Mozambique : Nacala Investors Burn Fingers

An unfinished multi million Rand hotel has been plundered and vandalised after the country's Armed Forces (FADM) stopped work on all development projects on sections of the Nacala Special Economic Zone in December 2012. The developers and contractors were issued with valid authorisation permits by the government's Office for Accelerated Development Areas (GAZEDA) and the Nacala Municipal Council, however the Ministry of Defence claims that these institutions did not have the legal authority or capacity to dispose of land ceded to the military by government decree.

GAZEDA has yet to issue a public comment on the matter. Armed FADM soldiers have been deployed to these areas to enforce the decree and many of the building sites are now inaccessible to its "owners".

As a result of the work stoppages losses are being incurred by all parties involved in the construction and development works. Construction workers have lost their jobs, companies are suffering losses and the unfortunate investors face very dark times paying back large loans without the benefit of an operational project generating income.

Mozambique's military, once a powerful elite, has witnessed its influence in decline since the end of the civil war in the early 90's. Currently the country has no need for a large military. (There are social problems but these are dealt with by the police and para-military units, not the military.) For all intents and purposes the FADM is a ceremonial army which is frequently ignored or "forgotten" by the government planners and their Western business partners.

Whatever the solution to this impasse might be, the immediate point of concern is the fact that investors (no matter how small) have lost time, money and profit due to this “governmental oversight” and need to be reassured by GAZEDA that their investments will be protected and that their legitimate losses will be reimbursed.

Anything less will put GAZEDA's credibility into disrepute and re-affirm the (unjust) belief held by many foreign investors that Mozambique is a nightmare investment destination.

News Source Reference: AIM :