The Centre for Public Integrity (CIP), a Mozambican non-governmental organisation, considers “urgent” the approval of a law that obliges multinationals to buy local goods and services, noting that this device “will promote the diversification of the economy.
In an analysis of the issue, CIP quotes a leader of the Confederation of Economic Associations (CTA) of Mozambique, who said that “without a legal instrument that obliges multinationals to incorporate national companies, Mozambican Small and Medium Enterprises [SMEs] will continue to be excluded” from oil industry projects.
The exclusion will persist, because the multinationals operating in the country are also pressured to include SMEs from their countries of origin, said the CTA official, according to the CIP study.
The NGO argues that the urgency of a “local content law” is justified by the fact that the production of liquefied natural gas in the Rovuma basin is about to start, through the Coral Sul floating platform, stationed off Cabo Delgado, northern Mozambique.
“The start of operations of the Coral Sul project installation, in the Rovuma basin, has rekindled the hopes of Mozambicans in relation to the direct and indirect benefits that gas exploration may provide,” the text reads.
CIP points out that an investment of seven billion dollars is expected in this venture, with a direct contribution to the state’s annual revenues of an annual average of 772 million dollars over 25 years.
CIP warns about the risk of repeating the case of natural gas exploration projects by the South African petrochemical company Sasol, in the province of Inhambane, southern Mozambique.
According to the analysis, local populations have reaped few benefits from natural gas exploration because the South African concessionaire has established few links with the region’s economy.
“Substantial improvements in the standard of living of the populations, not only of Inhambane province, but of the entire country, were expected through direct and indirect links to the project,” the document notes
However, it continues, the experience of more than 17 years of gas exploration in Inhassoro and Govuro by Sasol is evidence that there are few or almost no changes in the living standards of the population, when multinationals do not buy goods and services from local companies.
The CIP reports that a draft local content law has been in the possession of the Ministry of Economy and Finance since 2019, but no date is in sight for the submission of the document to the Assembly of the Republic (AR).
The organization expresses concern over statements by the Mozambican President, Filipe Nyusi, who said in a meeting with Mozambican businessmen that “the local content law is unsustainable because it distorts prices and competitiveness in the international market.”
This positioning leads CIP to question: “after all, who is interested in the absence of a law on local content”.
