The “resource curse” threatening Mozambique’s locals

By Simon Mwebaze

Editor’s note: The opinions expressed here are those of the authors. View more opinion on ScoonTV.

Mozambique is a resource-rich African country known primarily for its natural gas and rubies. Natural gas grabs the most attention because the country holds the three largest natural gas projects on the continent. They are located in the Cape Delgado province. The three projects are the Rovuma LNG project (worth $30 billion), the Mozambique LNG project (worth $20 billion), and the Coral FLNG project (worth $4.7 billion).

Contrary to the well-sounding prospects, Mozambique has exhibited signs pointing toward a “resource curse.” Resource curse describes a situation where a resource-rich country has many impoverished locals despite its abundant resources. The locals who should benefit from the revenue and profits of their nation’s resources end up worse off than before the exploitation of their resources. Mozambique seems to be following in the footsteps of other resource-rich African neighbors who suffer the same such as Chad, Nigeria, Sudan, Angola, and Papua New Guinea. 

The Cape Delgado province has been surrounded by increased insurgency since the discovery of natural gas in 2010. The insurgency increased with the entry of multinational corporations into the area. These include Total, ExxonMobil, Italian-based energy giant Eni, the state-run China National Petroleum Corporation (CNPC), Empresa Nacional de Hidrocarbonetos, South Korea’s KOGAS, and Portugal’s Galp.

The entry of multinationals to extract natural gas brought hope that economic and social development would be boosted through the creation of employment, upskilling locals through training, and fostering better standards of living. But the outcome has been quite different. 

The unmet expectations have led to the insurgency in the area. There are two alternative perspectives to the insurgency cause. The first blames Islamic extremism while the other blames the ruling Frelimo party.

The Frelimo party has ruled the country since 1975. They blame the Islamic movement Al Sunnah wa Jama’ah (ASWJ). They claim the group takes advantage of the province’s impoverished youth. While this may seem plausible, there is another side to the story. Some reports suggest the issue is politically motivated. 

The political elite of the Frelimo party are accused of conniving with multinational corporations to enrich themselves while the locals suffer. One of the reasons for this suspicion is due to an MOU signed by the government and military to protect the interests of multinationals in Cape Delgado. Additionally, the ruling government has mercenaries from Russia, South Africa, and recently US marines to control the insurgencies rather than use forces from SADC and the AU. 

More so, since the entry of multinationals, over 3000 people have died and 900,000 displaced from the province. 

Why have they not involved African bodies like the SADC and AU?

It is suspected that the ruling government is concerned about the possibility of these bodies shining a light on the political root cause of the insurgency. This poses a threat to the claim that the insurgency is caused by Islamic extremism and terrorism. 

In March 2021, the attack in Palma, the logistics hub for the LNG projects, killed dozens. The attacks forced a change in approach by the SADC. The bloc took notice of the humanitarian and insecurity crisis caused by the insurgency. 

South Africa and other member states deployed the SADC’s Mission in Mozambique (SAMIM). Not long after, Rwanda sent a troop of 1,000 soldiers to assist. The attack forced TotalEnergies to suspend operations in the area. 

The opportunity to positively change the socio-economic state of Mozambique lies in correctly exploiting their gas fields. The opportunity for LNG across the world is immense. 

There is significant interest in the shift toward natural gas. Some of the interested parties include the Middle East; South Asia (namely Pakistan, Bangladesh, and India); the EU as it tries to diversify its gas dependency away from Russian gas; Southeast Asia (Vietnam, the Philippines, Thailand, and Indonesia); and especially China. China in particular is turning to gas to offset record-high air pollution levels in major urban centers.

Despite the growing global interest and opportunities, the insurgency is a solid hindrance to Mozambique taking advantage. While there are several narratives to the insurgency, what is consistent from both the ruling party and Islamic terrorists’ claims is the poor social-economic conditions of the locals. 

Mozambique boasts of having one of the fastest sustained growth rates in Africa. Yet, it has one of the lowest rankings on the Human Development Index (HDI). Despite the revenue projections from natural resources being 7% of their GDP by 2032, the future looks dim for locals.

There are suggestions for avoiding the pitfall of the resource curse. A blog by the World Bank suggests that by following six steps, Mozambique can avoid becoming a victim. The six steps are:

1. Creating a fiscal policy framework modeled on Mozambique’s context.
2. Creating a resource fund.
3. Adopting a broader sovereign asset and liabilities strategy.
4. Integrating the fiscal policy framework into the budget.
5. Investing in institutions focused on managing a larger public investment portfolio.
6. Managing expectations.

Without the government seriously considering and implementing these steps, the future of Mozambique looks grim.