Cabo Delgado gas: “Expected economic gain is not happening”

Login

Register

http://www.clubofmozambique.com/

Cabo Delgado gas: “Expected economic gain is not happening”

3:34 CAT | 21 Oct 2020

Gas investments are not reaching communities, CDD says

In an interview with DW, the director of the Centre for Democracy and Development, Adriano Nuvunga, says that the implementation of the Local Content Law is being “stalled”, to the detriment of local communities.

The Mozambican non-governmental Centre for Democracy and Development (CDD) accuses multinationals linked to natural gas projects in Cabo Delgado of putting the brakes on the implementation of the Local Content Law, the draft of which was approved by Mozambique’s Economic Council in August 2019.

The CDD says that, as a result, Mozambican communities and small and medium-sized companies are losing out, because “all purchases are made outside” the country, with most of the “billions” being invested going to the multinationals’ home countries and not to the development of Mozambique.

In an interview with DW Africa, Nuvunga alleges that the Mozambican authorities lack the will to implement the law.

DW Africa: What are the reasons behind this delay in the approval and implementation of the Local Content Law?

Adriano Nuvunga (AN): It is clear that large multinational companies are not very interested in seeing a clear regulatory and governance framework on local content. Apparently, this situation delays [such a framework] and leads to situations of abuse by those who have to implement [the law] on the Mozambican side.

On the side of the Mozambican state, there is no firm leadership in terms of implementing the Local Content Law. Apparently, the current state of affairs favours some elites and local interests.

DW Africa: What are the economic impacts of this law not being implemented?

AN: The impact is very serious. The Local Content Law is the first step for Mozambique to develop economically. And, particularly, to boost small and medium-sized companies, as they are the ones which, in the end, employ labour, leading to the payment of income tax to the Mozambican state.

As this is not happening – all purchases are taking place abroad. As a result, the billions which are said to be being invested are staying in the countries of origin. The jobs that should be created in Mozambique are being created in the countries of origin.

In fact, Mozambique is the just place you bring the machines and products to extract [the gas], and then go [away].

So the expected economic gain is not happening.

Look at the situation in Cabo Delgado. It would be quite possible, with firm implementation of the Local Content Law, to solve part of the problems in the region, in terms of jobs for young people and opportunities for SMEs.

DW Africa: One issue that is always brought up is that there isn’t local capacity to supply goods and services.

AN: That is not true. Let’s take a simple case: an egg from China and an egg from another place. What’s the difference? The Mozambican government should take the upper hand in leading this process, but that’s not happening.

DW Africa: Why?

AN: If we remember, on the eve of the election campaign there was an initial investment decision announced by one of the [gas] multinationals. Now, that [initial investment decision] does not exist. That was a fraud to favour Frelimo [the ruling Mozambique Liberation Front party] and help Filipe Nyusi to win the elections. That may be the reason why today they are unable to stand firm and impose the legislation, by which Mozambique can gain. Because, in the past, there was complicity.

DW Africa: So, will we continue to see communities and small and medium-sized companies impoverished?

AN: Impoverished and, fundamentally, marginalised. The decision-making discussion takes place in Maputo with the great leaders interested in their short-term political objectives, marginalising communities in terms of the decision-making process. Nor are the fruits of these decisions reaching communities. At the moment, the policy of the ruling party is exclusive and oriented towards corruption.