In recent days, Mozambique has witnessed an escalation of protests reaching levels of concern for the national economy, directly impacting megaprojects that play a significant role in the country’s Gross Domestic Product (GDP).
Multinationals Dominate Exports
Multinational corporations account for more than 70% of Mozambique’s exports. Prominent examples include the MOZAL aluminum smelter, the petrochemical company Sasol, and Kenmare, which mines heavy sands.
Recently, in the locality of Topuito, Larde district, Nampula province, protestors invaded the construction site of the Irish mining company Kenmare, which operates in Moma. Demonstrators prevented the landing of a plane carrying workers and executives at the company’s local airstrip. Reports indicate that key access routes to the mine and company camp were blocked by supporters of presidential candidate Venâncio Mondlane. They demanded that the Kenmare administrator and general manager sign an agreement to expedite the construction of a bridge over the Larde River, a critical infrastructure for the local population.
Kenmare is one of the multinational companies reporting significant profits in Mozambique. In 2023 alone, the company reportedly generated 27.5 billion meticais from its operations.
Protestors Disrupt Natural Gas Supply
Earlier this week, demonstrators invaded and occupied Sasol’s natural gas processing center in Temane, Inhassoro district, Inhambane province.
The protestors, hailing from local communities, expressed dissatisfaction with the alleged lack of employment opportunities and social benefits provided by Sasol, a South African company operating in the region for several years. Their demands include greater inclusion in project-related jobs and investment in community infrastructure.
During the occupation, protestors forced workers to shut down the gas pipeline supplying South Africa, temporarily disrupting the flow of natural gas to the neighboring country. This action aimed to pressure Sasol and Mozambican authorities to address the community’s demands.
Key Export Routes Blocked, Affecting MOZAL’s Operations
In the municipality of Matola, residents completely blocked the road leading to the Beluluane Industrial Park, home to MOZAL, an aluminum producer responsible for a significant portion of Mozambique’s exports. Protestors erected barricades and burned tires on the road connecting to National Road 4 (EN4), the main route used by MOZAL to transport aluminum from its factory to the Port of Maputo and export markets. Workers were forced to use alternative routes, enduring long walks.
MOZAL is a joint aluminum smelting enterprise within the Beluluane Industrial Park and is part of Mozambique’s “megaprojects.” The company exclusively produces aluminum for export, having once accounted for more than 50% of the country’s total exports.
Economic Risks of Export Disruptions
To underscore the risks posed by this new wave of protests, economist Egas Daniel explained that while megaprojects contribute little to local community development, their paralysis could slow GDP growth, a potentially catastrophic outcome for the economy.
Daniel highlighted that Mozambique’s exports are heavily concentrated in megaprojects, which are essential for earning foreign exchange needed to cover imports. “The day MOZAL, Vulcan, Eni, Kenmare, Sasol, and other companies stop exporting due to adverse political conditions, we will undoubtedly face pressures on our exchange rate, which is currently artificial,” he warned.
A recent report by the Centre for Public Integrity (CIP) estimates that ten days of protests could result in losses of 24.5 billion meticais, equivalent to 2% of the GDP projected for 2024.
Contribution of Megaprojects to the Economy
Despite their weight in exports, megaprojects’ contributions to state revenues and GDP have been minimal. Studies show that at certain times, megaprojects contributed only 0.004% to state revenues, equivalent to 83 million meticais, and 0.01% to GDP, approximately 207 million meticais.
This disparity between generated profits and fiscal contributions has drawn criticism, with experts advocating for policies that ensure a more equitable distribution of benefits from natural resources.
Future Outlook
Ongoing protests and political instability could jeopardize the operation of megaprojects, negatively affecting Mozambique’s economy. It is imperative for the government and involved companies to adopt measures that promote local community development and ensure fair economic benefits distribution. Such actions are crucial for mitigating social tensions and ensuring the country’s economic sustainability.
