Mozambique News Agency

No.185, 5th June 2000


Government prepares for Consultative Group

The maintenance of macro-economic stability in Mozambique cannot be ignored just because of post-flood reconstruction in the south and centre of the country, Finance Minister Luisa Diogo told reporters in Maputo on 2 June. She said that the government would be going to the upcoming meeting in Paris of the World Bank's Consultative Group on Mozambique with proposals not only for urgent rebuilding of infrastructures destroyed by the February/March flooding, but also for measures to resume a high rate of growth, combined with poverty reduction.

Reconstruction after the floods could not be allowed to override all the government's other plans, she stressed. "We must ensure that the economy continues to function in the rest of the country", Diogo said.

The Consultative Group brings together the main donors and funding agencies who support the Mozambican economy, and it is at this forum that the government presents its funding needs for the year.

Diogo said that the new money to be requested at this year's meeting is around $440 million: this is in addition to the $453 million pledged for reconstruction at the donor conference on the floods held in Rome in early May.

The government document for the Paris meeting envisages external funding of well over $500 million every year for the next decade.

In addition, the government hopes to keep the lid on debt servicing. Further loans would be incurred, so there would always be "a certain level of indebtedness", said Diogo. But she hoped to keep annual debt servicing down to "no more than $25 million a year".

This year, debt servicing is just $23 million: that is because of the various debt cancellations and moratoria declared by creditors in response to the floods. Without those, the 2000 debt service would have been around $70 million.

Diogo said that, if all goes well and Mozambique qualifies in March 2001 for the "enhanced" version of HIPC (Heavily Indebted Poor Countries) initiative, then debt servicing in 2001 will be less than $23 million. This assumes that the suspension of debt payments announced for this year by the Paris Club of creditors is transformed into outright cancellation.

Floods hit growth and inflation rates

Diogo admitted that the floods have destroyed the possibility of achieving a GDP growth rate of around nine per cent this year. The government was now thinking in terms of between five and seven per cent growth.

"But in the longer term we want rapid growth, which means at least eight to nine per cent a year", she stressed. Without such growth, it would not be possible to tackle poverty.

As for inflation, Diogo admitted that this year it was likely to be much higher than desirable. In the first four months of the year, inflation (as measured by the Maputo Consumer Price Index) reached almost 10 per cent, which compares with a 4.8 per cent inflation rate for the whole of 1999.

Looking at inflation month by month shows the impact of the floods. In January, there was an overall decline in prices, and inflation for that month was minus 0.3 per cent. But in February, March, and April, inflation was 7.2 per cent, two per cent and one per cent respectively. February was the month of the catastrophic flooding, completely disrupting normal transport and marketing systems.

Although the May figures are not yet in, Diogo was optimistic they would show that inflation had become negative again.

She insisted that the government would maintain a restrictive fiscal and monetary policy. It would certainly not print more money just to cover public expenditure.

Crown Agents to be phased out

As for the reform of the Mozambican customs service, Diogo said that the British managers who have been running customs are now being gradually replaced with Mozambicans trained over the past three years.

The contract with the British company Crown Agents was being renewed, but on a "phasing out" basis. By the year 2002, the customs service would be entirely in Mozambican hands, she said.

That did not rule out foreign technical assistance, possibly from Crown Agents, possibly from other companies, in specific areas, notably anti-corruption units.

Diogo said that a rapid growth rate would require the government to develop specific national policies particularly in the industrial sector. This would entail making awkward choices - for instance, on the future of the textile factories, most of which are currently paralysed.

Specific indicators were needed, quantitative targets to allow monitoring of policy implementation. There had to be rigorous checking of progress against concrete targets, "and not just good intentions", she said.

Mozambique at Expo-2000

Culture Minister Miguel M'kaima has expressed satisfaction at the objects and artefacts on display in the country's pavilion at the World Exhibition Expo-2000 in the German city of Hanover, which was opened to the public on 1 June.

Speaking to AIM after he had visited the Mozambican pavilion and that of the collective display of the Southern Africa Development Community (SADC), M'kaima said that the exhibits reflect the original plans.

Mozambique is participating as a sole exhibitor under the theme "Environment and Development", with a major stress on the Zambezi Valley, and is jointly exhibiting with the other SADC members under the theme "Water".

Mozambique's Ambassador in Germany, Manuel Lubisse, described the pavilion as simple and well decorated, and thus selling the good image of the country, in the wake of the devastating flooding of February and March.

Jacinto Veloso, Mozambique's General-Commissioner for the event, said that "this is a dignified presence", thanking the effort undertaken by the government and by civil society to make Mozambique's presence in Hanover possible.

The deputy General Commissioner for economic affairs, Americo Magaia, said that the presence in Germany is the "culmination of collective work" developed by the team responsible for Mozambique's participation.

Expo-2000 is being held under the general theme "Man, Nature and Technology", and will last until October.

Negotiations over fate of BCM

Negotiations between the Mozambican government and the Portuguese BCP/Atlantico group, concerning the latter's holding in Mozambican banks, are almost complete, according to Finance Minister Luisa Diogo.

The BCP is the main shareholder in the International Bank of Mozambique (BIM), and in late 1999 it merged with the Banco Mello, the main shareholder in the country's largest bank, the Commercial Bank of Mozambique (BCM).

Fears were expressed that the merger in Lisbon might wipe out competition in Mozambique's nascent financial sector. For between them the BCM and BIM account for 54 per cent of all Mozambican bank accounts, and 61 per cent of bank credit. If the BCP was allowed to hold a majority of shares in both banks, it would be in a monopoly position.

Diogo told a Maputo press conference on 2 June that the question of the BCP's holding in the BCM was "practically resolved", and the final documents are now being drawn up.

"The BCP never said it wanted a majority holding", she said. Instead it would accept 50 per cent or less. She believed that the BCP and the Mozambican state were agreed that there should be no majority for any foreign shareholder in the BCM. Instead, Mozambicans should acquire more of the bank's shares.

Diogo said there would shortly be a general meeting of the BCM's shareholders which, among other issues, would decide on a "very large" increase in the bank's capital. She put that increase at "more than a 1,000 billion meticais" (over $65 million).

Chibuto road opens to convoys

Traffic on the Chissano-Chibuto alternative route, linking southern and central Mozambique, has reopened, but only for organised convoys and at fixed hours of the day.

The director of the National Road Administration (ANE), Carlos Fragoso, says that any vehicle using the road, regardless of its weight, should have no more than two axles, and should not have a trailer. Fragoso said that these limitations have been imposed in order to allow continued repair works on that stretch of road.

A stretch of the main north-south highway in Gaza province, between the provincial Capital, Xai-Xai, and Chicumbane, was washed away by the February floods on the Limpopo river, and repairing it is a major engineering task.

To ensure a road link between the south and centre of the country, a detour on the dirt road via Chibuto was to be used. But this road was severely damaged by renewed heavy rains in early May.

On 30 May the ANE announced that it would keep the road closed for a further ten days, but pressure form angry motorists, and the pressing need to restore overland communications between the southern and the central regions determined its conditional reopening.

Fragoso explained that the convoys will be organised at each end of the Chissano-Chibuto road, and will be controlled by the police. Priority in these convoys will go to light vehicles, followed by passenger transport, and then cargo vehicles.

Fragoso said that once these emergency road repairs are completed, a contractor, who is to be selected through a tender that has already been launched, will take over and do a more substantial and definitive job.

"We were only doing a minimum of repairs. Our provincial companies are for the maintenance of roads and not for this type of repairs. But we were forced to resort to the workforce and the companies that we could quickly put on the field", he explained.

The $3 million or so needed for the repair of the Chissano-Chibuto road, and parts of the stretch between Xai-Xai and Chicumbane, was granted by the British government.

France funds AIDS project

The Mozambican and French governments on 2 June signed an agreement under which the French government is to disburse $8 million francs (slightly over $1 million) to support the fight against AIDS in Mozambique.

Signing the agreement were Mozambique's Deputy Foreign Minister, Frances Rodrigues, and French Ambassador Bernadette Lefort.

Also present at the signing was Janet Mondlane, the widow of Eduardo Mondlane, the founder and first President of the Mozambique Liberation Front (Frelimo), who took office in Maputo, on 31 May, as executive secretary of the National Council for the Struggle Against AIDS.

Minimum price for cotton

The Mozambican Cotton Institute (IAM), the cotton companies, and representatives of associations of peasant producers who grow the cotton have agreed on a minimum price of 2,500 meticais (16 US cents) a kilo for raw cotton in the coming harvest.

The concessionary companies (who provide the peasants with inputs on credit, and then buy the peasants' cotton) proposed 2,400 meticais a kilo, the peasant associations proposed 2,600, and a compromise was reached by splitting the difference.

In nominal terms, this is an increase of 200 meticais a kilo on last years price of 2,300 meticais - a rise of nine per cent. However, over the same period the metical has devalued sharply against the US dollar: when it was introduced in mid-1999, the price of 2,300 meticais was equivalent to over 18 US cents.

The companies protested that even with a producer price of 2,300 meticais a kilo, they made a loss when they exported the cotton. In 1999, world cotton prices slumped to their lowest level in 15 years. Currently, the price is improving, and on 30 May stood at 61.55 cents a kilo.

The price is still a long way short of the 70 or 80 cents a kilo that cotton was fetching on the world market in the mid 1990s. High international prices made possible a minimum producer price of 3,300 meticais a kilo, for top grade cotton, in 1997.

Currently cotton is the only crop for which the government, through the IAM, sets a minimum producer price. But this is likely to disappear in the next couple of years.

At the meeting between the IAM, the companies and the associations there was general consensus that the liberalisation of the sector was "irreversible".

A working group has been set up to look at the entire cotton sector, and will draw up proposals for altering the rules for cotton marketing.

Frelimo discusses election performance

Frelimo on 31 May began a five day National Meeting, in the southern city of Matola, aimed at drawing up a balance sheet of its performance in last December's general elections, and to start preparing for the next presidential and parliamentary elections, due in 2004.

"This exercise, that started at lower levels of the party, and is now culminating in this national meeting, is already preparation for our participation in the 2004 elections", declared the party's general secretary, Manuel Tome, at the opening session.

He urged the participants to "make a deep analysis in order to know as objectively as possible to what extent the results achieved (in the general elections) corresponded or not to our expectations".

In fact, it is clear that the results were a disappointment. For while the elections were won by Frelimo and its presidential candidate Joaquim Chissano, Frelimo came nowhere near the two thirds parliamentary majority some of its spokesmen had hoped for.

President Chissano's presidential vote slipped somewhat, when compared with the first multi-party election in 1994. Then he won 53.3 per cent of the valid presidential votes: in 1999, this figure was only 52.3 per cent.

Frelimo saw its number of parliamentary seats rise from 129 to 133, increasing its overall majority from eight to 16. But in two provinces it suffered serious reverses: in the second largest province, Zambezia, where it had hoped to capture half of the 49 seats at stake, it actually lost three seats, with its total falling from 18 to 15.

And in the northernmost province of Niassa, one of the areas where Frelimo launched the independence war in 1964, it lost its majority: Renamo took seven of Niassa's 13 seats, to just six for Frelimo.

Tome noted that there were some improvements in the Frelimo election campaign, when compared with 1994: in 1994, Frelimo had needed support from friendly parties from other countries and from foreign marketing companies, but in 1999 dispensed with that assistance.

However, he criticised, and said that this will be part of discussion during the meeting, the attitude of "some of the national and foreign media who, evading the need for rigorously ethical behaviour, allowed themselves to become instruments in the manipulation of public opinion, made through systematic lies, repeated by some of the opposition".

He named no names - but the most notorious manipulation was by the Portuguese media, particularly Portuguese television, who accepted at face value the declaration made by Renamo on 14 December that it had won the election.

Lazy reporters simply transmitted a sensational story to Lisbon, without bothering to check Renamo's figures. With the aid of nothing more complicated than a pocket calculator both AIM, and the independent newsheet "Metical" were able to prove that Renamo's figures showed the opposite of the Renamo claims, and actually pointed to a Frelimo victory.

"If our discussions are to be fruitful", said Tome, "we must debate without preconceptions, in a cool, objective, frank and open fashion. While we should avoid an excessively defensive style of criticism, we should also refrain from self- flagellation".

"We must be able to put on the table in a just and balanced way our strengths and our weaknesses", he added.

Tome hoped that the meeting would produce "ideas and recommendations that improve the individual performance of each party member and sympathiser, and that make our party structures more effective in their task of serving the people".

Funds needed for helicopters

The Mozambican government is contacting donors to obtain more funds to extend the hiring of helicopters that are airlifting assistance to isolated areas in the southern provinces of Maputo and Gaza, reports "Noticias" on 26 May.

The director of the National Disasters Management Institute (INGC), Silvano Langa, said that the three helicopters operating at the moment will end their mission by the end of May.

He explained that the money the government is requesting is not to increase the fleet, but to ensure that the existing one will continue until a solution is found for the problem of access roads.

Langa said that the three helicopters are being paid for with money granted by the United States Agency for International Development (USAID). He said that these are commercial aircraft, and have the advantage of being cheaper than military ones and have a greater capacity.

The commercial helicopters cost between $2,000 and $2,500 an hour, while the military ones cost up to $3,500 an hour. The commercial helicopters can carry about four tonnes, compared with the 2.5 tonnes of the MI military helicopters.

Langa recalled that China has made available two fixed wing aircraft, but these will not be able to land where the cargo is needed. Thus, the government is still discussing the issue with China.

Books for Police Academy

The Police Academy (ACIPOL), in Michafutene on the outskirts of Maputo, on 1 June received a windfall of about 800 police technical books donated by the Portuguese embassy in Maputo.

The books are part of a consignment of 1,070 books on police techniques being offered by Portugal to boost the Academy's library, said Antonio Braga, director of the Portuguese Camoes Institute in Maputo.

Braga told AIM that Portugal has a cooperation protocol with ACIPOL. Currently, its cooperation lies in the advisory area, and personnel training - 10 ACIPOL staff are taking courses in a Portuguese academy.

For his part, the General-Commander of the Mozambican police, Pascoal Ronda, said that the offer would enrich part of the bibliography used by undergraduates at the academy.

Ronda said that other countries have been supporting ACIPOL through the United Nations Development Programme (UNDP).

As for ACIPOL's activities, he said that it was too early to make a general analysis of its functioning since "it's still preparing for the complete start of its activities".

The academy has 127 students, including serving police members and new recruits.

Plans to establish tri-partite wildlife park

Plans to establish the world's fifth biggest wildlife park could become reality with the expected signing of an agreement in mid-June by the Mozambican, South African and Zimbabwean governments.

A source from the South African Tourism and Environmental Affairs Ministry told AIM in Johannesburg that the park will run along the border of the three countries.

The source said that tourism ministers will meet in Kruger National Park, in South Africa's Mpumalanga province, on 19 June, and it is expected that they will sign the agreement which will formally give rise to the park.

The park will link Kruger Park, the Gonarezhou game reserve in southern Zimbabwe, and the Banhine, Zevane and Lot 16 parks, in the southern Mozambican province of Gaza.

Details for the creation of the park, to be called Gaza-Kruger-Gonarezhou trans-border area, were initially discussed in the Zimbabwean capital Harare between ministers of the three countries.

Leo Braack, national coordinator of the South African parks, told AIM that the ministers want the initiative to be up and running before the end of the year.

Seemingly, the project has the backing of international donors. Braack said that donors have promised to fund eco-tourism projects in the region, such as the tri-partite park.

However, South Africa has raised some concerns: Braack added that South Africa wants Mozambique to have an effective anti-poaching policy before the barbed wire on its side can be brought down.

He added that the three countries must also harmonise their legislation on wildlife, and stated that it would be absurd for South Africa to penalise poachers with a 20,000 rand (almost $3,000) fine, while in "some other country" the same crime results in a fine equivalent to 100 rand.

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