Intelligent news from Mozambique

Zitamar Daily Briefing, 11 September

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Welcome to Zitamar’s daily Mozambique briefing for 11 September, 2019

Sep 11 Subscriber’s post

Correction: Lazard Freres does not in fact have a mandate to help ENH raise funding for its participation in the Rovuma Basin LNG projects, as reported in yesterday’s Daily Briefing. We apologise for having suggested the existence of a potential conflict of interest on the part of Lazard Freres.


Agenda:

  • Today: Financial Times Mozambique Summit, Polana Serena Hotel, Maputo
  • Until Tomorrow: Former Liberation Movements Summit in Victoria Falls, Zimbabwe
  • Tomorrow: UN launches the revised humanitarian response plan for Mozambique, in Maputo, covering the period until May 2020
  • Tomorrow: Workshop on legal regulation of computer applications in Mozambique, hosted by the Ministry of Science, Technology and Higher, Technical and Professional Education
  • Saturday: Former President Joaquim Chissano attends the funeral of Robert Mugabe, National Sports Stadium, Harare, Zimbabwe

Today’s headlines:

  • Military Junta blames ‘formal’ Renamo for recent road attacks (Carta de Moçambique)
  • Credit Suisse hidden debts fine likely less than $75m (Lusa)
  • Election observers denied credentials in Nampula (AIM)
  • Mozambique a drug smuggling corridor, says UN representative (VoA, Plataforma Media)
  • President Nyusi condemns SA xenophobia (VoA)
  • Increasing money supply could help Frelimo election prospects (CDD)

Military Junta blames ‘formal’ Renamo for recent road attacks (Carta de Moçambique)
Renamo leader Ossufo Momade ordered the series of attacks in central Mozambique over recent days, according to Major-General Mariano Nhongo, leader of the self-styled Renamo Military Junta (RMJ), in an interview with Carta de Moçambique. Momade, Nhongo said, is “a traitor” who is trying to discredit the Junta by blaming it for these attacks. “The Military Junta is not attacking the population. We don’t want war. It’s Momade’s men,” Nhongo said. “Ossufo is creating confusion so that people think the Military Junta is attacking.” He promised to send a letter to President Filipe Nyusi on 16 September laying out his group’s demands.
Denials on all sides — from Renamo and the RMJ of having attacked civilian vehicles, and of the police of having attacked an RMJ base — are creating confusion and uncertainty about what is really happening in central Mozambique, and what the dangers are during and after the elections.

Credit Suisse hidden debts fine likely less than $75m (Lusa)
Credit Suisse could be fined less than $75 million for its role in the hidden debts scandal, according to analysts at Bloomberg Intelligence, who had estimated the bank’s potential liability at as much as $300m at the start of this year. The new estimate is based on the bank’s declarations that it only took $23 million in fees from the deals.
Legal action in both London and the US should shed some light on how much the bank knew about what its employees were up to. Andrew Pearse and his colleagues Surjan Singh and Detelina Subeva are alleged to have reduced the bank’s fees in return for backhanders from Privinvest — but also claim to have been working to maximise profits for Credit Suisse.

Election observers denied credentials in Nampula (AIM)
The Nampula Provincial Elections Commission (CPE) is refusing to issue credentials for observers, the “Sala da Paz” (Peace Room) coalition of Mozambican election observation bodies said yesterday. The CPE’s excuse is that the machine it uses to produce credentials has broken down. “Sala da Paz” says it has been attempting to secure credentials for 300 observers in Nampula since August, but without any satisfactory response.
One observer still waiting for his credential was prevented from photographing a Frelimo motorcade on Monday. When he took photos, a participant in the motorcade demanded to see his credential, and since he did not have one, ordered him to delete the images from his camera, despite the fact that credentials are not necessary for public photography.
The hostility of election bodies towards observers has been clear from the outset of the electoral process. A significant number of officials recruited to work in the elections belong to Frelimo’s youth organization. In the past Frelimo managed to set up their own observation bodies in order to improve their control of the elections operations — now their tactic seems to be to block independent observers.

Mozambique a drug smuggling corridor, says UN representative (VoA, Plataforma Media)
Due to improved maritime law enforcement in Kenya and Tanzania, Mozambique is becoming an ever more important gateway for heroin going from Afghanistan to other parts of the world, said United Nations Office on Drugs and Crime (UNODC) representative Cesar Guedes, at a seminar in Maputo. The solution, Guedes said, lies in Mozambique intensifying regional and international cooperation, and UNODC is able to provide training, technical assistance and advice in designing policies to fight organised crime.
Guedes’ comments will be seized on by those who justified the “hidden debt” spending on coastal defence equipment as necessary to protect the country against piracy and drug smuggling. Mozambique needs to police its coast better — but ProIndicus et al are not functioning companies and always had more to do with diverting huge amounts of cash than a serious attempt at offshore security.

President Nyusi condemns SA xenophobia (VoA)
In his first public statement about xenophobia in South Africa, President Nyusi promised that the affected Mozambicans would be repatriated with the help of the International Organization for Migration, assisted by the National Institute of Disaster Management. Nyusi condemned the violence and said that it didn’t represent the attitudes of South African people or their government. Over 500 Mozambicans have been displaced and deprived of their property due to xenophobic attacks.

Increasing money supply could help Frelimo election prospects (Centre for Democracy and Development)
An increase in money supply in Mozambique in election years has historically been associated with an increase in the vote for Frelimo, according to a new piece of research by economist Agostinho Machava of the Centre for Democracy and Development — and it looks like that is happening again this year. The practice, according to Machava’s paper, “is particularly prevalent in African and South American countries and is as a result of political pressure from governments on central banks to increase the issuance of money (or lowering the monetary policy interest rate) in election periods in order to create a false feeling of socio-economic [wellbeing]being thereby enhancing the prospects of re-election for the election of the ruling party candidate.”
It’s a bit difficult to tease out the cause and effect; elections are typically periods of high spending (particularly by the ruling party), which tends to feed into inflation but which will also amplify the amount of money circulating in the economy. The current regime at the Bank of Mozambique, for all its flaws, does seem laser-focused on keeping inflation in single digits and so is unlikely to be pumping money into the economy. But Machava’s correlation is worth noting.


Company Announcements

  • Woodbois said its operation in Mozambique was now “a far leaner and more flexible animal” as it published half-yearly 2019 results. The timber firm said that, following problems with cutting and export licences, it had adopted a more cautious approach in Mozambique focusing on the domestic market ,which was expected to grow with demand for housing for LNG project workers
  • Battery Minerals published half-yearly 2019 results, in which it said that the Mozambican Ministry of Natural Resources and Energy had now completed a review of its draft mining agreement for the Montepuez graphite project
  • Grit announced it would be holding a general meeting on 11 October to seek approval to issue 280 million new shares

© 2019, Alexandre Nhampossa. All rights reserved.

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