time in New York was Jean Boustani, described as lead salesman and negotiator for Privinvest. Charged but not then arrested was the chief financial officer of Privinvest, an Abu Dhabi-based shipbuilder. Arrested in London was Andrew Pearse, a managing director of Credit Suisse, who had organised the loan, as well as two associates.

Socioeconomic Developments

There was a widening gap between the better-off and the poor, “hindering Mozambique’s progress in achieving shared prosperity and making it now among the most unequal countries in ssa”, the World Bank reported in November. The poverty rate declined by 1% per year, but population growth was much more than that, meaning the number of poor people increased. There were 28.9 m people living in Mozambique at the time of the August 2017 national population census, according to data released in 2018. Population grew at 3.5% per year, nearly the highest in Africa. gdp growth was 3.3%, down from 3.7% in 2017 and 3.8% in 2016, estimated the World Bank. This was well below the 7% gdp growth achieved on average between 2011 and 2015. The economy continued to suffer from the economic crisis caused by the revelation of the $ 2 bn secret debt. Inflation was 3.5%, down from 5.7% in 2017. The prime lending rate fell from 27% to 19.9% during the year, a large drop, but leaving interest rates so much higher than inflation that most businesses found long- or even medium-term borrowing impractical. Government made substantial domestic bond sales at 14%, which was highly profitable for the banks, which preferred to lend to government. The mt (metical) continued its slight devaluation, from mt 59 = $ 1 in January to mt 62 = $ 1 in December.

In March prime minister Carlos Agostinho de Rosário said the government had $ 45 m to pay just 17% of the debts it owed to the private sector, some dating to 2007. On 24 August the prime minister admitted none had yet been paid and said the government was still drawing up a list of debts. In June, industry and finance minister Ragendra da Sousa admitted that the government had unpaid vat rebates of $ 2 bn, equating to 12% of gdp. When added to unpaid debts to suppliers, this was as large as government’s official borrowing. Speaking to construction companies in Nampula on 20 July, public works minister João Machatine admitted to long delays in paying contractors for roadworks. He said there was no money to pay for regular maintenance, meaning that roads such as the N1 in northern Sofala were almost impassable.

A major burden were the fraudulent loans allegedly for maritime security and fishing (see the prosecution reported above by the us authorities). There were three loans, a Credit Suisse $ 622 m syndicated loan to Proindicus, a vtb $ 535 m syndicated loan to mam, and an $ 850 m Eurobond to Ematum. In 2016 both a parliamentary special commission and the audit court found the loans illegal and unconstitutional. The first two have never had payments made, and government was moving toward calling them “odious” or at least “disputed”. But parliament, not knowing about the other secret loans, nationalised the Ematum debt in 2016 and argued the new bonds must be repaid. In November the government renegotiated the bonds with creditors and agreed to issue a third set of bonds. The second set of bonds would have been repaid by 2023, but that was clearly impossible. The new bonds would mostly be repaid in 2029–33. The original bonds for $ 850 m bought Mozambique only useless fishing boats sitting rusting in Maputo harbour, and patrol boats that cannot be used in the choppy waters of the Mozambique Channel. Under the revised bond deal, Mozambique would pay a total of $ 2.4 bn for the useless investments (see also the reports in earlier years).

The impact of extractive industry on the lives of Mozambicans “does not seem a boon and it now seems more of a curse”, said António Cruz, one of Mozambique’s more important economists, during the December Inclusive Development Conference in Mozambique run by unu Wider. “The existing growth strategy is limited in its capacity to support continued poverty reduction”, admitted a World Bank report, “Jobs Diagnostic Mozambique”, issued on 16 August. It diagnosed a non-inclusive nature of Mozambique’s economic growth, partly because of the reliance on megaprojects, which contributed little to employment. The World Bank report estimated that the bottom 40% of income earners had been left behind. It conceded that the strategies promoted by the World Bank for more than two decades – neoliberalism, no role for government in the economy, leaving poverty reduction to the private sector, and encouraging foreign investment – had failed. Its own report advised Mozambique to follow the lead of three countries that have rejected World Bank policies: Bangladesh, Rwanda, and Uganda. These were cited as examples of countries that, despite earlier conflicts, had delivered strong and relatively inclusive growth. This was “achieved by investments in the sectors where poor households earn their living, especially in agriculture”, the report said.

Cabo Delgado was becoming a major mineral producer, as well as being the base for gas fields. Three companies were mining graphite. Australian company Syrah Resources’s Balama mine and production facility was opened by President Nyusi in April, and exports through Nacala port began late in the year. Gemfields Group sold rubies mined at its controversial Cabo Delgado mine for $ 127 m during the year. Gas development continued at one of Africa’s largest gas fields, offshore of Cabo Delgado in the north of Mozambique, discovered in 2010. Construction began in March in Singapore and South Korea of an $ 8 bn floating gas liquification plant, which would be 80 km offshore, and which should start exporting lng in 2022. Most gas liquification plants will be onshore, on the Afungi Peninsula, where preparation work was already under way. After significant advance sales of gas to Asia, Anadarko and ExxonMobil both said that the final investment decisions would be made in the coming year, with the first gas exports expected in 2024. In November eni and ExxonMobil agreed to join Anadarko on the Afungi project. The Pemba logistics base was expected to be ready in early 2019 but may not be used by the gas companies. Meanwhile, contracts were signed in October with eni, Sasol, ExxonMobil, Rosneft, and Qatar Petroleum for offshore exploration for oil and gas further south, offshore of Nampula province and the mouth of the Zambezi River. The signing was delayed until Mozambique conceded to oil company pressure and withdrew the requirement that oil companies list on the Mozambique stock exchange.

After years of battling, three Tete coal miners finally agreed improved compensation packages for people moved from mining areas. In May, Vale agreed to make cash payments of up to $ 10,000 to each of 290 households whom it had resettled from its coal mining areas in Moatize in 2010 and 2011. In July Eurasian Natural Resources Corporation (enrc) agreed a plan to resettle more than 800 families from a new coal mine in Chitima. After losing two court cases and having its bank accounts frozen, Indian coal miner icvl finally settled with a community in Benga in August.

Corruption remained a major topic of debate. Corruption was declared most serious in the road construction sector, involving both contractors and those in the government awarding tenders, according to public works minister João Machatine, who spoke to construction companies in Nampula on 20 July. He pointed to a lack of transparency in awarding contracts and blamed the National Roads Administration for being notoriously corrupt. Foreign companies and Labour Ministry staff were both acting corruptly, admitted labour minister Vitoria Diogo. Applications for foreign workers were kept by ministry staff in their desks for up to two months, until the companies offered to pay a bribe, she said. On the other side, the law set quotas for foreign workers, and when foreign companies wanted to bring in more foreigners they made minor changes in the company name to pretend to be a different company, and then paid ministry staff to look the other way.

Organised crime flourished. Ivory smuggling continued, with seizures of over 6 tonnes during the year. South African police minister Bheki Cele visited Mozambique in August and witnessed numerous stolen luxury vehicles with Gauteng registration numbers being driven around Maputo. “They do not even change the number plates there…. A lot of the stolen Gauteng cars are being driven freely in the streets of Maputo with no problem”, he said. Mozambique was a significant heroin transit centre, and the trade had increased to 40 tonnes or more per year, making it a major export, contributing up to $ 100 m per year to the local economy, according to a study released in July. For 25 years the trade had been controlled by a few local families and tightly regulated by senior officials of Frelimo, and had been largely ignored by the international community, which wanted to see Mozambique as a model pupil. Apparently, there was a shift to a second channel, not so tightly controlled by the old trading families and the ruling party. The global move towards the gig economy and the broader corruption of Mozambican police and civil service made it easier to organise alternative channels, with local people hired by WhatsApp and BlackBerry for specific tasks. Mozambique was a key link in a complex chain that formed the east African heroin network from Afghanistan to the Makran coast of Pakistan, and then by dhow to northern Mozambique. Traffickers then transported it more than 3,000 km by road to Johannesburg. From there, others shipped it to Europe.