Mozambique News Agency

AIM Reports

 


No.342, 11th June 2007


Contents


President Guebuza visits opposition leader after crash

President Armando Guebuza has visited Renamo leader Afonso Dhlakama in hospital where he is receiving treatment following a traffic accident on 10 June. The accident occurred at about 23.30 on Eduardo Mondlane Avenue in central Maputo. At a crossroads, another vehicle slammed into Dhlakama's car. According to the police the other vehicle was travelling at high speed and drove through a red traffic light. Dhlakama was admitted to the Cruz Azul private clinic. His driver was seriously injured and is currently under intensive care in Maputo Central Hospital.


After his brief visit President Guebuza told reporters, "I was concerned because something happened to the leader of the opposition, who is also a member of the Council of State" (this is a body that advises the President, and Dhlakama has a seat on it, in his capacity as runner-up in the 2004 presidential election).

According to Renamo national spokesman Fernando Mazanga, Dhlakama was anxious to be discharged from the clinic, and go back to his normal political duties. Mazanga thought the doctors were being "over-cautious" in keeping Dhlakama under observation.


President swears in election commission

President Armando Guebuza on 11 June swore into office the eight members of the National Elections Commission (CNE) proposed by civil society organisations. These members were appointed by the five CNE members appointed by the parliamentary parties in May (three by the ruling Frelimo Party, and two by the Renamo-Electoral Union opposition coalition) out of the 62 candidates submitted by 22 civil society bodies.


According to Antonio Chipanga, coordinator of the five political party appointees on the CNE, it had been possible to reach consensus on seven of the eight names. The only vote taken was on the inclusion of Alice Mabota, the president of the Human Rights League (LDH). A reliable source told AIM that she was rejected by four votes to one. Rabia Valgy took the CNE place that would otherwise have gone to Mabota.

The eight appointed by President Guebuza are:

Speaking at the ceremony President Guebuza said the CNE now had the responsibility to ensure implementation of the electoral legislation recently approved by the country's parliament.

The first challenge facing the new CNE, said President Guebuza, was to organise the first elections to provincial assemblies, which should, in principle, be held this year. They will be followed by municipal elections in 2008 and presidential and parliamentary elections in 2009.

But holding the provincial elections this year now looks highly unlikely. There are simply not enough days left in the year to undertake all the necessary preparatory tasks.


Budget support increases

The 19 donors and funding agencies that provide direct support for the Mozambican state budget on 24 May announced that they will channel a total of $385.8 million in budget support in 2008. For 2007, the direct budget support from this group, known as the Programme Aid Partners (PAP), is $369 million. Subtracting the 2008 pledge from Austria (which only joined the PAP in April), the increase is four per cent.

A statement from the PAP Secretariat noted that, after taking account of the government's performance in 2006, many of the PAP members "decided to maintain the same level of support for 2008 as for 2007, instead of increasing it as had been envisaged".

At the ceremony to deliver the pledges for 2008 to the government, the PAP chairperson, Norwegian ambassador Thorbjorn Gaustadsaether, said that the April Joint Review between the government and its partners of performance in 2006 showed "there were good results in some areas, but in other areas the poor performance is a matter of concern".

The areas needing "special attention", he added, included "legal reform, productivity in agriculture, the provision of public services, and the fight against corruption". "In order to maintain our relationship based on trust, we need results and an open dialogue around these questions - whether political or economic", said the ambassador.

Although the Joint Review concluded that enough progress was made in 2006 to continue the same level of direct budget support, some partners scaled back their commitment "because of the poor performance".

Answering questions from reporters, Gaustadsaether said that Germany had planned to increase its budget support by 50 per cent - from 10 million in 2007 to 15 million in 2008. But it had second thoughts, and the German commitment to 2008 is now 12.5 million ($14.2 million).

The 19 PAP members have also pledged $241 million in sector aid for 2008 (that is, aid which is earmarked for particular programmes, rather then channelled to the budget). This is an increase on $223 million pledged for this year,

The Minister of Planning and Development, Aiuba Cuereneia, who received the pledges, said that the support from the PAP members amounted to a third of the country's total foreign aid. Cuereneia said the government was committed to improving performance in the areas regarded as weak in the Joint Review. It was particularly concerned with increasing production and productivity in agriculture, and boosting all those factors that contribute to agricultural growth.

The breakdown of the pledges show that nine PAP members (the World Bank, the African Development Bank, Belgium, Denmark, France, Holland, Italy, Portugal and Switzerland) are keeping their 2008 budget support to exactly the same level as in 2007. But nine others (Germany, Canada, the European Commission, Finland, Ireland, Spain, Norway, Britain and Sweden) have decided to increase their support.


European budget support

The Mozambican government and the European Commission signed an agreement on 1 June, under which Mozambique will receive a further 50 million (about $67 million) from the European Union's Ninth European Development Fund (EDF).

The agreement is an addendum to the 2001-2007 cooperation programme, and was signed by Deputy Foreign Minister Henrique Banze, and Glauco Calzuola for the European Commission. With this addendum, the total amount financed by the Ninth EDF for this period is around 560 million.

According to Calzuola, the additional sum is intended for a new programme of direct support for the state budget for 2008. He said that this was based on an assessment of Mozambique's needs, and also resulted from the country's "positive performance" in pursuing its poverty reduction programme (PARPA).

In the near future, the government and the Commission are likely to sign a new agreement on financing under the projected 10th EDF.

European support for agricultural research

Also signed was a protocol under which the Commission will disburse 4.3 million (about $5.7 million) to fund agricultural research, primarily on crops such as cashew, cotton, cassava and potato.

Glauco Calzuola, signed this protocol along with Minister of Agriculture Erasmo Muhate.

The research will be carried out by Mozambique's National Agricultural Research Institute, the National Cotton Institute and the Cashew Promotion Institute.

Speaking during the signing ceremony, Muhate explained that selection of those crops took into account their relative importance for improving the living standards of the Mozambican population, as well their significant contribution to the country's Gross Domestic Product and balance of payments.


European support for census

On 24 May the Mozambican government and the European Commission signed an agreement in Maputo, under which the Commission will provide 11 million (about $14 million) towards the cost of the country's third population census, due to be held in August.

The sum made available by the Commission covers 40 per cent of the census costs. The agreement will be implemented by the United Nations Fund for Population Activities (UNFPA).

According to Joao Loureiro, president of Mozambique's National Statistics Institute (INE), $10 million will be used immediately, in the period up to and immediately after the census.

The total cost of the census is estimated at slightly more than $34 million. The government itself is contributing $4.6 million. Other partners financing the census include the World Bank, Britain, Ireland and the US Agency for International Development (USAID).


Inflation falls, but interest rates remain high

The rate of inflation in Mozambique (based on the Maputo Consumer Price Index) was 1.55 per cent in the first quarter of the year, according to the latest set of statistics from the Bank of Mozambique.

The spokesperson for the Bank's Board of Directors, Waldemar de Sousa, told reporters on 11 May that preliminary indications are that by the end of May inflation had reached four per cent.

The final rate of inflation in 2006 was 9.37 per cent, and the government's target is to cut inflation to six per cent this year. The Bank is optimistic that this can be achieved. Thanks to the harvest, food prices tend to fall in the middle of the year, but will rise again as the Xmas and New Year holidays approach.

Despite low inflation, the interest rates charged by commercial banks on their loans remain exorbitant. Sousa put the average interest on a 365-day loan in April at 23.84 per cent – higher than a year ago when the average interest rate was 22.86 per cent. However, the interest paid by banks on deposit accounts has risen from 11.11 per cent in April 2006 to 12.5 per cent a year later.

Sousa announced that the central bank has cut its own key interest rate from 17.5 to 15.5 per cent, in the hope that this would encourage the commercial banks to reduce their interest rates.

As for the exchange rate, Sousa said that the Mozambican currency, the metical, had been stable. For the past six months it has been little changed, at around 25.8 meticais to the US dollar.

Furthermore, the official and the parallel exchange rates have tended to converge. In 2005, it was possible, on the illegal market in currency, to obtain over 27 per cent more meticais per dollar than was offered by the banks. That spread has now fallen to 3.1 per cent.

As for the balance of payments, Sousa could point to a significant improvement, largely because exports rose by 5.6 per cent in the first quarter of 2007, compared with the same period in 2006, while imports fell by 2.8 per cent.

The gap is still considerable. Exports from January to March amounted to $564.8 million, and imports to $652.4 million. The improvement is largely due to one factory, the MOZAL aluminium smelter on the outskirts of Maputo. The value of aluminium exports rose from $321.1 million in the first quarter of 2006 to $379.5 million in the first three months of this year - a rise of over 18 per cent. Since MOZAL was already working at near full capacity, this rise reflects the demand for, and hence increased prices of, aluminium on the world market.

Mozambique's electricity exports (to South Africa and Zimbabwe) rose from $38.4 to $61.6 million dollars - an increase of over 60.5 per cent. Exports of natural gas to South Africa rose from $15.8 to $18.8 million dollars.

Exports of timber rose by 174 per cent - from $4.1 million in January-March 2006 to $11.3 million this year. Cashew nuts showed a mixed picture. Exports of the raw, unprocessed nuts fell by 48 per cent, from $20.3 to $10.6 million. But the export of processed cashew kernels moved in the opposite direction, from $1.1 to $1.7 million, an increase of 56 per cent.

The reason for the overall decline in imports is that the country's mega projects (such as MOZAL, and the natural gas refinery), imported less - a decline of 12 per cent from $174.3 to $152.9 million.

Mozambique's bill for imported fuels also fell, from $68.2 to $61.7 million.


World Bank loan for roads and bridges

The World Bank has approved a loan of $100 million to support the second phase of Mozambique's Roads and Bridges Management and Maintenance project. According to the World Bank its Board of Directors approved the credit, from the Bank's soft loan arm, the International Development Association (IDA), on 22 May.

The Bank describes the roads project as "part of a ten-year programme designed to help stimulate growth and contribute to poverty reduction through improved road infrastructure, better sector policies and enhanced road sector management".

The loan is on standard IDA terms, which are a "commitment fee" of 0.35 percent, a service charge of 0.75 percent, and a repayment period of 40 years, which includes a 10-year grace period.


Fire devastates agriculture ministry

A devastating fire swept through much of the Mozambican Ministry of Agriculture on 25 May, destroying documentation and equipment.

When the alert was raised, all available fire fighting equipment in Maputo was mobilised to deal with the fire. Equipment came not only from the fire brigade, but also from Maputo port, from the aluminium smelter MOZAL, and from the international airport.

As the fire was still raging, Ministry staff and members of the armed forces rushed into the building to rescue documents, computers and other equipment from areas not yet affected. Seven of these people were slightly injured, mostly by falling debris, as they ran in and out of the burning building.

A commission of inquiry has been set up, chaired by an official in the Public Works Ministry, and will produce a final report before the next meeting of the Cabinet, scheduled for 12 June.

The fire destroyed 58 offices in the building, including those of the Minister and deputy Minister. Some of the Mozambican media has been indulging in conspiracy theories about the fire, suggesting that it was the work of arsonists intent on destroying evidence of crimes in the Ministry's files.


President Guebuza inaugurates Massingir Dam

President Armando Guebuza inaugurated on 4 June the Massingir dam, in the southern province of Gaza, following its rehabilitation.

The work cost $61 million, mainly funded by $54.9 million from the African Development Bank. The Mozambican government disbursed the remaining $6.1 million.

Construction of the dam, on the Elephants River, the major tributary of the Limpopo, began in the late colonial period, in 1973, and was concluded in 1977, two years after independence. But serious defects in the dam's construction meant that it has never worked properly.

The dam suffered from "infiltration" (in laymen's terms, it leaked), and was never able to store more than 40 per cent of the water initially planned. Its irrigation potential was reduced by 60 per cent, and the plan to build a hydroelectric power station was postponed.

The defects have now been corrected, with the result that the Massingir dam is now the second largest in the country (after Cahora Bassa, on the Zambezi), and its lake can store 2.8 billion cubic metres of water, which will directly benefit about 8,000 families in terms of irrigation.

The dam can now meet its original goals of irrigating 90,000 hectares in the Limpopo valley, and producing 125 gigawatts of electric power a year. It will also play a key role in flood control in the Limpopo valley.

With the rehabilitation work complete, the dam authorities are now monitoring the gradual filling of the lake, and planning the construction of an additional spillway, with funding guaranteed from an additional loan.


14 per cent rise in minimum wage

The Mozambican government on 29 May decreed a 14 per cent increase in the statutory minimum wage for industry, and services, including for its own employees in the public administration.

This followed weeks of deadlock on the Consultative Labour Commission (CCT), the tripartite negotiating body between the government, the trade unions and the employers' associations.

The unions had called for a 17 per cent rise in the minimum wage, while the employers were not prepared to go beyond 13 per cent. When the CCT failed to break the impasse, the unions and the employers left it up to the government to take the final decision.

A 14 per cent rise brings the minimum wage from the current 1,443 meticais to 1,645 meticais a month (or $63.6 at current exchange rates).

For agricultural workers the rise is much lower at only 10 per cent. Their minimum wage rises from 1,024 to 1,126 meticais a month (or just $43.6). Thus the gap between industrial and agricultural wages is continuing to widen.

The unions had argued that the current minimum wage covers less than 50 per cent of the basic needs of a worker and his or her family.

It is only the minimum wage that is fixed by government decree. Wages above the minimum are determined by collective bargaining in each company.


New water supply for Beira

President Armando Guebuza on 19 May inaugurated a new water treatment station in the central province of Sofala that will double the supply of water to the cities of Beira and Dondo.

Previously Beira and Dondo relied on water pumped from the irrigation system at the Mafambisse sugar plantation. This could only supply the two cities with 30,000 cubic metres of water a day. Furthermore, the old system was subject to salt-water intrusion during the dry season, drastically reducing the amount of drinking water available to the citizens of Beira and Dondo.

The new station 50 kilometres west of Beira, at Mutua, which cost 196 million meticais (about $7.6 million), is able to pump 60,000 cubic metres a day.

On 18 May President Guebuza launched the project for a new sanitation system in Beira, budgeted at 32.95 million (about $44 million). These funds, provided by the European Commission, could rise to an eventual figure of 52.95 million.

Construction work will begin later this year, and last for three years. 290,000 people should benefit from the project, which it is hoped will cut water-borne diseases by at least 25 per cent.


 

This is a condensed version of the AIM daily news service - for details contact aim@aim.org.mz

 


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