Is Foreign Investment Helping to Undermine the Stability of Mozambique?

This week Japanese President Shinzo Abe will visit Mozambique to discuss a variety of issues related to energy and agriculture. The trip, the first African visit from a Japanese premier in eight years, highlights the growing importance of Africa to Tokyo as Japan competes with China for influence on the continent. Abe is expected to announce $577 in loans for road construction which will help further develop the Mozambican mining industry. Mozambique has developed rapidly since the 1992 Peace Treaty which ended years of civil war. The country now has the potential to be an important exporter of agricultural goods and LNG. Mozambique’s location on the Indian Ocean also situates it in an area where it can easily service Asian markets whose demands for food and energy are ever increasing. Ensuring access to these resources is one of the primary purposes of Abe’s visit. What Japan, and the world, needs to understand is that Mozambique is facing increased internal instability and some of the agricultural deals that Abe will likely be discussing have the potential to further exacerbate tensions.


Mozambique attained independence in 1974 and almost immediately fell into a state of civil war which pitted the Marxist Frelimo against the anti-Communist Renamo. A peace deal was brokered in 1992. Since this time a great deal of development has occurred in the country, however, in October 2013 Renamo renounced the 1992 Peace Treaty. This action clearly endangers political stability. On Wednesday January 9^th Renamo killed six members of the Mozambican Riot Police. In addition to this they have also reestablished a base in Nhamunde in the Southeast of the country. Renamo’s activity in Northern Mozambique has also disrupted mining operations for companies such as Rio Tinto. It is unlikely that they will cease their activities anytime soon. In fact if October’s general election is unfavorable to Renamo further instability could result. If they can generate support from the local population the situation could deteriorate further.

In theory Renamo could exploit discontent against agricultural deals which have deprived local populations of their land. This action is of course subject to how they treat the local people. Renamo has a history of recruiting child soldiers and committing atrocities against local populations. Neither action is the sort of policy that wins the hearts and minds of a population nor do people forget groups that have subjected them to such abuse. Due to past precedent it would be dangerous to assume that Renamo would be able to gain local support, however, projecting what might happen if they pursued such a plan (and were relatively successful) is a worthwhile undertaking. After all, there is a great deal of discontent against deals that benefit foreigners and Maputo at the expense of the locals. One such program is ProSavana. This program will likely be discussed during Abe’s visit as the Japanese have invested a great deal in it.

ProSavana is a joint undertaking between the Ministry of Agriculture of Mozambique (MINAG) and Local Government, the Japan International Cooperation Agency (JICA), and the Brazilian Cooperation Agency (ABC). Per ProSavana’s website the organization seeks to:

Vision

Improve the livelihood of inhabitants of Nacala Corridor through inclusive and sustainable agricultural and regional development.

Missions

1. Improve and modernise agriculture to increase productivity and production, and diversify agricultural production.

2. Create employment through agricultural investment and establishment of a supply chain.

Objective

Create new agricultural development models, taking into account the natural environment and socio-economic aspects, and seeking market-orientated agricultural/rural/regional development with a competitive edge.

Essentially, ProSavana is trying to replicate the success that Brazil had in increasing agricultural output in its Cerrado region. The Cerrado is similar to Northern Mozambique’s Nacala Corridor in terms of agricultural potential. On the surface this intent sounds positive, however, the program has led to the displacement of local farmers. There is also evidence that people who have official land usage certificates are being displaced by agribusiness. There is little evidence that their complaints have led to any real resolution. A key factor that differentiates the Nacala Corridor from Brazil’s Cerrado region is that the population density is significantly higher in the Nacala Corridor thus more people are impacted by development. This means that there could be a larger pool of individuals who feel that they have no other course of action than insurgency.

In theory foreign investment could be positive for the populations of places such as the Nacala Corridor. For example, if a company comes in and dramatically increases agricultural yield while providing jobs and training the firm could contribute to local food security and provide economic opportunity while turning a profit and exporting the extra food to countries with less agricultural output. This is a win-win situation and there certainly are cases where this model is being effectively employed. The problem is that there are other situations where displacement and the concomitant removal of livelihoods are the norm. Cases like these generate distrust and make it more difficult to negotiate positive land deals. On one hand governments are in part to blame. For example, there have been cases where companies have negotiated a deal for unoccupied land only to find villages complete with postal service (a pretty clear indication that the government knew that the settlement existed). One the other hand businesses have a responsibility to understand the local conditions in place in which they intend to invest. After all, the failure to understand local conditions can harm businesses.

Anyone investing in agriculture needs to recognize that if land is arable it is safe to assume that someone is occupying it. If no settlements exist there probably is a very good reason for this. This reason needs to be determined in order to ensure that it can not come back to harm the company. Such damages can take numerous forms. For example, sabotage can be an issue. The negative PR that depriving a people of their livelihoods is also never welcome. Security concerns can also impact production. In some cases a situation occurs in which a political group can turn the discontent of the broader population to their advantage at the expense of the private sector. This is the exact circumstance that Renamo could theoretically exploit. The potential for any of these problems is something that companies need to gauge. After all, the negative PR that results from taking peoples’ land combined with lost profits due to suspended operations is not good for business?