After the polls

In October, a potentially fraught election in Mozambique concluded with only a few minor security incidents. Filipe Jacinto Nyusi, the leader of the ruling FRELIMO party, garnered 57% of the vote, whilst Afonso Dhlakama, the leader of the rebel group-cum-political party RENAMO, received 36%. Despite an impressive performance, considering he has been in hiding since October 2012, Dhlakama rejected the election result citing fraud and other irregularities, initially causing widespread fear of a return to violence. But Dhlakama has since promised to resolve issues with dialogue, raising hopes for the political process.

Despite a temporary cessation of hostilities, the unpredictable nature of the conflict between the ruling FRELIMO party and RENAMO was hammered home when RENAMO reignited conflict with FRELIMO in 2013. RENAMO and FRELIMO opposed each other in a 15-year civil war (1977-1992), which caused around one million deaths. Relations have since been fraught, with fighting breaking out regularly between government forces, managed by FRELIMO, and RENAMO’s rebel forces, which have yet to be disarmed and disbanded. RENAMO had long been written off as a spent, ageing force until early 2013, when it conducted several raids and subsequently renounced the 1992 peace pact. The ensuing violence all but halted transit along the main motorways from Zimbabwe to the port city of Beira and from Maputo to the resource-rich provinces of Nampula and Cabo Delgado in northern Mozambique, while around 50 people died between October 2013 and 2014. For now, RENAMO appears committed to the political peace process and their response to alleged electoral fraud has been measured, but the group’s armed wing remains a major concern for international companies operating in the country.

Less well understood are the threats emerging in parts of the country, principally the North, which is facing radical social and economic change as a result of investment and development. With fear of civil conflict at least temporarily diminished, infrastructure projects carry on in the remote, underdeveloped northern provinces where vast natural gas reserves have the potential to turn Mozambique into the world’s third-largest exporter of liquefied natural gas (LNG). However, popular grievances in the North may prove an obstacle. International oil companies (IOCs) and construction companies already active there are at risk of having their operations disrupted if local communities oppose their plans - a concern that will become more prominent as the country’s gas sector booms. 

Local communities such as those in Palma, a town in the Cabo Delgado province which will serve as an offloading point for the gas-rich Rovuma basin, are already feeling the squeeze of heavy industry. Environmental effects on the local economy, which is based on subsistence agriculture and fishing, and relocations (albeit compensated), have fuelled resentment and anger locally.

Media and NGO campaigns against IOCs in Cabo Delgado have already begun, and will undoubtedly spread if these grievances are not addressed. In remote northern towns, this could translate into similar disruptive civil unrest to that experienced by mining companies already operating in western Mozambique. In April 2012, a multinational mining company’s operations ground to a halt as a local community protested over deficient relocation compensation. In a quick fix, the government sent in riot police to break up the protest, but the issue has since resurfaced on several occasions. Other mining companies have faced similar social action in Nampula and Maputo provinces, with protesters citing a failure by foreign companies to implement promised social projects.

In the past, multinationals could rely on President Guebuza for largely pragmatic and business-friendly (if occasionally slow-moving) policy decisions. However, the elections demonstrated a shared desire across Mozambique’s political class to ensure that the country’s economic development is sustainable. All three parties’ campaigns focused on the principles of a united and inclusive Mozambique, promising to tackle the country’s inequalities - FRELIMO’s tagline was ‘Governing with the People’. Government policy will aim to maximise benefits for the underdeveloped economy of the North, by promoting and encouraging as much onshore investment as possible. This will increase the exposure of IOCs to civil unrest in the country, meaning that their management of community relations will become paramount.

RENAMO will continue to represent the most immediate risk to international companies and their personnel. The last round of violence ended as recently as August 2014, and fears of an eventual resurgence of violence are well-founded. However, long-term investors and operators will also need to pay close attention to popular grievances as development takes hold in previously poor and underdeveloped parts of the country.