commission formed between the Mozambican government and the
opposition party Renamo announced on 20 June that letters are being
sent to potential mediators who will take part in a dialogue which
ought to culminate in a face-to-face meeting between President Filipe
Nyusi and Renamo leader Afonso Dhlakama.
Speaking in the name of the Commission, the head of the government
delegation, former security minister Jacinto Veloso, said he thought
that formal invitations would be dispatched within the next three days,
and he hoped for “very speedy replies”.
The government had initially opposed calling in foreign mediators, on
the grounds that Mozambicans are quite capable of dealing with their
own problems. But Renamo refused to engage in further dialogue without
foreign mediators at the table.
Therefore, Nyusi reversed the government position and announced “if the
problem is to have somebody else present while we are discussing, then
let Dhlakama come with whoever he likes, and we will talk so that he
ends the attacks. Let him come with these people, and we shall see what
will happen. I am ready”.
The mediators suggested by Renamo are the European Union, the Catholic
Church, and South African President Jacob Zuma.
Veloso admitted that Renamo’s demand means that a Nyusi-Dhlakama
meeting will only be possible in the presence of mediators. Exactly
what the mediators will do is not yet clear. Veloso said the mission
and responsibilities of the mediators are still being defined.
No date has yet been fixed for the Nyusi-Dhlakama meeting, nor has
Renamo suspended its armed attacks in the central provinces.
At earlier meetings, the Joint Commission reached agreement on four
agenda points. The two proposed by the government are an immediate end
to military hostilities and the disarming of Renamo.
Renamo, however, wants to talk about the composition of the defence and
security forces, and governance of the six northern and central
provinces where it claims that it won the October 2014 general
Work on the new Moamba Maior dam on the Incomati River, in the southern
district of Moamba, is now about seven per cent complete. President
Filipe Nyusi witnessed the progress during a visit to the dam site on
The dam, budgeted at $466 million, will contain a power station with
the capacity to produce 15 megawatts. But the main purpose of the dam
is to control the flow of the Incomati, thus mitigating floods and
Elias Paulo, of the Southern Regional Water Board (ARA-Sul), told
President Nyusi that the dam will also boost the capacity to supply
water to Maputo and Matola cities, and the adjacent districts of Boane
and Marracuene by about 250 million cubic metres of water a year. It
will also allow an expansion in the irrigated area by 19,000 hectares.
Paulo added that the undertaking will create between 1,500 and 2,000
direct jobs, and will counter the intrusion of salt water at the mouth
of the Incomati. He believed the dam will stimulate the socio-economic
development of the region, and create the conditions for increased
agricultural, livestock and tourism activities.
Construction of the dam also involves building 518 houses for families
who will have to be resettled. This social aspect of the project also
includes the construction of two health centres, two primary schools, a
drainage system, water supply and electricity infrastructures and
improved access roads.
The Bank of Mozambique has again increased its key interest rates, in
its attempts to control inflation.
A statement issued by the Bank’s Monetary Policy Committee on 13 June
announced that the Standing Lending Facility (the interest rate paid by
the commercial banks to the central bank for money borrowed on the
Interbank Money Market) will rise immediately by 150 base points, from
12.75 to 14.25 per cent.
This is the sixth increase in the Bank’s main reference rate since
October. This rate had been falling gradually since late 2012. It
reached 7.5 per cent in November 2014, and remained at that level for a
year, but five rate rises in October, November and December 2015 and in
February and April 2016 brought the rate to 12.75 per cent. Now the
sixth rise has pushed it to 14.25 per cent, an increase that will
certainly be imitated by the commercial banks, making the cost of
borrowing prohibitively high for small businesses.
The Standing Deposit Facility (the rate paid by the central bank to the
commercial banks on money they deposit with it) also rose by 150 base
points from 5.75 to 7.25 per cent.
The Compulsory Reserves Coefficient - the amount of money that the
commercial banks must deposit with the Bank of Mozambique – has been
divided into two. For reserves in local currency, the coefficient is
set at 10.5 per cent, and for reserves in foreign currency, the figure
is 15 per cent, which must be deposited in US dollars. This change was
announced in April but only took effect on 7 June.
The Monetary Policy Committee says it “assessed the short and medium
term projections which point to a slowdown in economic activity and the
persistence of inflationary pressure in an environment of continued
pressure on the exchange rate”. As a result, the macroeconomic
foundation of the economy were facing constraints “which require the
The statement blamed this situation on such factors as “the prevalence
of politico-military tensions in some parts of the country” (referring
to attacks by Renamo gunmen against roads and railways) and the
suspension of aid from Mozambique’s cooperation partners.
After four months of rising prices, inflation in May was negative, at
minus 0.22 per cent. This seasonal variation was to be expected –
inflation declines every year when the harvest comes in. The Monetary
Policy Committee noted that increased supplies of fresh domestic
foodstuffs explained the fall in prices – but working against this
trend were the depreciation of the Mozambican currency, the metical,
and the difficulties in moving across the country due to the military
The metical continued to lose value in May. At the end of the month,
the rate quoted on the Inter-Bank Exchange Market was 58.22 meticais to
the dollar, a depreciation of 9.42 per cent over the month. Over the
entire preceding year, the metical had lost 68.61 per cent of its value
against the dollar. The average rate quoted by the commercial banks on
31 May was also 58.22 meticais to the dollar, while at the foreign
exchange bureaus the rate was 61.56 meticais to the dollar.
The metical recovered slightly against the South African rand and was
quoted at 3.7 meticais to the rand, an appreciation in May of 1.6 per
That relief was short lived. In the first fortnight of June, the
metical took a nosedive against the rand. On 14 June the rate on the
Inter-Bank Exchange Market was 3.98 meticais to the rand, while the
largest commercial bank, the millennium-BIM, was quoting a rate of 4.07
meticais to the rand.
The rand/metical exchange rate is crucial for food prices, particularly
in southern Mozambique, because so much basic food is imported from
Provisional figures indicate that in May the country’s net foreign
reserves declined by $80.3 million to $1.714 billion. This is enough to
cover 3.1 months of imports of goods and non-factor services, when the
operations of the foreign exchange mega-projects are excluded, and 2.4
months if the mega-projects are included.
President Filipe Nyusi on 16 June inaugurated a new Coca-Cola factory
in the Matola-Gare neighbourhood, on the outskirts of Maputo.
According to the chairperson of the board of Directors of
Coca-Cola-Mozambique, Benjamim Alfredo, this brand new plant cost $120
million and is equipped with state-of-the-art technology.
In its initial phase, the factory will be able to produce 50 million
crates of soft drinks a year. In a second phase, capacity will increase
to 70 million crates a year, and in a third, to 150 million crates a
During the construction phase, the plant employed 1,200 people, of whom
1,000 were Mozambicans. In the initial operational phase, it is
employing 300 Mozambican workers. This could rise to 700 by the third
Speaking at the inauguration, President Nyusi said investment occurs
where there is a favourable economic environment. This plant is a
testament to the contribution of the private sector to the development
of Mozambique. The government will continue to promote
industrialization to create jobs and maximize the value chain”.
President Nyusi added that he is aware that some of the sugar used by
Coca-Cola as a raw material is not produced in Mozambique, but is
imported. He stressed that the Mozambican sugar industry has the
capacity to produce all the sugar that Coca-Cola needs.
This is a longstanding problem. Soft drinks companies insist on refined
sugar, and the vast bulk of the sugar produced in Mozambique is not
refined. Last July the Minister of Industry and Trade, Max Tonela, was
optimistic that Coca-Cola would switch to Mozambican sugar and buy
10,000 tonnes a year. But this depends on the sugar mills producing the
type of refined sugar demanded by soft drinks companies.
The Mozambican police on 19 June rescued a kidnap victim in Boane
municipality, about 30 kilometres west of Maputo, shooting dead two of
the kidnappers during the operation.
The woman victim, whose name was not revealed, was kidnapped in central
Maputo on 2 June. The kidnappers held her prisoner for 17 days, first
in Txumene, in the city of Matola, and then in the house in the Boane
neighbourhood of Jonasse, where the police rescued her.
When journalists from the television station STV visited the house, one
of the dead kidnappers lay at the entrance, still clutching a pistol.
Inside the house was another gun, an AK-47 assault rifle, also used by
the gang. Spent cartridges from the exchange of fire between the police
and the kidnappers littered the floor.
The police arrested a woman found at the house who was guarding the
victim. She, however, denied any responsibility and blamed the
kidnapping on her boyfriend, who was one of those shot by the police.
The London-based company Gemfields on 20 June announced that its sixth
auction of rubies mined in the northern Mozambican district of
Montepuez has raised a record $44.3 million.
The auction took place in Singapore between 13 and 19 June and was
composed of high end and commercial grade rubies, both in treated and
The proceeds of the auction will be repatriated to Gemfields’
Mozambican subsidiary, Montepuez Ruby Mining Limitada (which is 75 per
cent owned by Gemfields and 25 per cent by local partner Mwiriti
Limitada), with the royalties due to the government being paid on the
full sales price.
Over one and a half million carats were sold to 44 international
companies at an average price of $29.21 per carat.
The company’s six ruby auctions have netted a total of $195 million.
Commenting on the latest auction, the Gemfields Chief Executive
Officer, Ian Harebottle, said “the prices achieved and the high
percentage of goods sold fully support our analysis of the market
conditions, the quality of Mozambique's rubies and the increasing
levels of demand across various markets and categories”.
The Irish company Kenmare Resources that operates a dredge mine in Moma
district, on the coast of the northern Mozambican province of Nampula,
announced on 20 June that its lenders have agreed to a debt
Under the plan, the Omani sovereign wealth fund (SCRF) will invest $100
million and Kenmare intends to raise at least a further $175 million
through issuing securities.
However, the company noted the termination by mutual consent of the
conditional agreement it had with the Chinese company King Ally
Holdings, under which it would have received a $100 million in return
for ownership of up to 29.9 per cent of Kenmare.
The Moma mine extracts ilmenite, rutile, and zircon from
titanium-bearing heavy mineral sands. However, falling prices and a
nineteen per cent drop in output last year has put Kenmare in deep
financial difficulty. Raising funds to pay its creditors has been
slower than expected and the company defaulted on its loans at the end
Commenting on progress towards solving Kenmare’s debt difficulties,
managing director Michael Carvill stated, “we are pleased that we have
signed an agreement for the investment of a hundred million dollars by
SGRF and are encouraged by the level of interest shown by a broad range
Carvill also made reference to the low global prices for its minerals,
adding “the product market is already showing a long-awaited
improvement in prices, reversing four years of significant downward
Kenmare expects to complete its capital restructuring by the beginning
of August. Shares in the company rose by over 18 per cent on the London
Stock Exchange following the announcement.
Ilmenite (iron titanium oxide) and rutile (titanium dioxide) are used
to make white pigments for paints, paper, and plastic. Titanium can be
extracted from these ores and used to manufacture metallic parts where
light weight and high strength are needed. Zircon (zirconium silicate)
is used for abrasive and insulating purposes.
A technical mission from the International Monetary Fund (IMF) arrived
in Maputo on 16 June to assess the macroeconomic impact of the huge,
government guaranteed loans which the previous government, led by
President Armando Guebuza, had kept secret both from the Mozambican
public and from the country’s international partners.
The two undisclosed loans, for the security-linked companies Proindicus
and Mozambique Asset Management (MAM), amount to over $1.1 billion. The
money was borrowed from the banks Credit Suisse and VTB of Russia – the
same banks which organized the borrowing, on the Eurobond market, of
$850 million for the Mozambique Tuna Company (EMATUM).
The EMATUM, Proindicus and MAM loans, all guaranteed by the Mozambican
government, date from 2013-2014, and between them added two billion
dollars to the country’s foreign debt (more than 20 per cent of the
The existence of the Proindicus and MAM loans only became known in
early April. Angered at the failure of the government to disclose such
huge loans, the IMF cancelled a mission that was to have visited
Mozambique in mid-April and suspended the second instalment of a $282
million loan from the Fund’s Standby Credit Facility (SCF).
The reaction from other key partners was similar. Thus the group of 14
donors and funding agencies that provide direct support to the
Mozambican state budget suspended disbursements.
The IMF mission will remain in the country until 24 June, and is
expected to hold meetings with Prime Minister Carlos Agostinho do
Rosario, Finance Minister Adriano Maleiane and the Governor of the Bank
of Mozambique, Ernesto Gove.
The Chinese authorities will forgive $30 million yuan ($5 million) of
Mozambique’s debt to China under an agreement signed in Maputo on 13
June by Mozambique’s Deputy Minister of Economy and Finance, Maria
Isaltina Lucas, and the Chinese Deputy Trade Minister, Zhang Xiangchen.
Speaking immediately after the signing ceremony, Mozambique’s Deputy
Foreign Minister Nyeleti Mondlane said the Chinese decision will help
relieve the pressure on the servicing of Mozambique’s public debt.
The debt cancelled is part of a Chinese loan bearing no interest.
Mondlane sad that this debt forgiveness “will contribute to
implementing the objectives contained in the Government’s five-year
programme, particularly at this time of important challenges to the
For his part, Zhang expressed China’s willingness to help Mozambique
overcome the current economic crisis it is facing.
The two countries also signed agreements on water supply and
agriculture. Zhang and Deputy Agriculture Minister Luisa Meque signed
an agreement on the opening of 202 boreholes to provide waters to
The third agreement involves the Mozambican and Chinese governments and
the Bill and Melinda Gates Foundation, of the United States. It will
support agricultural research in order to boost production. The amount
of Chinese investment covered by these two agreements was not stated.
The Mozambican Tax Authority (AT) is considering whether the sale by
the Brazilian company Vale of shares in its Mozambican operations to
the Japanese company Mitsui is liable to capital gains tax.
Mitsui agreed, in 2014, to pay $763 million for a 15 per cent stake in
Vale’s open cast coal mine at Moatize and a 35 per cent stake in the
new mineral port at Nacala-a-Velha, on the northern coast, and the
Nacala-Moatize railway. But this deal has only just received final
approval from the Mozambican government.
Vale’s expectation is that this sale of shares should not attract
capital gains tax as it merely seeks to complete the investments
required to make mining at Moatize viable.
The AT does not necessarily share this view. Speaking to reporters on
10 June, the AT’s general director of taxes, Augusto Tacarindua, said
the Vale-Mitsui arrangement is still being assessed.
Vale is currently running its Mozambican operations at a heavy loss.
According to the company’s accounts published in February, the Moatize
mine is costing Vale $500 million a year. Nonetheless, Vale shows no
sign of pulling out of Mozambique and has expressed a continued
interest in Mitsui investing in its Mozambique projects.
Clearly Vale believes that international demand for coal will rise, and
the coal price will eventually recover, thus making it possible to
recoup the money it has spent on the Moatize mine and on the port and
The Ministry of Health hopes to reduce the prevalence of chronic
malnutrition among Mozambican children to 20 per cent by 2020.
Data from the 2011 Demographic and Health Survey indicated that 43 per
cent of children under five years of age are suffering from chronic
malnutrition. This is believed to be strongly correlated with the
nutritional status of their mothers.
On 13 June the Health Ministry launched the Communication Strategy for
Social and Behavioural Change to Prevent Malnutrition. This is in line
with the existing Multi-Sector Action Plan to Reduce Chronic
Malnutrition in Mozambique (PAMRDC) and takes as its target groups
women of reproductive age, including pregnant and lactating women, and
children up to two years old.
The priorities identified include the promotion of breastfeeding, a
healthy diet for pregnant women, the use of iodized salt, and vitamin A
Health Minister Nazira Abdula, who chaired the launch ceremony, said
that investment in nutrition provides social and economic benefits to
the nation, such as lifting the intellectual and productive capacity of
The preventive measures envisaged “will reduce the resources the health
sector spends on the later treatment of malnutrition so that they can
be used for other purposes”. Improved nutrition would also boost school
attendance and the academic performance of schoolchildren.
Fighting against malnutrition, Abdula added, will increase resistance
to disease, and thus reduce the number of working days lost because
workers are ill.
Levels of chronic malnutrition vary across the country and are at their
worst in the three northern provinces of Nampula, Cabo Delgado and
Niassa and the central provinces of Zambezia and Tete, and so special
attention will be paid to these provinces.
The Health Ministry will form technical groups that will go into the
districts to deliver messages on nutrition to health promoters, and to
community, religious and political leaders.
The rail corridor from the northern port of Nacala-a-Velha to the
Moatize coal basin in Tete province will receive $3 billion of new
investment to boost its capacity to transport the coal produced in
Moatize, according to government spokesperson, Deputy Health Minister
Speaking on 14 June at the end of the weekly session of the Council of
Ministers (Cabinet) he said that $1.9 billion will be invested in
Mozambique and the rest in Malawi.
Saide added that the Council of Ministers approved a direct agreement
between the government and the two main rail and port leaseholders in
the north, the Northern Development Corridor (CDN), and the Nacala
Integrated Logistics Corridor (CLN). He said the agreement is needed to
allow CDN and CLN to obtain the loans needed for the planned
improvement in rail facilities.
“The agreement does not create any financial obligation on the
government”, he added, “since the risks of the logistics operation will
be the responsibility of the leasing consortium and its components,
notably Vale and Mitsui”.
CLN runs the coal terminal at the new port of Nacala-a-Velha, built on
the opposite side of Nacala Bay to the previously existing port of
Nacala, and the 900-kilometre long railway from Moatize to
Nacala-a-Velha, which runs across southern Malawi. CLN is a consortium
between the Brazilian mining company Vale, the Japanese company Mitsui
and Mozambique’s publicly-owned port and rail company, CFM.
The new investments, Saide said, will significantly increase the
capacity of the line which, in 2015, was capable of carrying 22 million
tonnes of cargo a year.
The government has also authorized the sale of all the shares held by
CFM in CDN, CLN and in Central East African Railways (CEAR), which runs
the Malawian rail network.
Mozambique News Agency