ECONOMY-MOZAMBIQUE: South Africa’s Top African Trading Partner

By James Hall Reprint | | Print |

James Hall

MAPUTO, Jan 27 2003 (IPS) - Mozambique is strengthening its neighbourly ties with South Africa, while the other country has found in Mozambique its top African trading partner, a spot held until a few months ago by Zimbabwe.

”The two countries have a long history, some of it contentious but some of it profitable and much of it friendly,” said Mozambican president Joacquim Chissano at last year’s opening of the giant Mozal aluminium smelter in the capital Maputo.

Replied South African president Thabo Mbeki, ”With R25 billion (around 2.8 billion U.S. dollars) investment by South African parastatals and private companies, South Africa has become Mozambique’s largest foreign investor.”

Mozambique is less populous than South Africa, with 18 million people to its neighbour’s 44 million. Mozambique has fewer cultural conflicts than South Africa, which still suffers racial divides, but until two years ago was the world’s poorest country.. That Mozambique now has one of the world’s fastest growing economies can be credited in part to South African investment.

South Africa is increasingly playing a role in Mozambique’s energy sector. The country’s giant petrochemicals and synthetic fuels group Sasol recently announced over 1 billion U.S. dollars in new investment at Mozambique’s Secunda natural gas fields, which will feed a pipeline to bring the gas to South Africa.

In an energy transfer going the opposite way, a large amount of energy needed to run Maputo’s Mozal aluminium smelter is coming from South Africa. To carry the current, a major power line was constructed through Swaziland, giving the tiny country one benefit from its larger neighbours’ cooperation.

Recent history between the countries told a different story, one of antagonism and hostility, which makes today’s budding relationship all the more remarkable.

A decade ago, the emerging democratisation of South Africa coincided with the spiralling down of civil war in Mozambique. The white racist apartheid regime, which was being dismantled, had been an agent provocateur in Mozambique. South African mercenaries were mandated by Pretoria to help destabilise the black-governed country.

All that seems a distant memory to Simeo Miguel, a taxi driver in the port city of Beira, as he sips from a bottle of beer. ”I don’t know if this is our country’s beer or South African beer anymore, but it makes no difference,” he says.

The nation’s beer brewing industry is now largely controlled by South African Breweries, which is a 78 percent shareholder of the nation’s leading brewery, Cervejas de Mocambique.

Mozambique’s cellphone provider is a South African firm. A second provider, Vodacom, also from South Africa, begins operations in April. Vodacom will spend 90 million U.S. dollars to upgrade the nation’s overall telecommunications sector, including the antiquated landline system, as part of its licensing deal with government.

Mozambique’s first toll road connects Johannesburg with Maputo, with the last segments put in place last year. Tourists can travel more swiftly and safely to and from Indian Ocean resorts. The attractions they seek are often in partnership or outright owned by South Africa.

In agriculture, South African farming experts are helping to revive Mozambique’s food production, which suffered during decades of civil war and post-war political turmoil. South Africa’s largest sugar producer, Illovo, is a major partner in the Maragra sugar consortium.

In the world of finance, the South African banking group Absa purchased Banco Austral last year.

The South African transportation conglomerate Spoornet is taking over the rail line from the Mozambique capital Maputo to the South African border town Komatipoort, a key rail link. The rehabilitated line will include new rolling stock aimed at enticing South African coal companies to use Maputo, whose 20 kilometre-long harbour is being dredged to accommodate larger ships, with an aim at handling 4.6 million tonnes of cargo annually.

South African industry now utilises that country’s Indian Ocean port at Richard’s Bay, which is further away for some exporters but more accessible by rail. Spoornet’s upgrade of the Komatipoort-Maputo line is intended to offer a cheaper and reliable alternative, particularly for industries along the Johannesburg-Pretoria corridor.

Tourism is largely a one-way proposition between the countries, with South Africans crossing the border to enjoy Mozambican resorts. Immigration traffic also seems to be one-way, as Mozambicans flock to South Africa in search of jobs, legally if possible, illegally if necessary. The South African government’s immigration and labour policy revisions now under consideration have been made necessary in part by a desire to protect jobs for South Africans, while seeking to preserve opportunities of nationals of neighbouring countries.

South Africa’s superior infrastructure and consumer culture has made the wealthier country a magnet for affluent Mozambicans to come on shopping trips. Nelspruit, an agricultural centre in South Africa’s Mpumalanga province, is the nearest large city to Mozambique. A new shopping mall is opening early this year to accommodate all the shoppers from across the border.

Will all this economic activity turn Mozambique into a satellite state dependant on South Africa? Government officials are sensitive to this possibility.

”We do not wish to be overrun by non-Mozambicans, who can control our economy. That is why we insist on local partners when foreign firms seek to invest here,” a finance ministry source told IPS.

Emotel is Vodacom’s local partner to establish the nation’s second cellphone service provider. A consortium of Mozambican business people, Emotel is putting up only 2 million U.S. dollars against the 90 million U.S. dollars provided by Vodacom. But the local partners are prized for their ability to bring in new business, a belief founded on their knowledge of the country’s market and personalities.

Transport and Communications Minister Tornaz Salomao said at the launch of the new cellphone system, ”South Africans’ enthusiasm for our country economically mirrors the friendship between our peoples. All nations sharing common borders can learn from our relationship”.