Feature on Maputo port privatisation

When President Joaquim Chissano addressed an international conference on management this week, calling for closer public-private partnerships as a means to encourage investment, he could do so knowing that Mozambique is seen as a model in Africa. During the past decade, Mozambique has been praised by donors for its political stability, steady privatisation, gradual empowering of civil society, increased foreign investment and continuous economic growth in double-digit figures. One of the most recent, and potentially significant, privatisations has been the management contact of the country's main port of Maputo, awarded in April to the Maputo Port Development Company (MPDC) for the next 15 years. It is a consortium consisting of the British Mersey Docks and Harbour Company, the Swedish company Skanska BOT and a Portuguese company, Liscont Operadores de Contentores. The consortium owns 51 percent and the government and the public company, Caminhos de Ferro Moçambique (CFM), own the remaining 49 percent. The Maputo port is situated in a strategic position close to South Africa's industrial centre, Johannesburg. The surrounding hinterland is rich, producing a range of goods and commodities including coal, fuel, fruit and timber. "There is a natural market and now business in this area can be better tapped," Emmy Bosten, the communication manager for MPDC told IRIN. "Once you have a flourishing port, it can be an anchor project to drive regional economic growth again." BACK TO THE PAST History speaks for that potential. Before Mozambique's independence from Portugal in 1975, Maputo port handled 16 million mt of cargo per year, mainly from South Africa. With independence, followed by a 16-year civil war between the Mozambican government and the opposition RENAMO, Mozambique's business with apartheid South Africa plummeted, bringing the port to a virtual halt. At its low point Maputo port was handling a mere two million mt annually, with most of the cargo from Johannesburg diverted to Durban on South Africa's east coast. There was no money to invest and the infrastructure crumbled, equipment became obsolete, the road linking Maputo to South Africa was dangerous, and the railway was continually sabotaged. The privatisation of Maputo port now has the potential of creating strong competition for Durban, which has become overburdened and is experiencing long delays in handling cargo. "The projections are that we will bring the Maputo port back to handling its former volumes, and that is money for both the company and the government," said Bosten. The MPDC will invest US $70 million over a three-year period, which Bosten explains will be more like $700 million due to the multiplier effect that investments in ports tend to have on businesses in the surrounding area. The MPDC investments will include new tugs, construction of a new port entrance linking to the N4 highway that runs from Maputo to Johannesburg, the purchase of new equipment, and the upgrade of roads. "A port is a nodal place, where everything comes together," said Bosten. There is a potential for businesses to concentrate in this area and, as the port grows, much more services are needed. Take for example Rotterdam port in Holland, it is a big distribution port; it has a huge amount of businesses related to the port that sprang up over time. The same can happen here. Already in the past two months, you can see an increase in vessels coming in." Some 400 Mozambican employees were taken over in the transfer from government to private hands, and are benefiting from more training. "The employees were ready for a change. They want to see a working port," said Bosten. The Maputo port venture follows on the heels of a number of major privatisations in Mozambique, the first and most notable being the Mozal aluminium plant, a $1.3 billion investment. Its scale is so vast that aluminium now represents almost 50 percent of industrial exports and about one-third of total exports. LOOKING FOR TRICKLE DOWN The challenge is for these successes not to remain concentrated in the southern region, to diversify industries, and to make sure that some of the gains trickle down to Mozambique's poor. Despite the country's growth, most people - about 70 percent - are living in grinding poverty, still depending on subsistence agriculture and unable to access quality health care, education, and other social services. Moreover, the HIV/AIDS epidemic - with 12 percent of the adult population infected - has begun to undo the gains made in some of the social sectors, and is hitting the most productive members of society. Investors too will be anxious to see how Mozambique fares when Chissano - an internationally respected statesman - steps down before the December 2004 elections after 18 years as head of the country. Bosten is, however, optimistic. She pointed out that already other projects are being developed, including one to revamp the northern Nacala port, which is one of the best natural deep-water ports in the world. In the central province of Sofala, the Beira port serving neighbouring Zimbabwe is now more active - albeit with transporting food aid to that country - but in future should be able to kick off again when the economic climate improves in Zimbabwe. Bosten is amazed by the changes over the 13 years that she has lived in Mozambique. "I was here when the country was at war and was totally paralysed. There was not a single construction going on. What has happened in 10 years is tremendous: there has been prolonged peace and there has been a steady build-up of foreign investments. More investors are looking into Mozambique for opportunities; there are lots of natural resources."