Ghosts of the Past: Mozambique's Former Troubles come back to Haunt

President Filipe Nyusi’s administration is facing numerous challenges domestically. Only recently considered a future leader in Africa’s growth story in light of the discovery of some 180 trillion cubic feet of untapped gas reserves in 2013, Mozambique is now facing an impending financial crisis coupled with an intensifying insurgency in its central provinces. The most pressing concern for the government will be establishing an effective strategy to manage Mozambique’s debt after international lenders withdrew funding to the country in April. However, Resistência Nacional Moçambicana (Renamo)’s campaign in Tete, Sofala, Manica and Zambezia is proving increasingly disruptive and continues to compound the crisis. While the need to kerb government spending could lead to the relinquishing of the ruling administration’s control of the economy, a move likely to sit well with Renamo, the government has thus far failed to demonstrate the political will to tackle both the financial crisis and Renamo’s campaign head on. 

On 19 April, the International Monetary Fund (IMF) suspended aid to Mozambique after it was reported that the country had not disclosed up to, and likely exceeding, USD 1 billion in hidden debt. The Mozambican government had failed to disclose the amount during previous discussions to secure a USD 282.9 million standby credit facility from the IMF, which was granted in December 2015. The IMF has since stated that the suspension is conditional, the outcome of which will be determined by a pending assessment of Mozambique’s current financial standing in June 2016. However, the move has placed the country under increased financial scrutiny, with other international donors such as the World Bank and UK government following suit and suspending financial support as well. Meanwhile, the international credit rating agency, Fitch, has downgraded Mozambique to CC, one level above restricted default status. Already, on 23 May, the state firm, Mozambique Asset Management failed to make a USD 178 million payment on a USD 535 million loan and it is highly likely that the country is facing further defaults on repayments owed. Mozambique’s fiscal stability is likely to become compromised as a result, as the latest loans are likely to (conservatively) push Mozambique’s debt-to-GDP ratio over 70 percent, well above the desired 40 percent. As such, the government will need to identify additional lenders and make significant cutbacks to avoid a financial crisis.

The inherited debt problem, undertaken during the previous Frente de Libertação de Moçambique (Frelimo) administration under former president Armando Guebuza, has served to further divide Frelimo between Guebuza’s old boys and President Nyusi’s new supporters. The developments are likely to be particularly damaging for President Nyusi who took office in January 2015 and has thus far failed to kerb divisions within the party, bringing into question the stability of the ruling administration and its ability to remedy the crisis. Further compounding the situation, the intensifying armed campaign by Renamo militants in Mozambique’s central provinces is also proving detrimental to Frelimo’s standing. While President Nyusi has publicly committed to seeking a negotiated resolution to the conflict, he has failed to capture the political will of the wider party and the subsequent security crackdown in Tete province, in particular, has led to growing criticisms over the government’s response to Renamo’s campaign. Reports from individuals among the estimated 6,000 refugees who have fled to neighbouring Malawi since the surge in Renamo-led violence in late 2015, for example, have made repeated claims of alleged abuses by security forces, a strategy reportedly aimed at appeasing Guebuza’s boys.

However, with the majority of refugees originating from known Renamo support bases, the former rebel-turned-opposition party is not blameless in this latest wave of violence. Renamo militants have been behind a spate of attacks against both military and civilian targets along major highways in central Mozambique; vehicles transiting through the region are now unable to do so without a military escort. In the deadliest attack in 2015, at least 27 soldiers were killed and a further 23 injured in an ambush by militants in Sofala province on 17 November 2015. The attacks have been linked to Renamo’s ongoing campaign to secure political significance in what the party claims to be a Frelimo-controlled political and economic space. Following President Nyusi’s election in October 2014, Renamo leader, Alfonso Dhlakama adopted an increasingly aggressive rhetoric against the Frelimo-dominated government. Dhlakama threatened to secede and create a new republic comprising his core constituencies of the Niassa, Sofala, Zambezia, Manica, Tete and Nampula provinces. Although Renamo is not assessed as having the requisite capabilities to launch an organised offensive to challenge the Maputo-based government, a protracted low-level insurgency is likely to further reduce foreign business confidence in the country.

In light of Renamo and Frelimo’s on-again-off-again approach to negotiation efforts – a pattern evident since the end of the country’s civil war between the two parties in 1992 – there is little confidence in the current talks about talks. The latest meeting on 25 May between Nyusi and Dhlakama to pave the way for future dialogue offered little in terms of immediate resolution. The two men face a significant challenge in determining a suitable agenda for future talks able to capture the interests of Renamo as well as the divergent factions within Frelimo. There is little love lost between the two parties and any ensuing dialogue is likely to be a drawn-out process, one that the current Mozambican economy can ill afford, making the peace process increasingly reliant on the backing of the European Union and others. 

A failure to kerb the latest Renamo offensive is unlikely to bode well for Frelimo’s efforts to rebuild trust with its international development partners and investors. Furthermore, such economic and social insecurity has not been well received domestically. General uncertainty over the country’s current economic position among the populace coupled with the fact that the government is likely to implement increasingly stringent fiscal measures to recoup government funds in the short term is likely to drive up anti-government sentiment. Rising food prices, subsidy cuts, and the impact on small businesses will increase the potential for demonstrations against the government. Opposition parties, including Renamo and the Movimento Democrático de Moçambique (MDM), will be keen to capitalise on these grievances. However, the Frelimo government will unlikely tolerate incidents of unrest. Already, on 21 May, several political parties and civil society groups were banned from holding a demonstration in Maputo whilst a subsequently increased police presence in the city deterred a second march from taking place. 

Frelimo now faces a greater need than ever to combat pilferage of state coffers by government elites and to loosen its political control over the economy to restore economic and political stability to the country. This indeed could be an opportunity to appease Renamo’s accusations of Frelimo dominance. However, there is currently little evidence of political will within the Frelimo government to develop an effective strategy to combat both the impending financial crisis and an increasingly aggressive Renamo.