Nairobi-based APA Insurance is seeking to expand its business to micro insurance, which targets low-income people and has been largely under-penetrated ... in Kenya where two-thirds of its nearly 55 million population is mired in poverty.
Total and ExxonMobil have separate onshore LNG development projects on the northern Afungi Peninsula. The developments combined are planned to have total investment of $50bn, though ExxonMobil has delayed its final investment decision. Italian oil major Eni also has a floating LNG facility offshore which is not directly affected by the insurgency.
The insurgency by the Islamic militant group Ahlu Sunnah Wal Jammah (ASWJ) in the northern Cabo Delgado province has displaced an estimated 670,000 people since it began 2017. In March, Total reduced the staff at its Afungi site to a minimum as the nearby town of Palma came under heavy attack.
“The bright economic future predicted for Mozambique based on the discovery of gas is not likely to take place,” says Helge Rønning, emeritus professor at Norway’s University of Oslo. Government security forces have been unable to contain the insurgency, he says.
Multiple causes are behind the siege, Rønning says. External impetus comes from the recruitment and presence of jihadists from as far afield as the Central African Republic and Somalia. The attack on the town of Palma on 24 March 24 shows that “the unstable security situation will lead to further delays in the project.”
Internal factors include anger with corruption, smuggling and banditry, and “oppression of the local population which feels that they are left out of the development and the potential wealth, which only benefits a corrupt political-economic elite,” Rønning says.
According to the research report An Unholy Alliance: Links Between Extremism and Illicit Trade in East Africa published by the Counter Extremism Project (CEP) in March, ASWJ is drawing followers from communities with a long history of exploiting Mozambique’s traditional smuggling routes.
Mozambique has the potential as a leader to contribute to the advancement of sub-Saharan Africa’ energy and economic growth.” – Ning Lin, chief economist of the Center for Energy Economics at the University of Texas
The group’s illicit trade activities include the export of timber, gemstones and wildlife products and the largescale import of narcotics, especially heroin, the report says.
In Mozambique, as in Tanzania, attempts to stamp out narcotics trafficking have been “severely hampered by corrupt elements of the countries’ political and civic institutions,” according to the CEP.
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There is no doubt that Africa needs Mozambique’s gas. Ning Lin, chief economist of the Center for Energy Economics at the University of Texas, points to Africa’s low base of gas consumption.
She notes that around 580 million people in sub-Saharan Africa lacked access to electricity in 2019, three-quarters of the global total, and that the COVID-19 pandemic may have increased that number in 2020.
“Mozambique has the potential as a leader to contribute to the advancement of sub-Saharan Africa’ energy and economic growth,” she says.
Much needs to be done before that can happen, Ning Lin argues.
“Social instability is going to be a major risk factor for project development timeline. Major delays imply budget overruns and lack of adequate supporting regulations may lead to ineffective cooperation between local sectors and international investors. This is a common challenge shared for many upstream developments in developing countries.”
Mozambique’s pattern of northern insurgency dates back to the struggle for independence from Portugal. The ruling Frente de Libertação de Moçambique (Frelimo) led the struggle for liberation from Rovuma in the north to the southern capital Maputo in the early 1970s. After independence in 1975, resistance in northern and central regions to southern domination continued.
That heritage of division has yet to be fully overcome.
“While there are strong indications that the self-proclaimed Islamic insurgency has connections with international jihadist forces, it is also clear that the violence in Cabo Delgado originates from a profound sense of neglect of the local population by the central government,” says João Honwana, a former director for Africa in the United Nations Department of Political Affairs in New York, who also previously headed Mozambique’s air force.
“The government of Mozambique seems ill-prepared to respond to both these military and non-military sets of challenges.”
President Filipe Nyusi has preferred to turn to private security companies rather than use international help.
An agreement in March with the US to train Mozambican counter-insurgency troops as well as possible military assistance to Mozambique by South African Development Community countries and the European Union may “significantly strengthen the capacity of the government to address the security challenge,” Honwana says.
“But the success of the Cabo Delgado gas projects will also depend in great measure on the ability of the Mozambican state to address the cultural, political and economic sources of conflict in Cabo Delgado and beyond.”
Even if the security battles can be won, Mozambique needs to create a sense of economic inclusion in the north if it’s to make the most of the LNG opportunity.
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