A better Mozambique is possible with Privinvest Assets

MOZAMBIQUE is the second poorest country in the world behind the Democratic Republic of Congo (DRC), writes Philip M. Griffin*.

Yet offshore is a goldmine of potential relief — one of the world’s largest newly discovered natural gas fields worth 50 times Mozambique’s $13bn GDP plus rich fisheries of tuna, crustaceans and other seafood.

Mozambique’s 1,400-mile coastline, nearly as long as the US eastern seaboard, and its three, deep seaports also make the region ripe for establishing a ship repair industry to serve its own fleets and thousands of cargo ships, tankers and other commercial vessels.

To seize this bounty, the Mozambique government launched a series of maritime projects earlier this decade to build a modern fishing fleet, a coastal security system and ship repair facilities. Privinvest, a global shipbuilder, delivered high-tech fishing boats, security vessels, maritime patrol aircraft, unmanned radar sites and a maritime satellite surveillance system.

On-shore ship maintenance and servicing bases, a mobile maintenance vessel and a maritime training facility were also provided. In 2014, during Mozambique’s annual National Day celebration of independence from Portugal, officials proudly displayed the vessels, paraded them through the streets of the capital city Maputo and held a demonstration in Maputo Bay for the president, ministers and local dignitaries.

But not long afterward, Mozambique officials walked away from the projects, ignored pleas to put them into service and defaulted on $2bn in loans financing them. The vessels, dubbed ‘the ghost fleet of Mozambique’, and millions of dollars in equipment lay idle today.

Imagine what Mozambique would be like if the Privinvest boats and systems were dusted off, cranked up and put into use. The country would be a much different and much safer and prosperous place.

Today, millions of children are malnourished. But without a fishing fleet, most of Mozambique’s seafood never makes it home and the country is forced to import food from South Africa. Of the 130 vessels licensed to fish its waters, only one belongs to Mozambique. Last fall, China celebrated the return of six fishing trawlers from Mozambique loaded with nearly 360 tons of fish and crustaceans. Imagine how many hungry children that single catch would have fed and nourished.

Mozambique earns just ‘pennies on the dollar’ from licensing foreign fishing vessels rather than deploying its own boats, and loses some 300,000 jobs and $3.3bn in revenue from legal and illegal fishing, according to one estimate.

Mozambique recognises that its fisheries sector, now only 7 percent of its economic output, is vital to food security and the health of its economy. Imagine if its fishing fleets, using the Privinvest deliveries, were already in service, how much good they would have already done. The answer: A lot.

Imagine also if Mozambican waters were safe to tap its natural gas assets to boost its economy and power its communities. That isn’t the case now, but it could be.

The giant offshore natural gas fields, worth around $1 trillion, could transform Mozambique’s economy with an influx of capital and jobs. In 2014, the Mozambique gas discovery attracted some $9bn in foreign direct investment, which contributed 70 percent to the country’s average GDP and some 1,500 related jobs a year, according to CNBCAfrica.com.

Each of these jobs rippled out to create six additional jobs. By boosting local incomes, the jobs also increase demand for local goods and services such as food and produce, housing, restaurants and bars.  Without the gas field investments, ‘Almost 1 million jobs of 9.5 million would have disappeared,’ CNBC estimated.

Imagine as well if Mozambique’s gas beds could light up the country.

Today, only 12 percent of Mozambique has electric power and mostly in urban areas. The US Agency for International Development (USAID) says Mozambique should harness some of its natural gas windfall for gas-fired power generation and broader electrification. Electricity everywhere would save and extend many lives.

But a chronic security threat hangs over Mozambique’s ability to tap its gas resources. The Indian Ocean remains so rife with criminal activity, piracy and trafficking that the US navy recently joined with several African and Western nations for ‘Exercise Cutlass’ manoeuvres to make the waters safer. Last August, as the South African navy completed a major anti-piracy mission in Mozambique, it said the likelihood of a piracy incident taking place in the Mozambique Channel was probably at its highest level since 2010.

To make matters worse, insurgents seeking to set up an Islamic state are attacking Mozambique’s northern Cabo Delgado province, site of a major natural gas development project. The energy company Anadarko, which has been developing liquefied natural gas from Mozambique’s enormous Romuva Basin that will generate some $40bn for Mozambique, recently suffered an attack that injured six and resulted in one of its contractors being beheaded.

A coastal security system could have prevented these atrocities. It would certainly have allowed energy revenues to flow sooner. Life would be better in Mozambique if it used the maritime assets it already has. Just imagine.

*Philip M. Griffin is a former staff member responsible for Africa on the Senate Foreign Relations Committee. 

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