The state must do its share

Good afternoon. Mozambique’s government wants mining and energy investors to process more resources locally and buy more from Mozambican businesses. At this week’s CAVAME-d conference in Nacala, investors have been reminding it that factories also need reliable electricity and usable roads. The ambition is reasonable. Its credibility depends partly on what the government itself is prepared to deliver.

The complaint from Syrah Resources, which operates the Balama graphite mine, was concrete. Its representative described deteriorating road connections to Pemba and Nacala, and continued reliance on diesel generators. Further graphite processing would require dependable electricity. A company facing those constraints in its existing operation has good reason to question the economics of adding another stage of production.

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Nampula governor Eduardo Abdula identified roads and reliable energy among the priorities for industrial development. His intervention brought the discussion back to the conditions investors need before committing capital. These are responsibilities that public authorities must help fulfil, through investment, planning and coordination. Listing them at a conference is useful only if it leads to work that companies and communities can see.

Local content is meant to run both ways. The government has become more explicit about what Mozambique should receive from investors, including jobs, domestic purchases and a greater share of processing. It must be equally explicit about the services and infrastructure its own institutions will provide. Investors’ obligations can be written into contracts and legislation. The state’s commitments also need budgets, deadlines and institutions responsible for delivery.

There is a sound economic argument for retaining more value from Mozambique’s resources. Processing can create employment, expand the tax base and generate business for local suppliers. But those benefits depend on operations that can compete and find buyers. Requiring a mineral to be processed domestically does not remove the cost of unreliable power or difficult transport. Where those costs make production uncompetitive, an obligation on paper may produce little investment.