Rio Tinto’s “Benga” coal mining operation in Tete province in central Mozambique. Arid, coal-rich Tete has been at the epicenter of a coal mining boom that has attracted billions of dollars in foreign investment. Photo: Human Rights Watch

Foreign aid donors could help navigate the risks and opportunities.

Titus Gwemende is Oxfam’s Southern Africa Program Advisor on Extractive Industries.

In last month’s presidential and parliamentary elections in Mozambique, Filipe Nyusi, the ruling FRELIMO party candidate, won comfortably, albeit by a reduced margin as compared to the previous elections.

Where does power really lie in Mozambique?

Seen as the preferred choice of outgoing President Armando Guebuza, Nyusi had been the surprise winner for the hotly-contested party nomination. Curiously, current President Guebuza will remain the leader of the ruling party till 2017, which in essence means the country will be led by two centers of power.

In addition to managing factional tensions in his own party, the new president can no longer afford to exclude the opposition party, RENAMO, as it won in some mineral rich provinces like Tete. And he will need to constructively engage with an increasingly vocal civil society that has been piling pressure on the government to lift a veil on the somewhat opaque extractive industries sector.

This concoction of political challenges could tempt the new president to dig in and use the power of incumbency and revenues from extractive industries to co-opt opposition into one gigantic patronage network.

Growth, extractives, and opportunity for Mozambique

The new president of Mozambique will preside over a growing economy. Mozambique has an annualized rate of over 7 percent GDP growth since the ceasefire agreement in 1992. Though much of this growth has not meaningfully reduced the country’s poverty and inequality, there fortunately remains an opportunity to turn this around.

One of the most important developments in Mozambique in the last few decades has been the discovery of massive mineral deposits like coal in Tete province in 2008 and natural gas in Cabo Delgado province in 2010. The discovery of mineral resources can alter the political and economic trajectory of a country and Mozambique has the opportunity to leverage the natural resources for inclusive development. Oxfam believes that pro-poor economic growth can be achieved through a commitment to democratic governance, inclusive economic policies, and shrewd political economy analysis by the new president.

The conundrum for Mozambique’s foreign aid donors

If the true center of power lies in a party’s leader who will not be in government, how effective are programs targeted at the government? If development partners take a more pragmatic approach and engage the party and ruling elites directly, won’t this affirm a historical wrong of bypassing government?

Also to consider, the discovery of natural resources will likely alter the calculus of Mozambique’s relationship with traditional Western aid donors, who have had considerable influence on policy over the years. Now more than ever, donors will need to re-strategize and be more creative in the way they engage the country’s leaders. David Booth and Sue Unsworth of the Overseas Development Institute suggest a new way of working for donors:

“They need to be politically informed and astute to assess the scope for change, and to make good choices regarding issues to work on and partners to work with; and they need to allow local actors to take the lead in finding solutions to problems that matter to them.”

Mozambique’s donors must resist the tyranny of technocratic solutionism. Furthermore, they must prioritize working with stakeholders who have the most influence over policy, without undermining the broader goal of strengthening governance institutions in the country.

How Mozambique can achieve progress

Going forward, the Government of Mozambique will need to:

• prioritize transparency and accountability around contract negotiation, particularly in the extractive industries;
• become transparent about beneficial ownership, or who actually owns companies, transparent; and
• improve tax collection and revenue management and allocate the resources equitably in an uneven society.

Fortunately Mozambique has willing aid partners to assist in this regard. However, experience shows that capacity building programs that take place outside a proper political economy analysis will be futile.

Civil society organizations will also need to massively engage communities through tested processes like Free Prior and Informed Consent (FPIC) so that they put pressure not just on government, but on companies that are involved in mining to act responsibly.

Should the extractive industries sector be governed well, progression of Mozambique to a middle-income status country will be fast. But that won’t be easy for the new president, his party and traditional aid donors. Everyone will need to change.