Mozambique News Agency

AIM Reports

No.382, 8th July 2009



  • Exports fall by over a third as aluminium prices crash
  • IMF approves $176 million loan
  • Legislation on conflict of interest passed
  • Bill on private medicine passed
  • Assembly passes bill against domestic violence
  • Assembly amends law on higher education
  • Credit for cashew companies
  • Chinese company warned over labour relations
  • Bio-fuel refinery for Sofala
  • Power supply to Botswana increased
  • Wages for chronically ill to go up

  • Exports fall by over a third as aluminium prices crash

    Mozambique’s exports fell in value by 36 per cent in the first quarter of this year, compared with the same period in 2008, according to the latest statistics from the Bank of Mozambique. The MOZAL aluminium smelter, on the outskirts of Maputo, dominates exports and the price of aluminium has tumbled in world markets.

    Earnings from aluminium were $330.7 million in the first quarter of 2008, but only $182 million in January to March this year – a decline of 45 per cent. This is the main reason why total exports over the period fell from $543.1 to $347.6 million.

    Exports of natural gas also slumped, from $60.9 to $33.7 million. But, with the Cahora Bassa dam operating at almost full capacity, exports of electricity jumped from $52.4 to $60.9 million. There was a slight rise in exports of the titanium ore, ilmenite, from $4.2 to $4.5 million.

    Most of the country’s agricultural exports showed a decline – cotton from $15 to $7.4 million, cashew nuts from $12.1 to $5.4 million, tobacco from $6.8 to $4 million, and timber from $6.8 to $4 million. No figures are available for sugar, since none was exported in the first quarter of either year.

    Despite the international financial crisis, Mozambique continues to show a healthy growth in its GDP. Contrary to predictions that growth would slow down to around four per cent a year, the figures for the first quarter show a five per cent annual growth rate, which is not far below the 5.2 per cent registered in the first quarter of 2008.

    The central bank is also pleased that the commercial banks are responding to the repeated appeals to open branches in the rural districts. The total number of bank branches rose from 275 in December 1007 to 364 in May 2009.

    Although there is still a heavy concentration of banks in Maputo, Matola and (to a lesser extent) Beira, the number of districts with at least one bank rose over this period from 33 to 49. That means, however, that there are still 79 districts where no commercial bank is yet operating.

    IMF approves $176 million loan

    The Executive Board of the International Monetary Fund (IMF) on 1 July approved a loan of $176 million for Mozambique over the next year to counter the effects of the world economic crisis. The money was granted under the IMF’s Exogenous Shocks Facility.

    This facility is designed to provide policy support and financial assistance on concessional terms to eligible low-income countries facing temporary exogenous shocks. Mozambique can draw immediately on $132 million worth of these funds to help offset the deterioration of the country's balance of payments.

    The IMF Board also approved its fourth review of the country's economic performance under the three-year Policy Support Instrument (PSI), which began in 2007. The PSI aims to support economic reform in Mozambique whilst helping to maintain macroeconomic stability as foreign aid is increased. It is designed to complement the government's Action Plan for the Reduction of Absolute Poverty (PARPA II).

    The PSI is an instrument that does not lend money to countries, but provides policy advice, and represents an endorsement by the IMF of the recipient's economic policies. The IMF argues that this sends a positive signal to donors and markets.

    After the Board meeting the IMF Deputy Managing Director. Takatoshi Kato, declared that "Mozambique has continued with a strong macroeconomic performance in 2008. A flexible policy response to higher fuel and food import prices helped to mitigate the impact of internal and external shocks in a challenging external environment".

    Kato added that "Mozambique's strong track record of prudent macroeconomic policy implementation has provided room for an easing of fiscal and monetary policy in the near-term while remaining within its prudent medium-term strategy. In this context, the authorities' commitment to expenditure restraint in the approach to elections is welcome".

    The IMF loan is interest free for the first five years, followed by a rate of 0.5 percent per annum. It is to be repaid over ten years.

    Legislation on conflict of interest passed

    The Assembly of the Republic, on 24 June passed unanimously the first reading of amendments to the Statute of Deputies, making it compulsory for deputies to declare any interests they may have in matters under debate.

    The amendments state that a conflict of interests exists if a deputy or any of his or her close relatives are personally involved in any business which will be affected by a law or resolution passed by the Assembly, or work in any capacity for a company or other collective body the operations of which may be modified by such a law or resolution.

    In such cases the deputy concerned must announce, either in writing or orally, before speaking on the matter, his or her interest in the question under debate.

    The amendment does not establish a register of deputies’ interests, and it does not forbid deputies with a conflict of interests from voting on the matter.

    The amendments also clarify the procedures for lifting parliamentary immunity, in cases where deputies are accused of crimes. Unless caught in the act of committing a crime, a deputy may not be arrested or detained without the consent of the Assembly.

    If a deputy is charged with a crime, the Legal Affairs Commission must give its opinion as to whether the lifting of immunity is warranted, and the final decision is then taken by the Assembly’s governing board, its Standing Commission.

    Any criminal case against a deputy must be prosecuted by one of the Assistant Attorney-Generals, and heard by a Supreme Court judge.

    The amendments also make it clear that nobody can be both a deputy and hold any municipal office, or any leadership position in the executive or judiciary. This had not been stated categorically before, but had been the practice.

    The amendments grant one additional privilege to deputies – the state will pay for third party insurance on their vehicles, which the Finance Ministry calculates will cost a million meticais ($38,000) a year.

    Bill on private medicine passed

    The Assembly of the Republic on 26 June passed the second and final reading of a bill that tightens the regulations governing private medicine.

    The bill ensures that all private medical units (including those dispensing so-called “alternative medicine”) must be staffed by properly qualified personnel, and be professionally registered – their qualifications must be recognised by Mozambique’s Order of Doctors.

    Other health workers in a private clinic must also have qualifications that are recognised in Mozambique.

    The bill allows health professionals in the public sector to go into private practice – but only with the authorisation of the director of the public health unit where they are working, who must indicate the hours permitted for their private practice.

    The bill passed unanimously, and when become law when promulgated by President Armando Guebuza and published in the official gazette, the “Boletim da Republica”.

    Assembly passes bill against domestic violence

    The Assembly of the Republic, on 29 June passed the first reading of a bill on domestic violence against women, greatly increasing penalties for such violence.

    Up until now domestic violence was not a specific offence, but was treated as a case of assault.

    This bill defines domestic violence as a “public crime” – which means that prosecuting the offender does not depend on a complaint from the victim. The police can act without waiting for a complaint, and anybody else who becomes aware of the violence can denounce it to the police or prosecution service.

    The bill states that in any case of domestic violence, the minimum and maximum prison terms established for crimes such as assault and causing grievous bodily harm will be increased by a third. But, after assessing the family situation, the court may replace a prison sentence by a period of community work.

    Women who are victims of domestic violence must receive urgent and sympathetic treatment from the police and the health authorities. The latter must provide a detailed report on the injuries to the woman, and their possible consequences.

    Should the husband or other male relative who committed the act of violence abscond, he will be tried in absentia.

    Even before there is any trial the Court may, at the request of the woman or of the prosecution, issue an injunction, banning the offender from the house, and suspending his parental rights over the couple’s children. The court may also ban him from removing or selling any family property.

    Meque Vicente, the chairperson of the Assembly’s Social Affairs Commission, which proposed the bill, denied that its purpose was to “break up the family”. On the contrary, it was defending families against violence.

    The bill passed unanimously and by acclamation. It will now be amended in committee before coming back to the plenary for a final vote in mid-July.

    Assembly amends law on higher education

    The Assembly of the Republic on 26 June passed a government bill amending the law on higher education to bring the country’s university degrees into line with normal international practice.

    For decades the standard first degree at the country’s largest, and oldest university, the Eduardo Mondlane University (UEM), has been a “licenciatura”. Most licenciatura courses lasted five years (and seven years in the case of medicine). Many students then remained enrolled at the university for several more years before completing a dissertation.

    The new bill slashes the length of a first degree course to three years, with an 18 month course for a Master’s Degree, and a minimum of three years for a doctorate.

    The bill was not controversial and passed its first reading unanimously.

    Credit for cashew companies

    The Mozambican cashew processing industry has benefited, over the last five years, from a line of credit of $50 million, opened by the government as part of a drive to facilitate access to credit for small and medium companies.

    The Minister of Industry and Trade, Antonio Fernando, told reporters on 2 July that in recent years 24 small scale cashew processing plants have emerged, in part due to the credit facilities provided by the government.

    Today the cashew industry, he said, directly employs about 6.700 workers, with a “very positive” impact on the cashew producing areas, notably the northern provinces of Nampula and Cabo Delgado.

    In the late 1990s, the cashew industry collapsed, largely because of the World Bank’s demand that the government should no longer protect the industry. The World Bank’s interference made it impossible for the Mozambican industry to compete with those who were buying up raw nuts for export to India. Wittingly or otherwise, the World Bank supported the Indian cashew processing industry at the expense of the Mozambican one.

    The result was that all 14 large-scale, mechanized cashew factories closed. The resurgence of processing this decade is on the basis of much smaller, labour intensive units. These smaller plants have not yet equalled either the production or the employment of the defunct large factories.

    According to Fernando, the government, working through the National Cashew Institute, is encouraging the establishment of small processing plants, with “globally competitive technologies”.

    In addition to the $50 million line of credit for the cashew industry, other credit possibilities are available to small companies, such as the Small Industry Promotion Fund (40 million meticais – equivalent to $1.5 million), and the Economic Recovery Support Fund (FARE). The latter has 21 million meticais available, essentially for the reconstruction of rural shops.

    Fernando said that a new fund, of over 100 million meticais, was now available to help farmers buy agricultural equipment.

    “These funds are not sufficient”, he said, “but they express the government’s efforts to place financial resources at the service of entrepreneurs”.

    The government was also trying to revive rural trade by selling off the ruins of shops that are still state owned. “These shops are being sold for the price of two goats, since the shops cost between 1,500 and 3,500 meticais each”, said the Minister. This measure was intended “to ensure that Mozambican could carry on their businesses in the rural areas”, where currently trade does not take place in commercial establishments at all, but is entirely informal.

    Chinese company warned over labour relations

    The governor of the central province of Manica, Mauricio Vieira, has warned the Chinese company China Henan International Cooperation Group (CHICO) that it must respect Mozambican labour legislation.

    Chico won the contract to build the new water supply system that will supply the provincial capital, Chimoio, and Manica and Gondola towns with water from the Chicamba dam. But although the project only began officially on 22 June, Mozambican workers are already complaining at the way CHICO treats them.

    Among the complaints made to the governor are lack of written work contracts, lack of overtime payments, lack of any fixed hours for the work, lack of protective equipment (gloves, face masks and hard hats), physical attacks upon workers, and insults.

    Reacting to these complaints, Vieira said the Chinese company must respect national labour legislation in its relations with its work force, and ordered an inquiry, headed by the Provincial Director of Labour, to assess the truth of the workers’ claims.

    “Workers must be respected and honoured, they should work with the necessary dignity and be treated as human beings”, said the governor.

    He warned that, if CHICO does not improve its labour relations, it would be liable to heavy fines. “Initially we shall use persuasion”, said Vieira, “but if they continue to commit irregularities, we may resort to more severe ways of restoring legality”.

    Bio-fuel refinery for Sofala

    The Galpbuzi consortium, consisting of the Mozambican Buzi Company and the Portuguese Galpenergia is planning to install a bio-fuels refinery in the district of Buzi, in the central province of Sofala, within the next 10 years.

    According to the general director of the consortium, Goncalo Barradas, the bio-fuels would be produced from sunflower and from the jatropha shrub.

    To be viable the project will need to plant at least 8,000 hectares to produce about 5,000 tonnes of seeds. The consortium has already planted 150 hectares of jatropha and 25 hectares of sunflower in the Buzi locality of Bandua.

    Barradas further explained that the project is counting on the contribution of small, medium and big farmers to produce the necessary raw material to feed the refinery. “If we manage to get enough seeds to justify the installation of the refinery, both for export and for the domestic consumption, Galpbuzi will go ahead with the project”, he said.

    Power supply to Botswana increased

    Mozambique is prepared to increase its sales of electricity to Botswana from 30 to 75 megawatts, according to Energy Minister Salvador Namburete.

    Namburete told AIM that the Botswana government had made this request, and the government had decided there was just enough spare capacity available at the Cahora Bassa dam to allow the increase.

    The Cahora Bassa power station has five giant turbines each capable of generating 415 megawatts. So the maximum installed capacity at the dam is 2,075 megawatts.

    Most of this is now committed – 1,300 megawatts sold to the South African electricity company Eskom, 200 megawatts to the Zimbabwean company ZESA, and 400 megawatts reserved for Mozambique’s own power distribution company, EDM.

    Namburete said that Hidroelectrica de Cahora Bassa (HCB) has been selling 30 megawatts to Botswana for some years under the existing arrangements. If necessary, the extra power for Botswana can be supplied from EDM’s reserve.

    Namburete added that EDM is working with the Botswana Power Corporation (BPC) to ensure that the agreement is viable. Since Botswana does not border on Mozambique, the power must pass through either Zimbabwe or South Africa. Using the Zimbabwean lines is cheaper, but they are in a poor state of repair.

    Botswana is therefore also negotiating the rehabilitation of the Zimbabwean power lines. The matter is urgent since Eskom is no longer able to sell power to Botswana due to South Africa’s own shortage of electricity.

    In the long term, the region’s electricity requirement can be met with the dramatic expansion planned in Mozambique’s generating capacity. The dam planned on the Zambezi at Mepanda Nkua, 60 kilometres downstream from Cahora Bassa, should provide 1,500 megawatts, and a second Cahora Bassa power station, on the north bank of the river, could add an extra 1,000 megawatts.

    Two large coal fired power stations are planned in Moatize district; one operated by the Brazilian mining giant Vale, and the second by the Australian company, Riversdale.

    Namburete also stated that Mozambique would not cut off the supply of electricity to Zimbabwe – despite a Zimbabwean debt of tens of millions of US dollars to HCB. He said that the supply of power to Zimbabwe by HCB is a way for the Mozambican government to help Zimbabwe to recover from its economic crisis.

    Although the debt owed by the Zimbabwean electricity company (ZESA) to HCB is now approaching $50 million, Namburete said there was no question of disconnecting Zimbabwe. “The inclusive government of Zimbabwe needs our support”, said Namburete. “An effort is being made by the Southern African Development Community (SADC) to help Zimbabwe’s economic recovery, and later on Zimbabwe can pay its debts”.

    Wages for chronically ill to go up

    The Mozambican government plans to increase the wages of chronically ill state employees. Speaking to AIM the Minister for the Public Service, Vitoria Diogo, said that a new government decree grants the sick employees a 30 per cent allowance on top of their basic wage.

    The measure is aimed mainly, but not exclusively, at state employees who are HIV-positive. Of the 167,000 people employed by the Mozambican state, an estimated 32,000 are HIV-positive.

    According to Diogo, the government decree states that when a medical board declares that a worker is chronically ill, and unable to continue working, he or she will be allowed to take up to two years leave. During this time the worker must receive medical treatment. In addition to receiving 100 per cent of his or her wages during this period, the worker will also receive an allowance of 30 per cent, intended to ensure that he or she can obtain an appropriate diet.

    Diogo stressed that the allowance is not intended for each and every HIV-positive worker, but only for those who have medical confirmation that they are unable to work.

    Diogo stressed that the government is concerned about the growing number of deaths from AIDS in the public administration. Currently, about 1,600 state employees are dying of AIDS every year. Over the next 15 to 20 years all the 32,000 public servants who are currently infected are likely to die unless measures are taken now to cope with the crisis.

    After two years of treatment and leave, each beneficiary of the allowance will be re-examined, said Diogo. If the medical board judges that the worker is still unable to return to work, he or she will be obliged to take early retirement. People in this situation will no longer receive wages, but only the pension to which they are entitled.


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