Mozambique: A Strategic Partner for America
Focusing on threats and short-term planning often leads to missed opportunities by governments. Insight is expected to be provided for immediate decision needs, while foresight becomes sidelined by more pressing current affairs. American positioning sometimes drifts away from building the conditions to project stable and enduring power, in favor of a more transactional approach to allies and adversaries.
Focusing on and investing in opportunities tends to avoid emergencies and unknown threats, while projecting American interests in a competitive world. Yet those mutually beneficial international partnerships are becoming more and more uncommon.
Mostly under the radar, Mozambique is a good example of an unconsidered opportunity for American political, security, and economic interests.
Almost twice the size of California but with only two thirds of its population, the fertile lands of this southern African nation are extremely underdeveloped. Since independence in 1975, Mozambique has endured civil war (1977-1992) and cyclical natural catastrophes (like annual floods).
This mix of war and natural disasters – a common story in other African nations – has had an uncommon outcome: Since Mozambique’s peace agreements more than 20 years ago, not only are regular elections held, but also presidents do step down and are peacefully replaced, despite the ruling Frente de Libertação de Moçambique (FRELIMO) party’s consecutive wins. This is not to say the multiparty democracy is well-established and stable. Resistência Nacional de Moçambique (RENAMO), the opposition, continually challenges the validity of the elections and keeps its military capabilities ready for use.
But despite violent incidents in the last two years involving clashes between RENAMO and government forces, civil war has not rekindled.
In fact, a one-week truce last December was extended, and negotiations between the opposition and government restarted on February 6, when specialized working groups were jointly established.
Why? Because the benefits of large foreign direct investment, in the wake of major natural gas discoveries in Mozambique, are incompatible with a country at war.
Mozambique is home to 100 trillion cubic feet (Tcf) of proven natural gas reserves, split between two major operators – ENI and Anadarko Petroleum. It has almost unlimited free, good quality, arable land; 1,535 miles of coastline (almost twice as much as California); immense hydropower resources; a geostrategic location; and development opportunities in all sectors.
The initial investment from the American owned Anadarko is estimated at more than $15 billion. According to the International Monetary Fund, the total direct investment in liquified natural gas in Mozambique will be $110 billion over 20 years. These values are highly attractive to suppliers, and not just because of the revenues after these projects come online after 2021.
As a recent report by a major consulting firm says, “Despite the country’s current debt conundrum, the projected economic boom associated with the development of the gas sector is expected to have multiple positive externalities for the rest of the economy, and provide numerous opportunities for firms looking to expand into Mozambique.”
Mozambique’s infrastructure further expands this business opportunity. In the 500 miles between the coast nearest the offshore gas fields and the onshore oil, we find the natural sea port of Nacala – a city which received a brand new airport just two years ago and is the last destination of the northern railroad system, from Moatize via Malawi, with potential to serve Zambia.
Driving up to Palma in northeastern Mozambique, we can already see Chinese-owned petrol stations. Soon, the exponential development of this region will bring a logistical bonanza, and those who are already there will have an advantage.
However, there remain legitimate maritime safety and security concerns for investing in Mozambique. And growing signs of imported extremism will pose a new regional risk.
But despite these risks – and the uncertainty of whether Mozambique’s government lives up to an increase in fiscal revenue to pay off its debt – the country will receive an absurd amount of investment in the medium-term, with foreign direct investment as the main driver.
Local entrepreneurs already have extensive know-how and capabilities. They now need strategic partnerships with those of us in the U.S. and Europe who will need them in the future.
The West has an option: Invest now, and take a relevant position in a strategic market.