Mozambican NGO pushes for more time and clarity in creating sovereign fund

Login

Register

http://www.clubofmozambique.com/

Mozambican NGO pushes for more time and clarity in creating sovereign fund

8:57 CAT | 19 Sep 2017

Traditional fishing boats sail as Mozambique's tuna fleet sits in dock beneath Maputo's skyline, in this picture taken August 15, 2015. Mozambique, one of the world's poorest countries, discovered the reserves off its coast between 2010-2013, offering an opportunity to transform the former Portuguese colony which was ravaged by a 16-year civil war that ended in 1992. Recent signs of reckless government spending and an uptick in political violence have raised concerns that Mozambique could be the latest African country to suffer the resource "curse," in which an influx of petro-dollars suffocates the rest of the economy, encourages corruption and stirs unrest. Picture taken August 15, 2015. REUTERS/Grant Lee Neuenburg - RTX1TA2Z

Lusa (File photo) / A view of Maputo

The Public Integrity Centre (CIP), a Mozambican NGO, said on Saturday that the government should take more time over the process of creating a sovereign fund with revenues from the exploitation of natural resources, scheduled for December.

“The government must reconsider its December deadline and must first clarify what is specifically intended,” the CIP said in a document released on Saturday.

Mozambique’s Economy and Finance Minister Adriano Maleiane announced the Government’s intention to create a National Development Fund at the end of August.

Also Read: Mozambique’s Sovereign Fund likely to be managed by National Investment Bank – FinMin

The initial capital will be the US$350 million in capital gains tax that the Italian multinational ENI is expected to pay for the sale of a portion of its stake in the natural gas concession in the Rovuma basin to the North American Exxon Mobil.

Maleiane presented the fund as taking advantage of natural resources “to finance good initiatives” while avoiding increasing current expenditure.

The CIP believes the idea “is good, especially if it is a revenue management mechanism with clear objectives,” but has doubts about the way the government announced the measure, “as a private sector investment fund managed by BNI” a state bank, which it considers “problematic”.

Also Read: Mozambique should create sovereign fund to manage gas revenues – Capital Economics

“Many sovereign wealth funds have already been created in the world. Most of them have management problems and few respond to the goals for which they were created because of political interference,” the NGO notes.

The CIP maintains that Mozambique must, therefore, “initiate a gradual, transparent and inclusive process towards the creation of the fund”.

With the beginning of Rovuma basin natural gas extraction about five years off, there is “enough time for that”, it concludes.

Source: Lusa