Mozambique: NGO wants a law obliging multinationals to buy local

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Mozambique: NGO wants a law obliging multinationals to buy local

2:58 CAT | 21 Apr 2022

FILE - For illustration purposes only. [File photo: Noticias]

Mozambican non-governmental organisation, the Centre for Public Integrity (CIP), considers it a matter of urgency that a law forcing multinationals to buy local goods and services be passed, in the interest of diversifying the economy.

In an analysis on the matter, the CIP cites a Confederation of Economic Associations (CTA) official who stated that “without a legal instrument obliging multinationals to incorporate national companies, Mozambican small and medium enterprises [SMEs] will continue to be excluded” from the oil an gas industry projects.

The exclusion will persist because multinationals operating in the country are also pressured to include SMEs from their own countries of origin, said the CTA official, according to the CIP study.

The NGO argues that the urgency of a “local content law” is pressing, since the start of liquefied natural gas production on the Coral Sul floating platform off Cabo Delgado in northern Mozambique is imminent.

“The start of operations at the Coral Sul installation in the Rovuma basin has rekindled the hopes of Mozambicans in relation to the direct and indirect benefits that gas exploration can provide,” the study reads.

The CIP points out that an investment of US$7 billion (€6.4 billion) is expected in the Coral Sul undertaking, with an annual contribution to the state averaging US$772 million (€711 million) for a period of 25 years.

The CIP warns of the risk that natural gas exploration projects conducted by the South African petrochemical company Sasol in Inhambane province, southern Mozambique, will repeat the scenario.

According to their analysis, local populations there have benefited little from the exploitation of natural gas, because the South African concessionaire has established few links with the local economy.

“Substantial improvements in the population’s standard of living were expected, not only in the province of Inhambane, but throughout the country, through direct and indirect links to the project,” the document notes.

However, the CIP continues, the experience of more than 17 years of gas exploitation in Inhassoro and Govuro by Sasol is evidence that there is little or no change in the population’s standard of living if multinationals do not buy goods and services from local companies.

The CIP states that a draft law on local content has been in the possession of the Ministry of Economy and Finance since 2019, but there is no date for the submission of the document to the Assembly of the Republic (AR).

The organisation expresses concern about statements by Mozambican President Filipe Nyusi, who said at a meeting with Mozambican businesspeople that “the local content law is unsustainable, because it distorts prices and competitiveness in the international market”.

This position leads the CIP to question: “Who, in the end, has an interest on the absence of local content legislation?”

Afinal a Quem Interessa a Ausência de Legislação sobre Conteúdo Local?
– A ausência de uma lei específica sobre o conteúdo local pode prejudicar benefícios do Projecto Coral Sul
Leia o texto na íntegra:https://t.co/edEz7h4p58 pic.twitter.com/JhU9XqlL2x

— CIP-Mozambique (@CIPMoz) April 18, 2022