Mozambique News Agency

AIM Reports


No.363, 23rd July 2008


Namibian ship seized for illegal fishing

The Mozambican authorities have seized a ship flying the Namibian flag that was fishing illegally for sharks in Mozambican waters. Fisheries Minister Cadmiel Muthemba told reporters on 18 July that a licensed Mozambican fishing vessel alerted the authorities to the presence of the Namibian ship, the “Antillas Reefer”, off the coast of the central province of Zambezia on 23 June.

The Ministry investigated and ordered the ship to head south and put in at Maputo port. “Eventually the ship came voluntarily”, said Muthemba. “The captain knew there would be serious consequences for disobeying”.

The ship and its 36-member crew, most of them Spaniards, arrived in Maputo on 5 July. When fishing inspectors weighed the “Antillas Reefer” cargo, they found that it was carrying 43 tonnes of sharks, four tonnes of shark fin, 1.8 tonnes of shark tail, 11.3 tonnes of shark liver, and 20 tonnes of shark oil. Shark fins are eaten as an expensive delicacy in Asia, while shark liver and oil are used for medicinal purposes. The total value of this catch was put at around $5 million.

Also found on board were 65 tonnes of bait and illegal fishing gear. The “Antillas Reefer” was using long lines, with anchors and weights that could keep the lines at depths of up to two kilometres, allowing the vessel to catch deep-sea sharks.

The ship was unlicensed, it was taking species that may not be fished in Mozambican waters, and it was using banned gear. In addition, the captain’s statements about the cargo proved to be untrue – he seriously understated the quantity of shark fins and liver on board.

The Fisheries Ministry has imposed a fine of $4.5 million on the ship’s owners. In addition it has confiscated the ship and everything on board. The owners have eight days to appeal to Mozambique’s Administrative Tribunal.

The “Antillas Reefer” was brought to Mozambican waters by a Mozambican company, Sabpal Pescas, which was working with the ship’s owner, the Walvis Bay registered Ompala Fishing Pty Ltd. Sabpal told the Ministry that the vessel would fish for tuna – but before any licence was issued, and before the obligatory inspection of the fishing gear, the “Antillas Reefer” was already hard at work, scouring the Mozambican seas, not for tuna, but for shark.

It turns out that Ompala is a joint venture between the Uruguayan company Mabenal, and the Namibian company Gongala Fishing. Now it so happens that Mabenal and Gongala are also the owners of the company Omunkete Fishing, which is already in deep trouble over illegal fishing in the Antarctic Ocean.

On 1 July, a New Zealand court found that Omunkete’s vessel, the Paloma V, was involved in illegal fishing in the Antarctic for toothfish, an endangered species. This makes it likely that the Paloma V will be blacklisted by the Commission for the Conservation of Antarctic Marine Living Resources which would prevent it from entering any ports in countries that are signatories to this commission (which include Namibia and South Africa).

Although Omunkete pleaded innocence, the New Zealand Fisheries Minister, Jim Anderton, said the “Paloma V”’s computer records revealed that it had contact with known illegal fishing vessels and had resupplied them at sea. But the New Zealand authorities did not confiscate the “Paloma V” which subsequently returned to Walvis Bay.

Mabenal’s address and telephone number in Uruguay are exactly the same as that of the company Fadilur, owner of the vessel “Hammer”, which is on a list of ships known to have engaged in illegal fishing. In 2006, Fadilur, and its Spanish owner, Antonio Vidal Pego, were convicted in a United States court for the attempted illegal import and sale of toothfish.

Since Ompala and Omunkete have the same owners and are registered in the same port, one may wonder whether they are really separate companies at all.

Muthemba promised that Sabpal Pescas will lose its licence, and that the government will report all the companies involved with the “Antillas Reefer” to the international organisations that deal with the fight against illegal fishing.


Sweden reaffirms reduction in support

The Swedish ambassador to Mozambique, Torvald Akesson, has warned that, as from next year, Sweden will reduce its direct support to the Mozambican state budget, because of the government’s failure to meet benchmarks in the area of good governance. Akesson told the weekly “Savana” “we aren’t seeing any serious progress in the fight against corruption”.

Sweden is one of 19 donors and funding agencies that provide some of their aid to Mozambique in the form of direct budget support, rather than as funds earmarked for specific programmes or projects. Every year, these “Programme Aid Partners” (PAP) review progress with the government, based on indicators – the 2008 Joint Review, which ended in late April, concluded that, of the 41 indicators and targets set for 2007, only 23 had been achieved.

The donors regarded this as a good enough basis for continuing budget support, but warned publicly that the country was not making enough progress in the fight against crime and corruption. The Aide-Memoire agreed between the government and the 19 partners declared that anti-corruption measures should be speeded up.

Akesson’s statement to “Savana” comes as no surprise. For when, on 22 May, the PAP members formally delivered their pledges of budget support for 2009 (totalling $445.2 million), Sweden and Switzerland were the two donors who reduced their aid, citing fears of corruption and poor governance.

At first sight, despite these concerns, overall budget support seemed to be rising: the amount pledged for 2008 was only $383.8 million. But this increase was deceptive, owing a great deal to the weakness of the US dollar. Most of the PAP members give aid in Euros or other European currencies (such as the Swiss frank, the British pound or the Swedish crown), which had appreciated considerably against the dollar.

In dollar terms, it looked as if both Sweden and Switzerland had increased their budget support (from $44.6 to $47.1 million). But this was just an artefact of the exchange rate. In reality, when the sums are expressed in Swedish crowns of Swiss francs, these were the two countries that had reduced support.

When expressed in their own currency, rather than in dollars, only four donors (Austria, Germany, Ireland and Spain) pledged to increase budget support in 2009. 13 of the partners opted to keep budget support at the same level as in 2008.

One of the longstanding problems cited by Sweden is the 2001 collapse of the privatised Austral Bank. The Malaysian-Mozambican consortium that purchased 60 per cent of the bank in 1997 presided over four years of looting, so that by December 2000 non-performing loans accounted for over a third of the credit portfolio.

Rather than recapitalize the bank, the consortium simply handed its shares back to the state in April 2001, leaving the government, which still held 40 per cent of Austral, to rescue the bank.

Akesson pointed out that “part of the money used to recapitalize the Austral Bank came from Swedish taxpayers, and so we are concerned that the case has not been cleared up. Schools and hospitals could have been built with the money that was criminally removed from the bank”.

However, finally there are signs of movement. The new Attorney-General, Augusto Paulino, has made the murder of the Austral interim chairperson, Antonio Siba-Siba Macuacua, in August 2001, and the looting of the bank, one of his priorities. Prosecutors have now questioned several of those who had been at the helm of Austral as the bank was ruined – including the chairman of the board, former Industry Minister Octavio Muthemba, non-executive director Jamu Hassane, and member of the Supervisory Board, Alvaro Massinga.

Akesson told “Savana” he had received indications that the investigations into Austral will be concluded by the end of this year. One key piece of evidence is a forensic audit of the bank, which was ordered by the government, but paid for by Sweden and Norway.

The Swedish attitude towards budget support is not determined simply by the Mozambican government dragging its feet on corruption. Sweden, so long regarded as a haven of social democracy, is now governed by a centre-right coalition, which came to power in the 2006 general election (when the Social Democratic Party achieved its worst result since universal suffrage was introduced in 1921).

The government has now moved to take greater control over budget support for developing countries, following a critical report on budget support published by the Swedish national audit office in December. Although the government has pledged to keep overall Swedish foreign aid to one per cent of GDP (much higher than the UN-approved figure of 0.7 per cent), the Swedish Development Minister, Gunilla Carlsson, has called for a reduction in the number of countries receiving support.

According to the Norwegian magazine “Development Today”, which specialises in Nordic development aid issues, new criteria have been issued, and developing countries must meet all of them, if they are to qualify for Swedish budget support. These criteria are “Fundamental respect for and a clear commitment and action to strengthen democracy and human rights; a realistic, national strategy for development and poverty reduction with democratic support; a sustainable economic policy for growth aimed at development and poverty reduction with a sound macro-economic environment; transparent and efficient public financial systems, in order to make the aims of the support possible to reach; a clear commitment and actions on fighting corruption”.

Just six countries currently benefit from Swedish budget support – Mozambique, Burkina Faso, Mali, Rwanda, Tanzania and Zambia. The total involved in 2007 was 966 million Swedish crown, of which about a third went to Mozambique.


Ethanol plant approved

The Mozambican government on 15 July approved a large biofuel project, under which 18,000 hectares in Dombe, in the central province of Manica, will be planted with sugar cane for the production of ethanol.

The project, budgeted at $280 million, belongs to the company “Mozambique Principle Energy”. Although the government spokesperson, Deputy Education Minister Luis Covane, told reporters that this firm is owned by Mozambican and Mauritian interests, its parent company, Principle Capital, is registered in London, and also has offices in Geneva and Cape Town.

The goal of Principle Energy is to produce 213 million litres of ethanol a year, starting in 2013. This will require a production of 2.5 million tonnes of sugar cane a year (12,000 tonnes of cane per hectare).

This project also includes the production of 82.2 megawatts of energy, starting in 2012. The company itself will use 20 per cent of this, and supply the remainder to the national grid.

The project is expected to create about 2,650 jobs. The company will also build a bridge over the Lucite River, and some social infrastructures for the benefit of the residents of the surrounding areas.

Covane explained that in approving this project, the government took into account aspects such as water supply, because sugar cane plantations need a great deal of water, and the Lucite river will be the source.

The government expects that this undertaking will be a major contributor to the state treasury, paying about $57 million in taxes in 2011, a figure that should grow to $119 million by 2012, and to $144 million in the following year.

Principle Capital announced the launch of Principle Energy in December 2007, when it said that it had secured funding for the first phase of the Dombe project. It stated that it had already raised $70 million in equity funding which would take the projects into 2009. It expected to raise a further $90 million of equity, possibly through a public offer of shares. The rest of the money would be project finance (bank loans).

The company also announced that, due to the quality of the soil, the Manica climate, and irrigation, expected cane yields at Dombe are 50 per cent higher than the average in Brazil, which is the world’s largest sugar cane ethanol producer.

Last year the government approved PROCANA, an even larger ethanol project which will involve planting 30,000 hectares with sugar cane in Massingir district, in the Limpopo Valley, in the south of the country. The foreign investor here is the London-based Central African Mining and Exploration Company (CAMEC), better known for its mining of copper and cobalt in the Democratic Republic of Congo. President Armando Guebuza laid the first stone for the construction of the PROCANA ethanol plant last December.


Millennium Challenge funding to start in September

Actions on the ground to use the $506.9 million promised to Mozambique from the United States Millennium Challenge Account (MCA) will start in September, according to Planning and Development Minister Aiuba Cuereneia. He was speaking to reporters on 14 July after meeting with US Senator William Frist, who is a member of the Board of Directors of the Millennium Challenge Corporation (MCC), which manages the MCA.

It is now almost exactly a year since Cuereneia signed the agreement (known as a “compact”) with MCC Chief Executive Office John Danilovich in Washington, under which $507 million was allocated mostly for water supply, sanitation and roads in four provinces north of the Zambezi River (Zambezia, Nampula, Cabo Delgado and Niassa).

Frist is in Mozambique at the head of an MCC mission analysing actions in the first year of the lifespan of the agreement. During his stay he will also meet with President Armando Guebuza, and visit some projects implemented by the government’s Water Supply Investment and Assets Fund (FIPAG) and by the Ministry of Agriculture.

The largest slice of MCA funds, $203.6 million, will be spent on water and sanitation. The roads component accounts for $176.3 million. Land tenure and registration activities will account for $39.1 million, and support for farm incomes $17.4 million.

Cuereneia stressed the importance of clean drinking water for public health and for preventing the spread of parasitic diseases. He said the activities to be developed with the MCA funding will be of major importance in the fight against poverty, enabling the government to undertake activities which it could not possibly undertake with its own limited funds.

The two main implementing bodies are FIPAG and the National Roads Administration (ANE). They will shortly launch tenders to select the contractors who will carry out the building work involved.

For his part, Frist said he was pleased with the steps taken since the agreement was signed on 13 July 2007. “The priority is to work to fight poverty and to ensure sustainable development”, he declared. He stressed that the entire programme has been designed by the Mozambican authorities and not by the United States.

The MCA and MCC result from an initiative of President George Bush, with initial funding of a billion dollars in 2004, rising to five billion dollars a year as from 2006. It looks certain to continue, whoever wins the US presidential election, as it enjoys bipartisan support.

Low-income countries are eligible only if the US administration believes that they are, in the words of President Bush, “ruling justly, investing in their people and encouraging economic freedom”.

So far 16 compacts have been signed, 10 of them with African countries.


Exports to SADC region remain low

Despite the SADC (Southern African Development Community) Free Trade Area, which came into effect in January, Mozambique’s exports to other SADC member countries remain low, the Minister of Industry and Trade, Antonio Fernando, admitted on 21 July.

He was speaking at a Maputo press conference held to announce that the SADC heads of state will formally declare the free trade area at their next summit, on 17 August in the South African city of Durban.

Fernando said Mozambican exports to the rest of southern Africa are currently running at around two billion meticais (about $83 million) a year. The largest market for Mozambican produce is South Africa – which purchases the bulk of the electricity produced by the Cahora Bassa dam on the Zambezi, and most of the natural gas processed at Temane, in the southern province of Inhambane.

Imports from the region are growing significantly, said Fernando. The main supplier of consumer goods for Mozambique remains South Africa. A long way behind come other SADC members such as Mauritius, Tanzania, Malawi and Swaziland.

As of 1 January, tariffs on most imported goods originating from SADC countries were supposed to fall to zero. Yet no decline in prices of South African products in Maputo shops has been noted.

Mozambique’s exports remain dominated by the aluminium ingots produced at the MOZAL smelter on the outskirts of Maputo. Currently Holland is the largest purchaser of MOZAL aluminium.

Fernando stressed that Mozambique needs to diversify its exports to other SADC members. “The country has the potential to offer much more”, he said. “We have to change the range of products to increase the volume of exports to SADC countries and thus contribute to increasing the country’s income”.

He suggested that businesses are not exporting more, because they are still unaware of the procedures and the benefits of the free trade area. “Imports have undergone major growth since the start of the free trade area in January”, said Fernando, “but Mozambique’s exports are not growing much. We aren’t exporting much because people still don’t know about the free trade area. We have to step up our work of explaining the conditions necessary for exporting”.

Fernando recognised, however, that there is a thriving informal cross-border trade that does not enter the official statistics. Thus large amounts of potato produced in Tsangano district, in the western province of Tete, are sold over the border in Zimbabwe at cheap prices. Likewise, a variety of medicinal plants, herbs, and even local alcoholic drinks, are taken illegally into South Africa. “Lots of exports happen without our knowledge”, Fernando admitted. “We have to improve our capacity to record exports”.

Fernando remained optimistic about SADC’s regional integration plans, despite the failure of most SADC members to opt clearly for SADC rather than other regional bodies. For example, no fewer than seven SADC members (eight if Seychelles, which has applied to rejoin SADC, is included) are also members of the Common Market for Eastern and Southern Africa (COMESA).

South Africa, Namibia, Lesotho, Botswana and Swaziland are members of the long-established Southern African Customs Union (SACU). Tanzania is a member of the East African Community (EAC). Angola and the Democratic Republic of Congo are members of the Economic Community of Central African States (ECCAS). In fact, Mozambique is the one and only SADC member that belongs to no other regional grouping.

This problem is becoming increasingly acute – for the next stage in regional integration is the SADC customs union, scheduled for 2010. Yet states cannot be members of more than one customs union – so what is the future of SACU? Furthermore COMESA claims it will form its customs union this year, and Zimbabwe has quite openly stated that it may join the COMESA customs union rather than the SADC one.

But Fernando thought that such problems could be dealt with as integration advanced. “I think regional integration isn’t threatened”, he said. “It’s a process that takes time to build, and during this period some decisions will be taken”.

“After the free trade area comes the customs union in 2010, and countries who belong to other unions will have to choose between one or the other”, he added.



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