Renamo’s threat to block road and rail stifles investor confidence - CNBC Africa

Renamo’s threat to block road and rail stifles investor confidence

Southern Africa

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"I think the impact of this situation is much greater than it comes to the reputation of Mozambique as a business destination. This sort of thing raises doubts in investors’ minds whether this is the right country to invest in. I believe that it is the right country to invest in-it will be overcome, it can be overcome-but investors who look at this case really and thoroughly might be put off by this,”  Markus Weimer, senior risk analyst at Control Risk told CNBC Africa on Friday

In June Mozambique's former rebels, currently at loggerheads with ruling party the Mozambique Liberation Front (Frelimo), vowed to weaken the logistics routes including a crucial exportation rail line for coal, which is a main economy driver.

Weimer said government is making efforts to adress the situation but it will take some time for the country to regain investor confidence because animosity between the two parties dates many centuries.  

“The positioning of Renamo also taps into a sentiment of many Mozambicans regarding democracy in the country. While the vast majority will not agree with the matter, some of the underlying messages regarding democracy in Mozambique and relationship of power have some resonance,” he added.

Anglo-Australian mining giant Rio Tinto this week resumed shipment of coal along the Sena railway line to the port of Beira, following a two consecutive week suspension due to the threats. Millions of US dollars have been pouring into the country’s coffers through this export gateway.

“When you have threat issues by Renamo it has to be taken seriously,” said Weimer.

Mozambique’s GDP is expected to grow by around seven per cent this year, following expansion of the country’s mining and financial services sectors, the International Monetary Fund (IMF) concluded on its latest consultation of Article IV Report.

“Mozambique has been one of the fastest growing countries in Africa in recent years. The average growth over the past couple of years has been over seven per cent, 2012 has been 7.4 per cent, hence the reference to a robust,” a bank strategist told CNBC Africa in July.

 

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