Civil society organisations have called for the adoption of strategies that allow for a balance between savings and consumption in the implementation of the Sovereign Fund in Mozambique, so that the revenues from the exploitation of natural resources benefit present and future generations.
Speaking on Wednesday, May 8, in Maputo, during a meeting with the government and other partners, the entities said that the country needs to decide on the approach it wants to adopt in terms of creating savings or maximising consumption at the present time.
‘There is a need to establish a balance because saving too much may not be good, just as excessive consumption does not benefit the country,’ they described.
For N’weti’s executive director, Denise Namburete, it is essential that legislation uses language that is accessible to citizens so that they understand what a Sovereign Wealth Fund is, not least because this method brings greater transparency and trust.
‘The Sovereign Wealth Fund brings us challenges and opportunities, so we need to translate the language to make it simpler and more accessible,’ she emphasised.
Regarding the meeting in particular, she said that it was designed to stimulate debate on how the Fund works, the legal and regulatory framework, its role in promoting wealth and the paths to sustainability.
‘The regulation also defines the procedures for ensuring the transfer of resources associated with the exploitation of liquefied natural gas (LNG), and also revenues from the exploitation of future projects in the oil and gas area, setting the proportion at 60 per cent for the State Budget (OE) and 40 per cent for the Sovereign Fund account, this for the first 15 years, and from the 16th onwards, the division will be 50 per cent for each.’
‘We addressed [issues] about aligning the management of the Sovereign Fund with Mozambique’s development agenda, taking into account the main challenges and opportunities, economic assumptions for generating revenue from natural gas projects and international experiences,’ he emphasised.
On 8 January 2024, Mozambican President Filipe Nyusi promulgated the law creating the FSM, which was approved by Parliament on 15 December 2023.
In the final vote, the proposal to create the Mozambique Sovereign Fund, presented by the government, received 165 votes in favour only from the Mozambique Liberation Front (Frelimo), while 39 opposition MPs [Resistência Nacional Moçambicana (Renamo) and the Movimento Democrático de Moçambique (MDM)] voted against.
‘Projections indicate that annual gas exports could amount to a nominal 91.7 billion dollars over the life cycle of the project, in a scenario in which all the development initiatives approved so far by the government are in operation. In this scenario, annual revenues for the state will peak in the 2040s at more than 6 billion dollars a year,’ explained Economy and Finance Minister Max Tonela last year
In March, the Deputy Minister of Economy and Finance, Amílcar Tivane, estimated that the Sovereign Fund would be operational by the end of April.
‘Our expectation is that all the work on creating instruments to ensure the viability of the fund will be finalised by the end of this month, so that by early April it will be up and running,’ he said.
After another session of the Council of Ministers, where the Executive approved the decree regulating the Sovereign Wealth Fund Law, he explained that guidelines will be established for good governance, emphasising that the fund’s decision-making structure will initially be made up of the Assembly of the Republic, the Government and the Bank of Mozambique.
‘The regulation also defines the procedures for ensuring the transfer of resources associated with the exploitation of liquefied natural gas (LNG) and also revenues from the exploitation of future projects in the oil and gas area, setting the proportion at 60 per cent for the State Budget (OE) and 40 per cent for the Sovereign Fund account, this for the first 15 years, and from the 16th the division will be 50 per cent for each,’ he said.
