While the Botswana government has given assurances that the nascent civil strife in Mozambique will not affect the construction and operation of a railway line to Maputo, the latest assessment from the African Development Bank (AfDB) is that economic confidence indicators on Mozambique have “plunged.”
“Political risks are looming with violent disputes between the Government and the former rebel movement, which can further escalate with the approaching of municipal elections in November,” says an AfDB report that came out last Friday.
This political risk is in the form of the Mozambican opposition leader, Afonso Dhlakama of the Mozambican National Resistance (Renamo), abrogating the 1992 General Peace Agreement and threatening to “destroy the country.”
Last month, Botswana’s foreign affairs minister, Phandu Skelemani, said that he did not see the civil strife in Mozambique affecting trade relations with Botswana. With Zimbabwe as third partner, the two countries have sealed a deal for the construction of a US$7 billion deepwater port and rail project. The proposed 1100-kilometre railway will connect Botswana and Mozambique through Zimbabwe and the port will be able to handle bulk mineral ships, oil tankers and passenger vessels.
This facility will reduce the time taken to move Botswana’s imports and exports. Routing goods through South African ports and railway system means that it takes Botswana-bound goods a much longer time to reach their destination. It would be cheaper for Botswana to have its fuel imports transported from the Mozambican port than from Durban and Richards Bay in South Africa. The latter give priority to South African goods and are prone to congestion. Botswana’s coal would be the main cargo of this transport system and already some local companies are planning around it. One is African Energy Resources (AER) which is developing a coal and power project in Sese.
In its latest annual report that came out last month, the company says that this year it completed a prefeasibility study to assess the capacity of the existing northern rail corridor to the Matola Coal Terminal at Maputo, Mozambique.
“This study concluded that the rail and port had the potential to ship up to 20Mtpa through a series of staged expansions. A successful export trial to Maputo of 1,600 tonnes of coal from Sese and Morupule Coal Mine was completed in under four days by a 34-wagon train, confirming the suitability of this northern rail corridor,” the report says adding in another part that the company is working with the Botswana government as well as the regional railway companies and the port operators to evaluate how to implement a viable rail and port solution.
However, the Mozambican conflagration has rattled some nerves in the investor community and the AfDB report says that the ongoing political instability “could be weighing down on the expectations of businesses.” Renamo has threatened to escalate the confrontation and fearful of what might happen, the Mozambican government is reported by AFP to be forcibly conscripting youngsters to fight against a revived Renamo insurgency elsewhere in the central Sofala province.
