The absence of a Regional Response to COVID-19

The absence of a Regional Response to COVID-19

Azwimpheleli Langalanga

COVID-19 has been characterised by a return to various forms of nationalisms including inward looking policies. This has been the case at both a continental and global level. The World Health Organization, an institution tasked with governing global health matters has thus far provided the closest to a multilateral response to the Corona pandemic. However, the WHO has seemingly been caught in the crossfire of geopolitical battles between China and the US. The organisation has even faced threats of reduced funding from key financial contributors such as the United States. With the ultimate custodian of global health governance under so much pressure, the focus on how to tackle the Corona epidemic falls on regional and continental efforts. However, the world has experienced a dearth of regional and continental leadership in fighting the Corona. The European Union, for instance, faces its greatest existential challenge after the 2008 financial crisis and the Brexit. This is because there is no consensus on how the regional block must help its worst hit members, Italy, and Spain.

Africa has not been spared such regional and continental lapses. Despite the Corona epidemic coming at a time when strides have been made in consolidating regional integration. This has been through initiatives such as the Tripartite Free Trade Area, the Continental Free Trade Area, and most importantly, in the health sector, the adoption of the African Medicines Agency. The latter initiative is built upon regional initiatives and has a business plan that includes a Pharmaceutical Manufacturing Plan for Africa. What has come out strongly within African policy and intellectual circles is that the Coronavirus provides an opportunity for the continent to establish a capacity for
the manufacturing of pharmaceuticals, medicines, and medical devices. This is because the Coronavirus has exposed the vulnerability of the continent on the reliance of imports for critical health products. However, all these discussions are taking place outside institutions of the African Union. It is important that formal institutions start to reflect on some of these discussions, and dust up ambitious policies such as the Pharmaceutical Manufacturing Plan for Africa.

The COVID-19 epidemic offers an opportunity to assess the suitability of regional and continental initiatives in dealing with transnational health challenges. In the SADC region, there has not even been a regional meeting at Heads of State level to craft a common regional approach to the epidemic. The Southern African Customs Union, a much more integrated formation is also characterised by inward looking responses. Lesotho, for instance, has not recorded a single Coronavirus case, mostly because of a lack of capacity. Swaziland, Botswana, and Namibia have introduced states of emergency that are more stringent than the states of national disaster in South Africa.

What has not been clear is the policy around the closing of borders. All the countries in the SACU and SADC regions have closed their borders. The closing of borders has thus far been a unilateral act from member states. They close the borders in way that suggests that these countries do not view borders as common boundaries. For instance, South Africa unilaterally closed the Beitbridge border post except for goods and services. The Zimbabwean government seems to have been playing by the ear in trying to synchronise its lockdown with that of South Africa. From international trade and regional integration standpoint, the absence of coordination presents a practical challenge in that a member state decides to open its borders while the other states have them closed, they will be no proper trade facilitation.

The lack of regional or continental co-ordination around the COVID-19 can be attributed to an absence of institutions and to a degree a lack of utilisation of existing institutions. Before the COVID- 19 struck, the African Union, through its development agency, the African Union Development

Agency, has been in the process of developing an institution that is aimed at regulating medicines control in the continent. This is the Africa Medicines Agency, modeled along with the European Medicines Agency. It is not clear to what extent that the AMA, would have been effective in helping to co-ordinate a response to the COVID-19 pandemic. Its sister organisation, the European Medicines Agency has not been instrumental in the Coronavirus fight in that continent.

A positive feature of the COVID-19 pandemic in Africa is that there has been a recentring of discussions around continental pharmaceutical industrial policies. The shortage of medicines and medical equipment accompanied by overreliance on imports has made African policymakers face the reality of a need to augment the security of supply through domestic production. It is rather disconcerting that the discussions around increasing the domestic supply of pharmaceutical and medical devices in Africa make no mention of the continent’s key policy iteration in this regard. This is the Pharmaceutical Manufacturing Plan for Africa. The PMPA, as it is called offers a roadmap on how the continent could establish a semblance of domestic pharmaceutical manufacturing industry.

The COVID-19 pandemic will leave the African continent in a deep economic recession. It has also exposed the lack of regional and continental approaches to common challenges. Indeed, the pandemic has exposed the perennial rift among rhetoric, protocol culture, and implementation in African regional integration initiatives. However, on the positive side, the pandemic offers Africans an opportunity to reflect on some policies that have been agreed on which however lack implementation, such as the PMPA. African institutions such as the NEPAD-AUDA have a key role to play in not only shaping some of the continent’s key developmental trajectories but also in providing thought leadership.

Minister Mboweni Delivers the Mini Budget Speech: Case of a Blinking Hatchet Man

Minister Mboweni Delivers the Mini Budget Speech: Case of a Blinking Hatchet Man

Azwimpheleli Langalanga, Anna Ngarachu and Heinrich Krogman

Finance Minister Tito Mboweni presented his mini-budget speech on the 30th of October 2019. The mini-budget is essentially a report that reviews the economic situation from a fiscal and monetary policy perspective, done through a budgetary lens. The speech is aimed at preparing the country and economy for the main budget speech that will be presented in February the following year.

Mboweni Mirrors Ramaphosa

It is widely speculated that President Ramaphosa kept Minister Mboweni in cabinet because he is a maverick who pushes a more conservative economic line and is a deeply trusted ally. Mboweni has the capacity to push through policies that would not ordinarily be acceptable to either the alliance partners or perhaps even Luthuli House. There is no denying that Mboweni faces an unenviable task that sees him required to play ‘hatchet man’ as South Africa continues to struggle against unfavourable economic conditions. The Mini Budget Speech indeed lived up to this characterisation of Mboweni. He came across as a hatchet-man with a clear sense of where he needs to administer the cuts while taking account of the dangers surrounding him but not assured of victory. The shadows emerging in Mboweni’s presentation were in the form of cutting perks for national and provincial executives, talk of cutting the public sector wage bill and potentially severing the lifeline to limping SOEs. In true Ramaphosa style, Mboweni was more comfortable on the institutional side of things when announcing additional funding to the National Prosecution Authority and the South African Revenue Services.

The Mini Budget as a Signalling Mechanism

Unlike the Budget Speech scheduled for February 2020, the Mini Budget statement serves essentially as a signalling mechanism to both domestic and foreign constituencies. Over the medium-term, expenditure will continue to outpace revenue, but as a share of GDP, the main budget balance is projected to decrease from a 2019/20 low of -4.71{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} to -4.28{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} in 2021/22 (see graph below). The 2019 Mini Budget statement was particularly important to all constituencies in two main areas: interventions around State-Owned Enterprises and measures to reduce spending. Minister Mboweni was fairly conservative and cautious on both these matters. As already indicated, this has to do with the competing pressures within the body politic. However, the Minister’s candidness about the real state of the economy was welcome. The pronouncements around the visa regime were well received, though the changes will not address the choking immigration restrictions around the movement of businesspersons and skilled personnel.

Eskom: The Elephant in the Room

As expected, Minister Mboweni did spend some time on SOEs in general and Eskom in particular. Unsurprisingly he indicated that the power utility posed the biggest threat to the fiscus and implied that Eskom’s survival is intertwined with that of the country’s economy. In other words, Eskom is too big to fail and must be bailed out, to the tune of tens of billions of Rands in the coming three years. The minister asserted that the price to pay would be a widened public debt to GDP ratio, which he expects to surpass the psychological barrier of 70{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} in the next two years.

What was glaringly lacking in Mboweni’s presentation was his characteristic assuredness. It was clear that the Minister was juggling interests and prudency. It does seem Minister Mboweni has taken heed of the fact that if he totally disregards the noises from various sectoral interests, he might expose his principal and ultimately weaken him. In this regard, Minister Mboweni shied away from making bold decisions about cutting jobs at Eskom – the same way he walked a tight rope around the public sector wage bill. Mboweni seemed to be pandering more to domestic constituencies, specifically the alliance partners and the anti-Ramaphosa faction within the ANC. A case in point was his indirect allusion to not nationalising the reserve bank. Vintage Mboweni would ordinarily have been much more direct. Instead, Mboweni seemed more comfortable in engaging in ‘lawfare’, a space that his principal thrives in too.

Institutional Rebuilding: Strengthening SARS and the NPA

At the core of South Africa’s recent economic challenges was impunity and the hollowing out of state institutions. Any efforts to revive the economy and rebuild investor confidence require the rebuilding of criminal justice systems. Minister Mboweni has allocated additional budgetary support to the South African Revenue Service and the National Prosecutions Authority. These efforts will help towards strengthening capacity and hopefully bring perpetrators of state capture to book. The importance of this cannot be emphasised enough. Having high profile, politically exposed persons being arrested, prosecuted and convicted will assure not only South Africans but also foreign investors that the Ramaphosa administration is committed to fighting corruption beyond the rhetoric.

See consolidated government fiscal framework here

The country’s attention now turns towards Moody’s decision on Friday. If one was to hazard a prediction, should Moody’s locate Minister Mboweni’s statement in the context of the bigger picture, South Africa will escape a downgrade. However, there will likely be reservations around the seemingly nonchalant attitude towards Eskom and the rapid shift in public debt to GDP breaking through the 60{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} barrier, indicating a potential debt sustainability risk. Moody’s might also express a desire to see the wheels of justice turning much faster than they are at this stage.


Understanding Constitutional underpinnings of the NHI

Understanding Constitutional underpinnings of the NHI

During the last two years, a debate has raged in South Africa around the proposed National Health Insurance Fund.

This debate has taken place in various fora, but mostly on social media with ‘thought leaders’ airing their views on electronic and print media.

Much of the discussions on NHIF, assume a certain level of knowledge. The assumed knowledge is not only of South Africa’s proposed NHIF, but of a broader comparative understanding of various universal health insurance schemes, globally.

What has emerged as the dominant view from the NHIF discourse is that the government has got it all wrong. Analysts and experts alike, argue that the NHIF is a bad idea in that there will be no funding for the scheme and that it will face governance challenges.

Further, the dominant view posits that the NHIF is based on a misdiagnosis of the country’s public health access problem.

Overall, the overarching attitude to the NHIF is pessimistic and implicitly draws parallels between the NHIF and the Fees Must Fall approaches.

Limitations of the Anti-NHIF Narrative
An argument can be had that the dominant view could be characterised as elitist with little regard for the material conditions of the majority of South Africans who have no access to universal health care.

The counter-argument is fair to a degree. This argument asserts that one of the main challenges to universal health care is inadequate and dilapidated infrastructure. However, this view, like most elite positions in South Africa, places the infrastructural deficits to the failures of the post-1994 dispensation. In other terms, the argument fails to place the current challenges in a historical and contemporary historical context.

Locating the NHIF within a Historical Context 
A reading of the National Health Insurance Bill provides a comprehensive historical and constitutional underpinning of the policy.

The preamble aptly captures that the historical basis of the current public health has challenges.  Firstly, the preamble reiterates the need to heal divisions of the past. Secondly, it reminds South Africans of the socio-economic injustices, imbalances and inequities that led to the enduring indignities among most of the population.

The current South African health system is reflective of the apartheid induced inequities. It is these legacy issues that the Bill reminds the public about.

Constitutionalising the NHIF
The South African Constitution has gained global recognition as one of the best in the world. Domestically, all strata of society, particularly the middle and upper classes make glowing references to the Constitution.

One of the often-celebrated peculiarities of the Constitution is its entrenchment of socio-economic rights. Examples of such rights include housing and health care.

The country’s Constitution is synonymous with two of the post-apartheid most favoured figures: first as being an embodiment of President Mandela’s values and secondly, as having been negotiated and crafted by President Cyril Ramaphosa.

Section 27 of the Constitution
Basic curiosity leads one to want to research on the Constitutional position on the NHIF.  The NHIF is an expression of Section 27 (1)(a) of the Constitution. This provision states: ‘Everyone has a right to have access to health care services.’

Further, Section 27(2) enjoins the State to ‘take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of these rights’.

Socio-Economic Rights
The NHIF should, therefore, be understood within this context. It is unusual for constitutions to entrench socio-economic rights. However, South Africa has had an unusual and painful history.

The healing of divisions of the past was not meant to be of a ceremonial nature. Instead, it was intended to be material, with the State using its available means to lead that process.

Any South African, who purports to live by the values of the great Nelson Mandela, respects the Constitution and trusts Cyril Ramaphosa to lead should, at least until now, find resonance with the NHIF.

The public discourse on the NHIF has lacked any depth around the constitutional principles surrounding the policy.

Fiscal feasibility of the NHIF
The discussions around the NHIF, have in most instances been half baked in that they ignore all the history, values and philosophical underpinnings of the policy.

However, unsurprisingly, and in true South African style, all the energies have centred around funding of the NHIF.

This is unsurprising because South Africa has a low tax base, supporting the bulk of the citizenry.

The health sector adds an additional burden to the taxpayers in that immigrants from neighbouring countries seek health care in South Africa.

In this regard, the taxpayers are fair in expressing discomfort on how the scheme will be funded. The same taxpayers are already saddled with high taxes that pay for the huge social security bill, in the form of social grants.

How will the NHIF be funded?
The NHI Bill has a whole section dedicated to answering this question. Section 48 of the NHI Bill enumerates various funding modalities.

These include fines, interest or investments, money paid erroneously, bequests, donations, reallocations from medical schemes tax rebates and national budget allocations. More importantly, the Bill explicitly states that the NHIF will be funded through payroll tax and personal income tax.

What is apparent from section 48 is that the government intends to fund the NHI from revenues collected.

South African taxpayers are burdened with tax in addition to paying huge sums of funds towards private health care. Their fears of possible ghettorization of both public and private health care services due to mismanagement are not unfounded.

The track record in the management of state-owned enterprises lends credence to these concerns.

Does the Constitution address the funding concerns?
The crafters of the South African Constitution, including President Ramaphosa, were wise enough to anticipate such concerns.

While they understood that the future of the country lay in social and restorative justice, those men and women were alive to the need to balance that imperative with practical reality.

This gave rise to the principle expressed in Section 27, one of a ‘progressive realisation’ of rights.

Relatedly is reasonable measures and available resources. The NHIF pessimists who are fixated with funding would best locate their concerns within Section 27.

That way, they will start asking relevant questions. The most relevant question would be: Considering the fiscal challenges under the current economic environment, how best can the state progressively and reasonably use the meagre resources at its disposal to ensure universal health access?

NHIF and the Immigration Question

South Africa has lately experienced a lot of debate and controversy around immigrants’ access to health care.

Former Minister of Health, Dr. Aaron Motsoaledi always contended that the country did not have a health infrastructure problem. Minister Motsoaledi asserted that the country has been overrun by illegal immigrants who were burdening the public health care system.

He shared this view with Joburg Mayor Herman Mashaba. In this regard, some hospitals effected administrative exclusion by denying health care to so-called ‘foreigners’.

The Motsoaledi and Mashaba approach has been codified in the NHI Bill. Illegal immigrants and asylum seekers will only have the right to emergency health care. This is in spite of the fact that the Constitution makes no distinction between citizens and non-citizens with regards to access to health care.

The exclusion of access to health care of certain categories of persons in South Africa is therefore unconstitutional.

The NHI as a Foundation to Inclusive Health Care
There is no doubt that the NHIF is not feasible under the current economic climate. Its impracticability does not take away from the fact that it is anchored on all the values and spirit of a post-apartheid South Africa.

These values and principles are enshrined in the Constitution. A document that enjoys universal respect and recognition.

The same Constitution advises that the NHI must be implemented without breaking the fiscus. This Constitutional caution is balanced with a challenge for all South Africans to contribute to a just society with a view to healing the divisions of the past. The NHIF should, therefore, be viewed as laying a foundational stone in achieving an inclusive health care system.

First published in here

Developmental State inspired Cabinet

Developmental State inspired Cabinet

President Cyril Ramaphosa’s cabinet announcement had a lukewarm reception. This was mostly because President Ramaphosa while introducing new faces to his team, also maintained a lot of old hands. The South African cabinet is organised into clusters that talk to different sectoral focus. These clusters were established with a view to improving inter-departmental coordination within government. These are following cabinet clusters: economic, infrastructure, community and human development, international co-operation, governance and administration; and justice, crime prevention and security. An analysis of President Ramaphosa’s cabinet through clusters reflects that there is an even spread of key credible individuals within the clusters. This approach helps in understanding how the composition of clusters will help neutralise those who might be determined to undermine the delivery of the current administration.

Economic Cluster

The economic cluster is composed in the main of the following departments:  trade and industry, finance, public enterprises and small business development. This department’s current composition reflects the importance that President Ramaphosa attaches to economic policy.

The Department of Trade and Industry is headed by Minister Ebrahim Patel who has a labour background and has served in the now collapsed Economic Development ministry for almost ten years. While Patel is a Marxist Leninist, none of this orientation seems to have had a major influence on his job as Economic Development Minister. Mr Patel is known for being a workaholic and stickler for rules.

As expected, the Department of Finance is led by Mr Tito Mboweni. The former governor suffers no fools, is hard working and has a no-nonsense approach. He has a more economic orthodox approach which will ensure much-needed stability at the fiscus. Mr Mboweni has indicated that he does not need the job, having ventured into business and farming after leaving the central bank. He is not shy to take on those that seek to undermine treasury and the central bank.

In addition to the two incorruptible and hard-working ministers is Mr Pravin Gordhan, a known anti-corruption crusader. Mr Gordhan is the Minister of Public enterprises, tasked with cleaning up the state-owned enterprises (SOEs). Having Mr Gordhan in this department is crucial in that SOEs pose the biggest fiscal risk to the country’s economy. His disciplined approach will ultimately save the SOEs and broader fiscus. President Ramaphosa strengthened the economic cluster through the appointment of a new Minister of Small Businesses Development Ms Khumbudzo Ntshavheni. Little is known about this new addition to the economic cluster family, except that she has a small business background (and no known scandal around her). In addition, she adds to the youth component of the cabinet.

An analysis of the economic cluster is indicative of President Ramaphosa’s intention to build the “developmental state”. Mboweni will bring fiscal stability, Gordhan will strengthen and rebuild SOEs, Patel will focus on investment-led trade and industrialization while Ntshavheni will focus on improving the development of an inclusive and vibrant SMME environment. However, a developmental state also requires a strong and visionary bureaucratic machinery. It is against this backdrop that President Ramaphosa placed some of his key lieutenants in the Governance and Administration cluster.

Governance and Administration

At the core of developmentalism is a capable state. Post-apartheid South Africa did try to establish such under the Mandela and Zuma administrations. Under the Zuma Administration, much of the capability built up since 1994 was dismantled. The Governance and Administration cluster is made up of the following ministries: Co-operative Governance and Traditional Affairs, Public Service and Administration, the Presidency (includes planning, monitoring and evaluation) and Communications. There is no doubt that President Ramaphosa deliberately placed the trusted hand of Mr Jackson Mthembu, as Minister in the Presidency; a workaholic and efficient administrator and Dr Nkosazana Dlamini-Zuma in Co-operative Governance and Traditional Affairs. Mr Jackson Mthembu is a former Chief Whip of the ANC in parliament and was quite vocal against the excesses of the Zuma Administration. He had hinted on a possible retirement before the beginning of the current administration. This means he has no further ambitions and will do his best to monitor and evaluate his colleagues.

The cog of an efficient state is a skilled, focused and disciplined bureaucracy. It is this realisation that has led to President Ramaphosa to appoint someone whom he had initially intended to have at the hub of running the ANC, Mr Senzo Mchunu. Minister Mchunu lost the job of running the ANC to Ace Magashule. His appointment by President Ramaphosa to the Public Service and Administration department shows the trust the president has in Mchunu’s capabilities to operate large organisations.

Just as in the economic cluster, President Ramaphosa deliberately added a young, loyal and efficient person in this cluster. This is the Minister of Justice and Correctional Services, Mr Ronald Lamola. The president is aware that a young capable and ambitious cabinet member will in most probability go out of his way to prove himself. Mr Lamola is in charge of the justice institutions such as the National Prosecutions Authority and the courts. These institutions support a capable state if they are strong. Mr Lamola is therefore tasked with revamping them after they have been hollowed out during the Zuma years.

The departments of State Security and Police have also been allocated to not only loyalists but efficient and hard-working persons – Ayanda Dlodlo (deputised by Ramaphosa loyalist and hard worker, Mr Zizi Kodwa) and Mr Bheki Cele, respectively.

While the choice of President Ramaphosa’s cabinet was confusing in the beginning, a closer look from a developmental state and cluster approach, betray the president’s priorities. Where he could not appoint only loyalists, he ensured that in each cluster there is a trusted pair of hands and eyes. This is the case in the other clusters such as infrastructure development, community and human development and international co-operation.

Image: SABC News

Cyclone Idai leaves a trail of destruction in Mozambique as the country’s economy grapples with the mission billions of dollars

Cyclone Idai leaves a trail of destruction in Mozambique as the country’s economy grapples with the mission billions of dollars

Mozambique has just been hit by cyclone Idai and more than a thousand people reportedly having lost their lives. President Filipe Nyusi recently indicated that the damage of Cyclone Idai is still to be quantified. These tragic events revealed Mozambique’s underbelly: weak infrastructure and under-preparedness to deal with natural disasters of this magnitude. Mozambique’s development has been frozen in time for most of the country’s 31 million people.

The country’s underdevelopment is not unrelated to the rise in avarice. Consider the US$2bn dollars that disappeared from the coffers of the Mozambican government. Properly used, these resources could have gone far in improving a lot of Mozambicans. The combination of poverty, corruption and vulnerability to natural disasters reflects years of institutional erosion and embedded culture of impunity.

Apart from the natural disasters that have visited that country, political risk in Mozambique remains heightened. The leading economic analyst, Wandile Sihlobo, has recently highlighted concerns related to food insecurity in that country due to damage in crop fields and port infrastructure. Further, the country’s political economy landscape is currently characterised by inter alia:  ongoing low-intensity insurgency in the far north; the high debt to GDP ratio; and endemic corruption. The country’s inland revenue authority has missed its revenue collection target by 4.9{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}. Trade of goods and services is looking positive with the country has scored well in the Global Connectivity Index of 2019. Mozambique had an overall score of 116 out of 169 in terms of connectivity and 83 out of 169 when the depth of connectivity is measured. The country is connected mostly to China (28{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} of trade) and Portugal at 14{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}. On the diplomatic front, the arrest of former Finance Minister Manuel Chang and the death of a South African citizen while incarcerated in what looks like poisoning could sully the relations between the two countries.

Manipulation of institutions

South Africa has recently been asked to assist Mozambique to deal with the devastating effects of Cyclone Idai. The country has indeed responded by dispatching military personnel. Subsequently, Maputo asked Pretoria to hand over Mozambique’s former Minister of Finance Manuel Chang, who was arrested in South Africa on the back of a US warrant of arrest for allegations conspiracy to commit fraud and accepting bribes in a $2bn loan scandal.

In another sign of institutional manipulation, in August 2018, Mozambican authorities detained a South African businessperson based in the northern part of the country. They accused Mr Andre Hanekom of assisting the terrorist groups in Delgado province. Hanekom was denied a fair trial with Mozambican authorities holding him in custody for over six months without appearing in court. He later died in prison under mysterious circumstances. His death and the detention of Chang in South Africa might muddy the diplomatic relations between South Africa and Mozambique with consequences for business. This could be through Mozambique making arbitrary decisions against South African firms invested in that country.

Possible regional contagion

While Mozambique’s neighbours, Malawi and Zimbabwe have been directly hit by Idai, the repercussions from the financial storm relating to the missing US$2bn is being felt by South Africa. The regional giant has been roped into the debt saga through the arrest of former Mozambican Finance Minister Manuel Chang. In addition, the Mozambican authorities seem to be applying diplomatic pressure to Pretoria for Chang’s extradition to Maputo. It is needless to mention that a Mozambique with a struggling economy and weak resilience to natural disasters inevitably exerts economic and humanitarian pressure on South Africa.

Terrorist threats

Mozambique is susceptible to terrorist attacks beyond the internal insurgency related to FRELIMO and RENAMO tensions. Thus far a non-descript group of fighters has been launching guerrilla-style terrorist attacks on civilians in the far north region. This violence has thus far claimed the lives of 150 people in 2018. Security analysts have not yet been able to figure out the identity of the terrorist group involved. One view suggests the group could be linked to more continent-wide Islamic terrorist groups such as Boko Haram or Al Shabaab. The alternative conjecture locates the terrorist group within disenfranchised communities in the north, adjacent to where massive offshore gas deposits have been discovered.

This narrative argues that the minority communities in the far north have been marginalised by Maputo since the country’s independence from Portuguese rule. It is possible that these communities have, with the discovery of gas deposits, decided to launch proactive attacks as a way of highlighting their plight to the government and the international community. However, the first suspicion that these groups are somehow linked to Al Shabaab is more compelling considering the arrest of four Ugandan nationals in the area in February of 2019, on allegations of being terrorists. It may be that the two schools of thought are not mutually exclusive.

US Efforts to recover the stolen US$2bn

The Mozambique government took a loan of US$2bn from private international creditors in 2013-2014. Initially, the money was intended for the provision of marine and fishing infrastructure. However, the funds were embezzled by banking and government officials. International development finance institutions, such as the IMF and World Bank, had to suspend aid to Maputo due to the disappearance of the funds. The US authorities, after extensive investigations, have arrested three Credit Suisse banking officials and a Lebanese businessman for the disappearance of the loan.  The banking officials are alleged to have facilitated the diversion of the money to non-state accounts. It is alleged this was done with the knowledge and authorisation of then Finance Minister Manuel Chang.  Just like cyclone Idai, the embezzlement of the US$2bn loan almost sunk Mozambique’s economy.


There have been efforts towards a smooth transition from the long-time leader and founder Afonso Dhlakama. The Renamo conference was an attempt to manage a delicate transition. This peaceful transition augurs well for Mozambican stability and business in the long run. However, the arrest of Manuel Chang could drive deep divisions within the governing FRELIMO and might have repercussions for doing business as the graft involved the private sector. Maputo’s reluctance to pay the US$2bn debt might induce a strike by international lenders. This could lead to an unfavourable financial situation in Mozambique with adverse effects for business. The Chang arrest and Hanekom’s death under mysterious circumstances might lead to tensions between Maputo and Pretoria. Such a diplomatic standoff will not be good for South African businesses in Mozambique. This will also dent Mozambique’s image in the investor community. It is therefore advisable for businesses to keep a watching brief on the developments in Mozambique and between the two countries’ diplomatic relations. Thus far, the developments in Mozambique and South Africa seem not to have soured the relations as South Africa swiftly moved to mitigate the cyclone Idaho carnage.

Image: Evening Standard