By Mario de Queiroz
LISBON, May 20 2003 (IPS)

Portuguese investors have begun to pull out of Mozambique, once Portugal’s biggest colony in Africa, and are moving over to the now peaceful Angola, where the guns fell silent 15 months ago.

The apparently definitive arrival of peace to Angola is having a negative economic effect on Mozambique, by contributing to the plunge in private foreign investment.

The ferocious gun battles in besieged cities and ambushes of trains, trucks and buses no longer form part of the daily life of Angola’s 12 million people, as they did for two and a half decades.

The insurgent National Union for the Total Independence of Angola (UNITA) laid down its arms on Feb. 22, 2002 – the day its charismatic leader, Jonas Savimbi, was killed in combat.

With the arrival of peace, and with UNITA in parliament today as the main opposition party, the former Portuguese colony in southwest Africa has turned into a land of opportunity for entrepreneurs in Portugal.

But another former Portuguese ”overseas province”, the southeast African country of Mozambique, population 22 million, is paying the price, due to the reduced inflow of direct investment.

The influx of foreign capital grew swiftly after the end of Mozambique’s civil war in 1993, which was followed by the unexpected democratic coexistence of two rivals that had torn each other apart on the battlefield for 18 years – the governing Front for the Liberation of Mozambique (FRELIMO) and the opposition Mozambique National Resistance (RENAMO).

But peace in Angola has merely accelerated a phenomenon that had already begun – the fall in private investment in Mozambique.

Portuguese capital in Mozambique drastically shrank from 100.5 million dollars in 2000 to 15.3 million dollars in 2001. As a result, Portugal fell from first place in terms of direct foreign investment in the southeast African nation to third, after South Africa and Italy.

A study recently published by the Diario Económico of Lisbon indicated that, although the final statistics are not yet in for 2002, ”the downward trend continued last year and this year.”

However, Mozambique remains the leading recipient of official development aid from Portugal.

The latest figures available, from 2001, show that Mozambique received 34.25 million dollars in development aid and 43.98 million dollars in public assistance from Portugal that year, far exceeding the 11.87 million dollars in development aid and 15.25 million dollars in public assistance provided to Angola.

The influx of Portuguese direct investment has played a leading role in the growth of industry in Mozambique in recent years, especially the Ferreira dos Santos group, which billed a total of 47 million dollars in the African nation in 2001.

The turnover reported by the corporation, which began to invest in Mozambique in 1987, in the midst of the civil war, is a relatively small figure in western European terms, but significant with respect to the size of the southeast African country’s economy.

The armed conflict ”was never a reason for interrupting our investment programmes,” Joao Ribas, a Ferreira dos Santos spokesman in Lisbon, told IPS.

The corporation is active in agriculture and agribusiness in Mozambique, especially the production, harvesting and marketing of cotton, tobacco, cashews, sisal, tea and citrus fruits, he said.

Portuguese business initiatives involving 294.5 million dollars ”created 31,133 jobs” in Mozambique between 1996 and 2000, according to a report released May 12 by the Centre for the Promotion of Investment.

The downward spiral in which the Mozambican economy – with the exception of the banking sector – is currently caught up is also of concern to the Portuguese government.

Portugal is the principal foreign country with interests in Mozambique’s banking system, which moves 1.2 billion dollars a year, a majority of which is controlled by the Banco Comercial Portugués (BCP), the Banco Portugués de Investimento (BPI), and the Caixa Geral de Depósitos (CGD).

The Banco Internacional de Mocambique (BIM) ranks at the top of the list of the country’s assets, with 53 percent of the market in loans, insurance, investment and letters of credit. But the BCP controls BIM, in which it owns a 67 percent share.

Portugal is studying other forms of channeling investment into Mozambique, now that Angola has become ”a very attractive country,” José Cesário, Portugal’s Secretary of State (deputy minister) for the Portuguese communities, said on a visit to Maputo, the capital of Mozambique.

Portuguese companies also complain that in Mozambique, unlike Angola, there are serious bureaucratic obstacles to attaining residency permits for specialised Portuguese workers, which stands in the way of business endeavours.

What is needed for the development of the African markets, and the group of Portuguese-speaking African countries (PALOP) in particular, is a thorough assessment of the capacities of each nation, concluded the Africa Hoje (Africa Today) seminar held on May 13 in Lisbon.

In the PALOP nations – Angola, Cape Verde, Guinea-Bissau, Mozambique and Sao Tomé-Príncipe – ”the business community and international organisations must stake their bets on the techniques and strategies of multilateral trade, which form part of regional integration processes,” Portugal’s Secretary of State for the Economy, Dulce Franco, said at the seminar.

Franco called for the creation of associations that promote investment, which she said was ”an essential condition for the development of the economies of Africa.”

At the seminar, Carlos Feijó, the coordinator of Angola’s Legislation Review Commission, said his government planned to enact new laws that would eliminate the hurdles standing in the way of foreign investment.

Mozambique, on the other hand, has not yet removed such obstacles.

Experts believe Mozambique should look mainly towards tourism, with the aim of becoming one of the main destinations of visitors to southern Africa.

The Portuguese business group Pestana invested 27.2 million dollars in tourist infrastructure in Mozambique last year, and plans to invest an additional 12.2 million dollars this year.

But that capital has come from South Africa, not Portugal. Pestana has done lucrative business in tourism in South Africa, especially in hotels in Kruger Park, a nature reserve.

The director of the Africa Hoje forum, Alberico Cardoso, said that in the meeting there was ”a latent and unmistakable interest” in seeing Portuguese investment grow in the PALOP nations. ”Now we have to infect the youngest generation of entrepreneurs with the Africa ‘virus’,” he added.

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