Via Future Directions International, a report on the latest meeting of the Mozambique-China Joint Co-operation Commission which has given a green light to increased Chinese investment in the economy of the resource-rich African country:

China’s interest in resource-rich Mozambique was reiterated at the fifth Mozambique-China Joint Commission for Economic, Technical and Commercial Co-operation, held in the Mozambican capital, Maputo on 20 June. Discussions centred on maximising for mutual benefit the comparative advantages of the two countries: finance, technology and investment on the Chinese side and plentiful natural resources and a large and affordable labour pool on the Mozambican.

Comment

In her address, Mozambican Deputy Foreign Minister Nyeleti Mondlane described China as a ‘special partner’ for her country. In a very clear signal to Beijing, Mondlane stated that, for the Mozambican Government, ‘our expectation is for the increasing involvement of China in Mozambique, through private investments in the areas of transportation, logistics, manufacturing, agro-processing, commercial banking, tourism, housing and others.’

Despite tremendous progress since the Frelimo party government that has ruled Mozambique since independence in 1975 renounced its previous commitment to Marxism in 1989 and the end of a bitter 15-year long civil war in 1992, Mozambique still has a long way to go if it is to move beyond the ranks of the world’s poorest countries. While living standards have improved and economic growth averaging six to eight per cent per year has raised living standards overall, and enriched the governing elite, the official unemployment rate – which does not factor in the equally real problem of underemployment – is still approaching 30 per cent. Half of the population lives below the poverty line, only half of the country’s dwellings have access to clean drinking water and just 21 per cent of the population has access to adequate sanitation. Despite the country’s significant coal deposits and hydro-electric potential, the World Bank estimates that only 15 per cent of Mozambicans have access to the electricity grid, with most sourcing their energy from biomass. Foreign investment is clearly needed if the country’s plentiful natural resources are to be fully – and sustainably – harnessed and the grim statistics, such as those above, improved.  

While the capital, Maputo, is in the throes of a construction boom that has seen many of the capital’s colonial-era buildings torn down and replaced with high-rise office towers and apartment complexes, infrastructure remains sorely neglected, particularly outside the main centres. Out of a total road network of just over 30,000 kilometres, only some 6,300 km is paved. That lack of paved roads, bridges and functioning railways is a serious constraint to economic activity and investors, including Australian miners, are frequently required to construct them as part of their projects, thus necessitating deep pockets.

China – like Japan, India and South Korea – has had an active presence in Mozambican infrastructure for some time now, a situation that should be bolstered by the Joint Co-operation Commission. Chinese funding has already enabled the repair of several important national highways and the construction of new bridges. Funds from China will be likely to play a large role in the Mozambican Government’s goal of paving another 2,100 kilometres of roads by 2019.

Such infrastructure will significantly aid the development of the country’s natural resources, which include natural gas, coal and titanium, all of which are in demand by China. While South Africa is by far Mozambique’s main trading partner, China is playing a growing role and the sentiment expressed at the latest Joint Co-operation Commission should aid that. The Chinese Ambassador in Maputo has spoken of his country’s intention to raise annual trade with Mozambique to US$5-million by 2018, largely through investment in infrastructure projects.

Just how much use Chinese investors may choose to make of Mozambique’s large pool of predominantly unskilled labour is, however, questionable. If the past is any guide, new Chinese companies coming to Mozambique will be likely to import the majority of their staff, significantly reducing the opportunities for employment and training of local workers. If not handled carefully, such a lack of inclusion could potentially fuel anti-China sentiment similar to that seen elsewhere on the continent.