<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=6015194370001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>Torrential rain has devastated parts of Mozambique, Zimbabwe and Malawi, killing more than 150 people and leaving scores more without homes, power and access to aid. The Gift of the Givers foundation is working hard to get humanitarian aid to affected areas. CNBC Africa’s Kopano Gumbi spoke to Ahmed Bham, Team Leader at Gift of the Givers.</p>


Cyclone Idai leaves destruction in Mozambique, Zimbabwe & Malawi

<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=6003889311001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>Elections are a hot topic in Africa right now with many countries headed to the polls. One of them is Mozambique. A lot has been said about the arrest of former Finance Minister Manual Chang over the tuna bond scandal and the potential implications for the ruling Frelimo party. Menzi Ndlovu, Political Risk Analyst at Signal Risk joins CNBC Africa for more.</p>


Signal Risk’s economic & political outlook for Mozambique

<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=5996296956001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>The Mozambican former finance minister loan saga is unfolding in domestic and international courts. Now there has been growing concerns of the involvement of a senior Angolan political leader in the scandal. This could be trouble for Angola as this risks the relationship with the IMF and the prospect for economic recovery this year. Robert Besseling, Executive Director of EXX Africa joins CNBC Africa for more.</p>


Mozambique’s debt scandal spills over into Angola

<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=5990948219001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>Mozambique&#8217;s Ex-Finance Minister, Manuel Chang is appearing in court today in Kempton Park. Chang has been in police custody in South Africa for almost three weeks following his arrest for alleged fraud. The charges relate to one of the biggest scandals in Maputo. CNBC Africa&#8217;s Fifi Peters filed this report.</p>


Ex-Mozambique finmin remains behind bars

<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=5990550449001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>Mozambique&#8217;s Ex-Finance Minister, Manuel Chang, returns to court tomorrow to fight for his freedom. Chang has been in police custody in South Africa for almost three weeks following his arrest for alleged fraud. The charges related to one of the biggest scandals in Maputo that led the country into default and the economy into tailspin. CNBC Africa&#8217;s Fifi Peters filed this report.</p>


What Manuel Chang’s arrest means for Africa’s battle against corruption

<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=5988398679001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>Ex-Mozambique Finance Minister, Manuel Chang found himself in court again this week to argue against previous ruling that his legal team think will get in the way of winning him a successful bail hearing. Chang was arrested in December last year for his alleged involvement in the issuance of $2billion worth of fraudulent loans. CNBC Africa spoke to Aly Khan Satchu, CEO of Rich Management for the background story of the bond scandal that led the country to default.</p>


Mozambique ex-minister Chang’s scandal: What you need to know

<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=5988239770001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>The bail hearing of ex Mozambique Finance Minister has been postponed to January the18th. Manuel Chang was arrested in December last year for alleged involvoment in a $2billion loan scandal that caused the country to default and foreigners to cut aid.<br />
Zacarias Cossa, Counselor for Police at the Mozambique High Commission had this to say after the ruling.</p>


Ex-Mozambique finance minister’s court case postponed

<p>By Gary van Staden – Senior Political Analyst, NKC African Economics.</p>
<p>Official results of Mozambique’s local authority elections announced on October 14 provided a boost to the prospects of the ruling Mozambique Liberation Front (Frelimo) ahead of national and presidential elections scheduled for 2019. The scale of the victory suggests Frelimo and President Filipe Nyusi face no serious electoral threat next year.</p>
<p>Ossufo Momade acting leader of the Mozambican National Resistance (Renamo), an opposition party cum rebel movement, was not happy after the comprehensive defeat. As was the habit of his late predecessor Afonso Dhlakama, Mr Momade threatened to suspend peace talks.</p>
<p>However, there is little prospect of that threat materialising as Renamo is currently too weak politically and militarily to make good.</p>
<p>Elections in Mozambique always produce two main headlines – Frelimo Wins and Renamo Complains. Allegations of fraud in the wake of last week’s (October 10) vote follow a well-trodden path of fraud and rigging allegations that may contain elements of truth but never enough to alter the scale of Frelimo’s electoral successes and which tend to be exaggerated.</p>
<p>The most recent local results were no exception, with Frelimo winning 44 local authorities against the eight councils won by Renamo while the Mozambique Democratic Movement (MDM) took one of the 53 local councils. Frelimo won 49 councils in 2013 while Renamo boycotted that poll.</p>
<p>There is some evidence for Renamo making gains in the central and northern regions of the country, but not enough with just a year to go to suggest it poses a credible electoral threat. Renamo won several major cities in Zambezia and Nampula provinces, its traditional stronghold, and came close in several others, but the results seem to confirm its regional rather than national power base.</p>
<p>Faced with the prospect of an electoral disappointment following the release of early results, Mr Momade told AFP that the ruling party had falsified results in several areas and he threatened to abandon the peace talks that have made considerable progress since Dhlakama’s death.</p>
<p>The latest phase of the peace talks between Frelimo and Renamo began in 2016 to end three years of violence between government troops and Renamo rebels that had created instability and impacted investment and logistics in the country.</p>
<p>Mr Nyusi and Mr Momade have made progress on the disarmament and integration of former Renamo rebels into the police and army and the decentralisation of powers to local and regional authorities.</p>
<p>“We do not want war, but we also do not accept any attempt to change the popular will,” Mr Momade told AFP, suggesting the “popular will” favoured Renamo while all other indications suggest otherwise.</p>
<p>The local authority elections cleared up several factors ahead of the national polls scheduled for next year. First, with barely a year to go, Renamo will be hard pressed to mount a serious challenge that dents Frelimo’s support. That will allow some continuity in the country that faces several major economic and financial crises that demand urgent and focused attention.</p>
<p>On the upside for Renamo, the outcome strengthened its position as the major (only, really) opposition after the MDM failed to make any headway.</p>
<p>While we accept that elections in Mozambique have seldom been in the same room as perfect, there has over several years been no credible evidence of large scale state-sponsored rigging or fraud and this election is likely to be no different.</p>
<p>Renamo may make threats and puff out its political chest, but it has little politically or militarily to back a withdrawal from the peace process for anything but a token period and we expect the talks to resume when the dust settles.</p>
<p>Gary van Staden – Senior Political Analyst</p>


OpEd: Will Frelimo’s local poll victory boost party in Mozambique’s 2019 elections ?

<p>JOHANNESBURG (Reuters) &#8211; Diamond producer De Beers said on Monday it was relocating 200 elephants from its private reserve in South Africa to neighbouring Mozambique, part of wider efforts to restore wildlife populations ravaged by conflict there.</p>
<p>The Anglo American unit said its 32,000-hectare )80,000-acre) Venetia Limpopo Nature Reserve could support around 60 elephants but now had 270, causing “extensive damage to an ecosystem that must sustain a diverse wildlife population.”</p>
<p>The world’s largest land mammals have a jumbo-sized impact on their terrain and in many South African parks, which are fenced to contain them, populations have reached levels where the vegetation cannot support their numbers.</p>
<p>De Beers said the elephants would be moved 1,500 km (1,000 miles) to Mozambique’s Zinave National Park, which has over 400,000 hectares and an elephant population of only 60.</p>
<p>Mozambique’s wildlife numbers were badly hit by a 15-year civil war that ended in 1992. In more recent years, its remaining elephant populations have been targeted by ivory poachers.</p>
<p>The operation is being conducted with the Peace Parks Foundation (PPF) conservation group, and De Beers said it was providing it with $500,000 to support anti-poaching efforts.</p>
<p>“Ecosystems require a range of fauna and flora to stay balanced. If you remove one species, such as elephant, it has a ripple effect on the whole system,” said Werner Myburgh, the chief executive of the PPF.</p>
<p>“The reintroduction of elephants to Mozambique will bring us one step closer to achieving our dream of restoring the landscape.”</p>
<p>Elephants are extremely social animals and family groups will be kept together for the translocation, a huge logistical undertaking that will include darting operations and the movement of tranquilised animals over long distances by road.</p>
<p>Editing by James Macharia and Robin Pomeroy</p>


Here’s why De Beers is moving 200 elephants from South Africa to Mozambique

<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=5812621030001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>Last week, Mozambique President Filipe Nyusi visited Kigali with aim to strengthen his country’s ties with Rwanda. Both countries on Friday July the 20th signed five bilateral pacts which included a MoU between Rwanda Development Board and the Investment and Export Promotion Agency of Mozambique. CNBC Africa’s Steven Muvunyi filed this report.</p>


Rwanda, Mozambique sign pacts to deepen trade and bilateral ties

<div style="display: block; position: relative; max-width: 730px;">
<div style="padding-top: 56.25%;"><iframe style="width: 100%; height: 100%; position: absolute; top: 0px; bottom: 0px; right: 0px; left: 0px;" src="//players.brightcove.net/1571595826001/default_default/index.html?videoId=5811599737001" allowfullscreen="" border=0 frameborder=0></iframe></div>
</div>
<p>Mozambique President Filipe Nyusi is in Kigali Rwanda on a 3 day state visit. On this visit, the two countries are expected to sign bilateral pacts aimed at strengthening cooperation between Rwanda and Mozambique.</p>


Mozambican President Filipe Nyusi in Kigali on 3-day visit

<p>Mozambique was the site of one of Africa’s <a href="http://www.fao.org/docrep/013/i1255b/i1255b00.pdf">most devastating natural disasters</a> in recent times. In the year 2000 floods killed 700 people, displaced 60,000, and left more than 500,000 needing humanitarian assistance.</p>
<p>The disaster also <a href="https://reliefweb.int/report/mozambique/mozambique-flood-emergency-recovery-project-ferp">inflicted economic damage</a> totalling over US$273 million – that’s six times Mozambique’s GDP.</p>
<p>Unfortunately, neither the citizens nor the government had disaster insurance. This meant that the country had to seek donations and humanitarian aid to rebuild. At the time, Mozambique’s economy was already constrained by poverty and low levels of social development. So the aftermath of the floods was another blow to the economy.</p>
<p>Compare this to the 2010 earthquake that devastated Christchurch in New Zealand. There, <a href="http://www.qucosa.de/fileadmin/data/qucosa/documents/22550/20170620.pdf">over 81%</a> of the losses were covered by disaster insurance. This ensured a quick <a href="https://www.sciencedirect.com/science/article/pii/S221242091500031X">recovery</a>, and reduced the economic burden on both the government and the people.</p>
<p>These two scenarios demonstrate the importance of <a href="https://www.undp.org/content/sdfinance/en/home/solutions/disaster-risk-insurance.html">disaster insurance</a>. Current global estimates suggest that over <a href="https://www.christianaid.org.uk/resources/about-us/act-now-or-pay-later-protecting-people-coastal-cities">a billion people</a> are susceptible to natural disasters.</p>
<p>Between 2006 and 2015 the damage caused by disasters cost Africa <a href="http://www.ifrc.org/Global/Documents/Secretariat/201610/WDR%202016-FINAL_web.pdf">$8.1 billion dollars</a>. Global estimates of the same damage costs have nearly doubled in 2017 from <a href="http://www.swissre.com/media/news_releases/nr20171220_sigma_estimates.html">$188 to $306 billion</a>.</p>
<p>Insurance is one way that citizens and governments can mitigate against the damage caused by natural disasters. But in Sub-Saharan Africa the uptake of such insurance remains low. This is surprising given the increased threat large parts of the continent face from climate related hazards and the extreme economic losses that may be incurred.</p>
<p>So what are the factors underpinning this lack of demand for disaster insurance? They include risk assessment, access to information, and the affordability of premiums.</p>
<h2>Disaster insurance</h2>
<p><a href="https://www.undp.org/content/sdfinance/en/home/solutions/disaster-risk-insurance.html">Disaster insurance</a> is an agreement between an insurance company and a nation state, body corporate, or individual that entitles them to compensation for losses incurred during disasters. For that entitlement, a cash premium is paid every month.</p>
<p>The seminal works of academics <a href="https://link.springer.com/article/10.1007/BF00055792">Howard Kunreuther</a> and <a href="http://www.econlib.org/library/Enc/DisasterandRecovery.html">Jack Hirshleifer</a> were among the first to assess the role of insurance in disaster recovery. They were both concerned with how to mitigate the effects of disaster losses.</p>
<p>Kunreuther argued that insurance was a potent tool in mitigating disasters by securing recovery funds for disaster victims. Hirschleifer contended that insurance would secure resources for urgent problems and ensure faster recovery for those affected. Both advocated for insurance as a way of building up the cash reserves that would be needed in the long-term management of disasters.</p>
<p>Despite these studied and stated benefits, the demand for disaster insurance in Sub-Saharan Africa remains critically low. Only <a href="http://www.droughtmanagement.info/literature/WB_disaster_risk_financing_insurance_sub_saharan_africa_2012.pdf">2.6%</a> of consumers have disaster insurance. An <a href="https://www.un.org/africarenewal/magazine/may-july-2017/disaster-insurance-against-climate-change-attracts-african-countries">estimated 80%</a> of those are in South Africa. Why is this the case?</p>
<p>Traditional literature <a href="https://academic.oup.com/ajae/article/89/5/1241/117781">points to factors</a> such as poor insurance education. But insights from <a href="https://hbr.org/2015/05/from-economic-man-to-behavioral-economics">behavioural economics</a> – the process of economic decision-making – indicate that the problem may be elsewhere.</p>
<h2>Behavioural economics</h2>
<p>Behavioural <a href="http://www.ase.tufts.edu/gdae/Pubs/te/MIC/3e/MIC_3e_Ch7.pdf">research</a> has consistently shown that individuals <a href="https://www.degruyter.com/downloadpdf/j/peps.2016.22.issue-2/peps-2015-0047/peps-2015-0047.pdf">deviate from rationally expected behaviour</a>. In the context of the threat of natural disasters, the rational thing would be to prevent economic losses by insuring one’s assets.</p>
<p>And yet this isn’t how people behave in this case. While <a href="https://www.jstor.org/stable/43151298?seq=1#page_scan_tab_contents">empirical evidence</a> suggests that <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/iere.12184">high premiums are responsible</a> for the low uptake by ordinary citizens this is only part of the problem.</p>
<p>An individual’s attitude towards risk, together with a lack of information, are also likely to play a significant role in insurance uptake. While the general population is considered to be slightly risk averse, individuals who are risk neutral or risk averse are less inclined to be insured. This is compounded by the <a href="https://onlinelibrary.wiley.com/doi/full/10.1002/bdm.728">geographical distance</a> from a potential disaster: for instance, the further away a person is from a disaster site, the safer they’ll feel.</p>
<p><a href="https://onlinelibrary.wiley.com/doi/full/10.1002/hec.907">Research</a> also shows that general understanding of insurance products and disaster probability is limited. Finally, <a href="https://www.nber.org/papers/w15396">trust</a> is key. Individuals <a href="https://pdfs.semanticscholar.org/f170/e5bffc1e0999a9f04a586b44bd6e57f76e10.pdf">will not pay for insurance</a> if they do not believe support will be provided when it’s needed. As such, the relationship between consumers and insurers is very important for boosting demand.</p>
<h2>Future policy considerations</h2>
<p>To solve the sub-Saharan African insurance problem, our research indicates that a raft of coordinated policies should be implemented to ensure a net increase in demand for disaster insurance.</p>
<p>Behavioural insights suggest that policies should be directed at influencing individual decision-making processes by removing barriers such as <a href="https://theconversation.com/how-insurers-can-get-better-at-responding-to-natural-disasters-75846">lack of information</a>, mistrust and prohibitive costs.</p>
<p><img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/97958/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" />Mandatory disaster insurance is another option; it would broaden the insurance pool, spread the risk and lower individual premiums – making insurance affordable to the average citizen.</p>
<p><a href="https://theconversation.com/profiles/matthew-abunyewah-469315">Matthew Abunyewah</a>, Casual Academics and PhD Candidate, School of Architecture and Built Environment, <em><a href="http://theconversation.com/institutions/university-of-newcastle-1060">University of Newcastle</a></em>; <a href="https://theconversation.com/profiles/david-a-savage-94980">David A. Savage</a>, Senior Lecturer Behavioural Economics , Newcastle Business School, <em><a href="http://theconversation.com/institutions/university-of-newcastle-1060">University of Newcastle</a></em>; <a href="https://theconversation.com/profiles/kim-maund-497893">Kim Maund</a>, , <em><a href="http://theconversation.com/institutions/university-of-newcastle-1060">University of Newcastle</a></em>; <a href="https://theconversation.com/profiles/michael-odei-erdiaw-kwasie-310390">Michael Odei Erdiaw-Kwasie</a>, Research fellow, <em><a href="http://theconversation.com/institutions/university-of-southern-queensland-1069">University of Southern Queensland</a></em>; <a href="https://theconversation.com/profiles/seth-asare-okyere-279492">Seth Asare Okyere</a>, Assistant Professor, Division of Global Architecture, Graduate School of Engineering, <em><a href="http://theconversation.com/institutions/osaka-university-1303">Osaka University</a></em>, and <a href="https://theconversation.com/profiles/thayaparan-gajendran-497892">Thayaparan Gajendran</a>, Associate professor, <em><a href="http://theconversation.com/institutions/university-of-newcastle-1060">University of Newcastle</a></em></p>
<p>This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/more-people-in-africa-need-to-be-insured-against-natural-disasters-97958">original article</a>.</p>


Why people living in Africa need insurance coverage against natural disasters

<p>ACCRA (Reuters) &#8211; Sub-Saharan African nations are at growing risk of debt distress because of heavy borrowing and gaping deficits, despite an overall uptick in economic growth, the International Monetary Fund warned on Tuesday.</p>
<p>The sober assessment comes as African countries continue to tap international debt markets and issue record levels of debt in foreign currencies, spurred on by insatiable investor demand for yields.</p>
<p>In its economic outlook for the region released in Accra Ghana, the Fund projected the rate of economic expansion would rise to 3.4 percent this year, up from 2.8 percent in 2017, boosted by global growth and higher commodity prices.</p>
<p>Slower growth in South Africa and Nigeria &#8211; the continent’s two largest economies &#8211; weighed on the region-wide average, but the IMF expects growth to pick up in around two-thirds of African nations. However, under current policies, that rate is expected to plateau below 4 percent over the medium term.</p>
<p>Meanwhile, around 40 percent of low-income countries in the region are now in debt distress or at high risk of it, the IMF said. And refinancing that debt could soon become more costly.</p>
<p>“The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favourable &#8230; which could coincide with higher refinancing needs for many countries across the region,” it said.</p>
<p>African governments issued a record $7.5 billion in sovereign bonds last year, 10 times more than in 2016. And they have issued or plan to issue over $11 billion in additional debt in the first half of 2018 alone, the report said.</p>
<p>Foreign currency debt increased by 40 percent from 2010-13 to 2017 and now accounts for about 60 percent of the region’s total public debt on average, IMF data showed. Average interest payments, meanwhile, increased from 4 percent of expenditures in 2013 to 12 percent in 2017.</p>
<p>Six countries &#8211; Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe &#8211; were judged to be in debt distress at the end of last year. And the IMF’s ratings for Zambia and Ethiopia were changed from moderate to “high risk of debt distress.”</p>
<p>The IMF conceded that Africa’s enormous needs will continue to demand heavy investments to build infrastructure and social development. But to do so while avoiding the risk of a debt trap the continent, which currently has the lowest revenue-to-GDP ratio in the world, will need to become more self-reliant.</p>
<p>“With debt vulnerabilities rising in the region, sub-Saharan African countries will need to further rely on sustainable sources of financing, making domestic revenue mobilisation one of the most urgent policy challenges for the region,” it said.</p>
<div class="container_28wm1">
<div class="attribution_o4ojT">
<p class="content_27_rw">Editing by Joe Bavier, Larry King</p>
</div>
</div>


Sub-Saharan African nations are at growing risk of debt distress, warns IMF, here’s why

<figure><img decoding="async" src="https://images.theconversation.com/files/212177/original/file-20180327-109185-xijvll.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="File 20180327 109185 xijvll.jpg?ixlib=rb 1.1" /><figcaption>Pemba in northern Mozambique has seen a surge of new arrivals in step with investments to exploit off-shore gas deposits.<br />
<span class="attribution"><span class="source">Flickr</span></span></figcaption></figure>
<p><a href="https://theconversation.com/profiles/gerhard-toews-456302">Gerhard Toews</a>, <em><a href="http://theconversation.com/institutions/university-of-oxford-1260">University of Oxford</a></em> and <a href="https://theconversation.com/profiles/pierre-louis-vezina-456305">Pierre-Louis Vézina</a>, <em><a href="http://theconversation.com/institutions/kings-college-london-1196">King&#8217;s College London</a></em></p>
<p>Natural resources are often thought of as a <a href="https://www.aeaweb.org/articles?id=10.1257/jel.49.2.366">curse</a> in developing countries, slowing economic growth rather than driving it. But new results from our <a href="https://www.theigc.org/project/21002/">research</a> show that discoveries themselves – before extraction happens – have their own economic consequences.</p>
<p>Our research shows that countries where natural resources are discovered are inundated with injections of capital, much like boomtowns during a gold rush. Giant and unexpected oil and gas discoveries act as news shocks, driving the business cycle by triggering foreign direct investment (FDI) bonanzas. Across countries, we find that FDI inflows driven by new projects in new industries increased by 58% in the two years following a giant discovery.</p>
<p>We illustrate how this works using Mozambique as a case study. Following a prolific gas discovery in 2009, foreign companies came pouring in and FDI ballooned off the chart. By our calculations 21,500 out of the 25,500 created by FDI in the five years following the first giant gas discovery in 2009 could be due to the discovery.</p>
<p>Our research upends conventional wisdom that the impact of new resource finds, such as gas, only have negative effects on the economy. Our results suggest that discoveries may lead to simultaneous foreign direct investment in many sectors, possibly diversifying economies and increasing capabilities and thus providing a window of opportunity for a growth takeoff.</p>
<p>This is important because it opens the door to policies being developed that exploit the early gains that can accrue from natural resource finds.</p>
<h2>Mozambique’s offshore finds</h2>
<p>Mozambique’s offshore natural gas discoveries in the Rovuma basin since 2009 have been nothing short of <a href="https://www.ft.com/content/39f0b2be-a2b0-11e7-8d56-98a09be71849">prolific</a>. They are now valued at approximately 50 times the country’s gross domestic product (GDP).</p>
<p>While these gas fields are still under development, data from <a href="https://www.fdimarkets.com/">fDiMarkets</a> – a branch of the Financial Times Group that collects and tracks FDI projects around the world – suggest that foreign companies moved in right after the first discovery in a multitude of industries. These companies created around 10,000 jobs across the country in the following three years.</p>
<p>In 2014 alone, the discovery attracted $9 billion worth of FDI. FDI inflows boomed from 2010 onwards. In 2012 Mozambique received 15% of all sub-Saharan African FDI. In 2013-2015, FDI amounted to 70% of the country’s average GDP, the highest share of all African countries.</p>
<p>Analysis suggests that none of this would have come in without the gas discovery. And very few jobs would have been created. A comparison of the weighted average of other developing countries with no discoveries shows that if Mozambique had not discovered natural gas, the number of jobs created by non-extractive FDI would have remained flat at around 1500 per year.</p>
<figure class="align-center zoomable"><a href="https://images.theconversation.com/files/212191/original/file-20180327-109185-15y0mea.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img decoding="async" src="https://images.theconversation.com/files/212191/original/file-20180327-109185-15y0mea.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="" /></a></figure>
<p><span class="caption">The FDI effect of the Mozambique gas discovery.<br />
Note: The MOZ line is the estimated number of jobs created by FDI projects, as reported by fDiMarkets. Synthetic MOZ is a synthetic counterfactual – a weighted average of FDI jobs in non-OECD countries with no discoveries that mimic Mozambique until its first large discovery in 2009.</span></p>
<h2>One new FDI job creates an extra six</h2>
<p>Our study also measured direct and indirect job-creation stemming from Mozambique’s investment boom. We did this by linking projects from the fDiMarkets database and data on firms from the country’s 2002 and 2014 firm censuses to employment outcomes across districts, sectors, and periods. Data from the country’s 2002-2014 <a href="http://www.ine.gov.mz/operacoes-estatisticas/inqueritos/inquerito-sobre-orcamento-familiar">Household Budget Surveys</a> was used.</p>
<p>Our estimate suggests that for each new FDI job, an extra six were created in the same sector in the same district. This is because newly arrived foreign companies might demand services such as catering, driving, and cleaning services, as well as services from local law firms and consultancies experienced with the economic and legal environment.</p>
<p>Moreover, newly created FDI jobs are likely to be associated with higher salaries. Research elsewhere in sub-Saharan Africa has shown that foreign-owned firms <a href="http://www.ilo.org/global/research/publications/working-papers/WCMS_592292/lang--en/index.htm">pay higher wages</a> to non-production and managerial workers. They also offer more secure – or less temporary – work.</p>
<p>Thus, these jobs are likely to increase local income, and in turn, demand for local goods and services. For example, the multinational’s employees might increase the demand for local fruit and vegetables, as well as for services such as housing, restaurants, and bars. This increase in demand is likely to be met by local businesses, creating more jobs and multiplying the initial number created directly by multinationals.</p>
<p>Our results also point to other interesting aspects of the extra jobs created. This includes the fact that around 55% are informal, that around 65% are taken by women, and that only workers with at least secondary education benefit.</p>
<p>To better grasp the magnitude of the multiplier effect of FDI, we asked: if we removed all foreign direct investment projects from Mozambique in 2014, how many jobs would disappear? This includes all the jobs directly associated with incoming investments (131,486 jobs in 2014) but also all the non-FDI jobs due to the multiplier.</p>
<p>We find there would be almost 1 million fewer jobs, out of a total of around 9.5 million jobs in Mozambique. The drop would be especially large in the manufacturing sector and in the capital of Maputo, where more than half would disappear.</p>
<h2>Facing reality</h2>
<p>Of course, economic growth and diversification do not automatically follow from a large discovery. The Mozambique foreign investment bonanza occurred while the government accumulated an unsustainable level of debt, and many of the FDI projects may only have short-run effects.</p>
<p>This has happened before. For example, a foreign investment boom in Tete province in northern Mozambique went from El Dorado to nightmare when a coal project failed to materialise in 2014-15. This prompted Rio Tinto to <a href="http://www.mining.com/rio-tintos-3-7bn-mozambique-coal-business-sold-for-50m-72265/">sell</a> its $3.7 billion coal business in the country for $50 million.</p>
<p>Additionally, the economy is still reeling from a debt scandal that led the International Monetary Fund to <a href="https://www.wsj.com/articles/imf-cancels-mozambique-credit-meeting-following-wsj-report-1460733681">cancel</a> its funding for Mozambique in 2016.<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/93963/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" />Even so, foreign investment bonanzas stemming from natural resource discoveries do provide an important economic growth opportunity, and the FDI effect needs to be considered when analysing the effects of natural resources on economic development.</p>
<p><a href="https://theconversation.com/profiles/gerhard-toews-456302">Gerhard Toews</a>, Post-doctoral researcher, Oxford Centre for the Analysis of Resource Rich Economies, <em><a href="http://theconversation.com/institutions/university-of-oxford-1260">University of Oxford</a></em> and <a href="https://theconversation.com/profiles/pierre-louis-vezina-456305">Pierre-Louis Vézina</a>, Assistant Professor in Economics, Departments of Political Economy and International Development, <em><a href="http://theconversation.com/institutions/kings-college-london-1196">King&#8217;s College London</a></em></p>
<p>This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/why-natural-resource-finds-are-more-than-just-a-curse-the-case-of-mozambique-93963">original article</a>.</p>


Why new discoveries of gas in Africa could be bad for its economies

<p>A group of Mozambique’s international creditors said on Wednesday it hoped to soon start constructive debt restructuring talks with the heavily indebted African country, with follow-up high level meetings scheduled in four weeks time.</p>
<div id="attachment_39080" style="width: 810px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-39080" class="wp-image-39080 size-full" src="http://cnbc.africa/wp-content/uploads/2017/02/mozambique_shutterstock_318371054.jpg" alt="" width="800" height="600" /><p id="caption-attachment-39080" class="wp-caption-text">Photo: Shutterstock</p></div>
<p class="">Mozambique had tabled the key outlines of a three-pronged proposal to restructure roughly $2 billion in debt during a meeting with creditors in London on Tuesday. However, creditors had been swift to reject the advance, which included some steep write-downs.</p>
<p class="">Following a second meeting on Wednesday, the Global Group of Mozambique Bondholders (GGBM) said it hoped some with some adjustments there could be “good faith negotiations to reach a fair and equitable solution.”</p>
<p class="">The group’s legal adviser, Thomas Laryea at Cooke Robotham LLC, told Reuters the group and Finance Minister Adriano Maleiane and his team would meet again for talks in four weeks on the sidelines of the IMF World Bank Group spring meetings starting in mid-April.</p>
<p class="">The GGBM represents or has the backing of some 80 percent of a Eurobond issue earmarked for restructuring.</p>
<div class="container_28wm1">
<div class="attribution_o4ojT">
<p class="content_27_rw">Reporting by Karin Strohecker; Editing by Hugh Lawson</p>
</div>
</div>


Mozambique bond creditors eye “good faith” debt talks, to meet govt again

<p class="MegaArticleBody_first-p_2htdt">Mozambique will present to its creditors the key elements of a debt restructuring proposal and give an update on its fiscal and macroeconomic situation at a meeting in London on March 20, the Ministry of Economy and Finance said on Thursday.</p>
<div id="attachment_39080" style="width: 810px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-39080" class="wp-image-39080 size-full" src="http://cnbc.africa/wp-content/uploads/2017/02/mozambique_shutterstock_318371054.jpg" alt="" width="800" height="600" /><p id="caption-attachment-39080" class="wp-caption-text">Photo: Shutterstock</p></div>
<p class="">“The government remains committed to finding a consensual and collaborative resolution to the current debt situation through dialogue with the holders of the Republic’s direct and guaranteed external commercial obligations,” the ministry said in an emailed statement.</p>
<p class="">Debt-ridden Mozambique has been in turmoil since the 2016 discovery of previously hidden loans granted to three state-owned companies, which led the International Monetary Fund and Western donors to halt budget support, triggering a currency collapse and debt defaults as well as hitting economic growth.</p>
<div class="Attribution_container_28wm1">
<div class="Attribution_attribution_o4ojT">
<p class="Attribution_content_27_rw">Reporting by Karin Strohecker; Editing by Kevin Liffey</p>
</div>
</div>


Mozambique to propose debt restructuring plan to creditors

<p>MAPUTO (Reuters) &#8211; At least 17 people died and several others were injured in Mozambique’s capital early on Monday when a 15-metre pile of garbage collapsed due to heavy rain and buried seven houses, officials said.</p>
<p>The collapse happened at around 3 a.m. (0100 GMT) in the impoverished Hulene neighbourhood, which is around 10 km (6 miles) from the centre of Maputo. The houses were built illegally and authorities had previously asked the residents to leave, officials said.</p>
<p>“Up to now 17 dead bodies were recovered. We fear more might be unaccounted for. So we will keep searching for bodies buried underneath the garbage pile,” a councillor for Ka Mavota Municipal District, Despedida Rita, told reporters.</p>
<p>Land pressure in many African cities leads some people to squat on land they do not own as they seek higher wages available in urban centres. The dwellings are sometimes built on land that is marginal or unsafe.</p>
<p>Reporting by Manuel Mucari; Editing by Matthew Mpoke Bigg</p>


Mozambique

Cyclone Idai leaves destruction in Mozambique, Zimbabwe & Malawi

Signal Risk’s economic & political outlook for Mozambique

Mozambique’s debt scandal spills over into Angola

Ex-Mozambique finmin remains behind bars

What Manuel Chang’s arrest means for Africa’s battle against corruption

Mozambique ex-minister Chang’s scandal: What you need to know

Ex-Mozambique finance minister’s court case postponed

OpEd: Will Frelimo’s local poll victory boost party in Mozambique’s 2019 elections ?

Here’s why De Beers is moving 200 elephants from South Africa to Mozambique

Rwanda, Mozambique sign pacts to deepen trade and bilateral ties

Mozambican President Filipe Nyusi in Kigali on 3-day visit

Why people living in Africa need insurance coverage against natural disasters

Sub-Saharan African nations are at growing risk of debt distress, warns IMF, here’s why

Why new discoveries of gas in Africa could be bad for its economies

Mozambique bond creditors eye “good faith” debt talks, to meet govt again

Mozambique to propose debt restructuring plan to creditors

At least 17 killed in Mozambique capital

News Tips

Advertise With Us

Mozambique

Cyclone Idai leaves destruction in Mozambique, Zimbabwe & Malawi

Signal Risk’s economic & political outlook for Mozambique

Mozambique’s debt scandal spills over into Angola

Ex-Mozambique finmin remains behind bars

What Manuel Chang’s arrest means for Africa’s battle against corruption

Mozambique ex-minister Chang’s scandal: What you need to know

Ex-Mozambique finance minister’s court case postponed

OpEd: Will Frelimo’s local poll victory boost party in Mozambique’s 2019 elections ?

Here’s why De Beers is moving 200 elephants from South Africa to Mozambique

Rwanda, Mozambique sign pacts to deepen trade and bilateral ties

Mozambican President Filipe Nyusi in Kigali on 3-day visit

Why people living in Africa need insurance coverage against natural disasters

Sub-Saharan African nations are at growing risk of debt distress, warns IMF, here’s why

Why new discoveries of gas in Africa could be bad for its economies

Mozambique bond creditors eye “good faith” debt talks, to meet govt again

Mozambique to propose debt restructuring plan to creditors

At least 17 killed in Mozambique capital

News Tips

Advertise With Us

Newsletters