For decades, Mozambique was yet another country struggling for economic stability after gaining independence from colonial rule, first ravaged by a 23-year civil war and then by years of severe annual flooding. Now, however, it seems that things are finally looking up for the south-east African nation.

A recent discovery of natural gas deposits off Mozambique's Cabo Delgado coast have been described by executives at Italian oil heavyweight Eni as “giant” and “historic”, while officials at US-based Anadarko Petroleum Corporation are forecasting that Mozambique will become one of the biggest exporters of liquefied natural gas (LNG) in the world.


Hearing mining potentates making such bold predictions must be every head of state's dream but Armando Guebuza, Mozambique’s president, is taking a very pragmatic view of the subject. Treading lightly when talking about the economic outlook for his country, he says that tapping its rich natural reserves is “a very complex process that will involve state, private and domestic [investors]”.

Prompting a rethink

The discovery of the gas deposits has led to heated discussions among Mozambique's politicians regarding the country's tax code and the renegotiaton of existing extraction contracts. The contracts up for renegotiation involve just two companies – aluminium producer Mozal, which is a joint venture between BHP Billiton, Mitsubishi Corporation and the Mozambican government, and Sasol, a South African chemicals conglomerate – both of which established operations in Mozambique in the 1990s when the country was just emerging from civil war.

“When the contracts [with Mozal and Sasol] were signed, it was the best thing we could do at that particular moment. It signalled that the country was interested in foreign investments,” says Mr Guebuza.

Even though he is looking to renegotiate these contracts, Mr Guebuza is keen to show that Mozambique still values foreign investment and has stated that any decisions regarding the contracts will be made with the participation of representatives from the companies in question. “We do not want to discourage investors. Whatever we do, we will do it in such a way that we can show that [Mozambique is an] attractive place for business,” he says.

Onshoring wealth

The provinces located closest to the Rovuma basin – the site of the natural gas deposits – are among the poorest in Mozambique, and Mr Guebuza is keen for them to benefit from the discovery. “We need to be thinking about infrastructure, [this is what] will bring development to these areas,” he says. Therefore companies wanting to drill in the basin are expected to invest in the construction of roads, railroads and bridges, as well as in fundamental facilities such as LNG plants.

To that end, a new law on public-private partnerships (PPPs), large-scale projects and company concessions in Mozambique came into force in August 2011, and Mr Guebuza says that the government “very much appreciates [the importance] of PPPs” in the overall development of the country’s infrastructure.

An influx of large, labour-intensive projects would also give the country a chance to fight its stubbornly high unemployment rate of nearly 19%. However, despite having a large workforce, the country lacks workers with the right skills for such projects.

Mr Guebuza says that the situation is about to change thanks to an initiative between public entities, educational institutions and investors. “We want to create [adequate] training. At the moment universities are discussing with companies [ways to] restructure their curriculum so that the necessary skills can be obtained.”