Transparency Initiative (EITI)

74 Case Study: Mozambique
9.1 CONTEXT AND HISTORY OF EITI
IMPLEMENTATION
Mozambique is assessed as a “highly defective democracy”
(BTI 2016 among others). In terms of political rights and
civil liberties the country is ‘partly free’ (Freedom House
2016: 22), with a declining trend. This context needs to be
taken into account to reflect on the prospects of the EITI
to reach impact level results. The Initiative contributes –
but also relies on – conditions such as that stakeholders feel
free to talk about weak governance systems, corruption and
government and corporate accountability. However, the
study noticed critical media and civil society statements
and did not find indications for principal impediments to
freedom of speech on issues related to the EITI.
Economic reforms designed to stabilize the economy after
the civil war have led to strong and sustained growth of the
Mozambican economy since 1992. In particular, fiscal reforms
have helped improve the government’s revenue collection.
However, in spite of these gains, Mozambique remains
dependent on foreign assistance and over half the
population still lives below the poverty line. According to
the IMF (IMF 2015), while Mozambique’s poverty rate declined
from 69% in 1997 to 54% in 2003, it seems to have remained
stagnant since. As a result, even though Mozambique
over the past two decades has experienced one of
the highest growth rates in the world (averaging an annual
7.5%), a large share of the Mozambican population has not
benefited from this growth.
The oil, gas, and mining industry has been the fastest growing
sector in recent years, which has helped propel Mozambique’s
high gross domestic product (GDP) growth rates.
The extractive industries sector in Mozambique accounted
for about 3.5% of the country's GDP in 2014 and a projected
7.8% growth in 2015 mainly due to natural gas development
and a rapid growth in coal. The coming into operation
of the railroad line Moatize-Nancala in the near future
will further propel growth in the coal sector. In expectation
of this development, the Government of Mozambique
(GoM) Economic and Social Plan for 2016 projects the contribution
of the extractive sector to GDP in the order of 10%
in 2016. Moreover, the extractive industry was responsible
for 55% of exports in the last three years and its contribution
to government revenue has been rising, reaching 20%
in 2014.
The extractive industry is a fairly recent addition to the
Mozambican economy. In the early post-war years, Mozambique
offered highly concessional terms for extractive
companies, which attracted foreign investment for several
so called “mega-projects”. Mozambique has also attracted
large-scale investors such as Vale and Rio Tinto in mining,
and Anadarko, ENI, Statoil, Petronas, and ExxonMobil
in the oil and gas sector. The impact of these projects on the
economy has, however, been limited. Aside for some localized
employment creation and access to improved infrastructure
in the communities in the areas of impact of the
mega-mining projects, integration of existing projects into
the economy has been low.
Over the past few years, the GoM has been implementing
policy reforms aimed at preventing negative effects of resource
extraction – widely described as resource curse. A
new Mining Law and a new Hydro-carbons Law were enacted
in 2014 as well as strategic policies for mineral resources,
capacity building for the mining sector, licensing
in the oil sector to attract Foreign Direct Investment (FDI),
and a policy on Corporate Social Responsibility (CSR). In
addition, a Gas Masterplan, a gas transport tariff methodology,
and a Coal Masterplan were developed.
Nevertheless, as weak commodity prices have slowed the
exploitation of oil and gas reserves, recent developments in
the Mozambican economy show that the country has increased
its external borrowing and is currently ranked the
most indebted country in Sub-Saharan Africa. The government
debt-to-GDP ratio is now over 80%, prompting drops
in sovereign credit ratings and even rumors of default. Consequently,
the IMF has pushed for an independent audit
of the new loans and, pending this audit, further disbursements
from both the IMF as well as the international donor
community are frozen. This situation further highlights the
need for increasing fiscal transparency, in particular related
to the extractive sectors, in Mozambique. In that regard,
prioritizing and ensuring EITI compliance would contribute
to creating the conditions for an improved investment
climate.
The GoM, under the guidance of the then-President Armando
Emilio Guebuza, formally became an EITI Candidate
country in May 2009. Accession of the country
emerged as a way to improve other existing internal instruments
of promoting good governance, including transparency
and the prevention of corruption, and also to ensure
that payments and government receipts from the extractive
industries were published regularly. Mozambique proceeded
to become EITI Compliant in October 2012. The
country has produced six reports; the latest report covering
the accounts of 2013 and 2014 was prepared under the 2013