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Articles by Joseph Hanlon

Following the donor-designed path to Mozambique's $2.2 billion secret debt deal

Author's Original Manuscript of an article published by Taylor & Francis in Third World Quarterly on 19 October 2016. The published text is available online to university researchers

Abstract: Strenuous efforts by donors and lenders over four decades turned Mozambique from a socialist success story into a neoliberal capitalist one. The private sector dominates; a domestic elite dependent on foreign companies has been created. But a secret $2.2 billion arms and fishing boat deal involving Swiss and Russian banks and Mozambican purchases from France, Germany, and Israel, with large profits on all sides, was a step too far down the donor's capitalist road. The IMF cut off its programme and western donors ended budget support.

 

Manica Miracle

The failure of the ‘Manica miracle’ provokes new development strategy debate

Roses are no longer exported from Manica to Europe; Vilmar Roses closed early in 2006. By then, many Zimbabwean farmers were in financial trouble and some were leaving, because they could not produce tobacco and paprika profitably. At least 5000 full time and seasonal jobs were lost in Manica province in 2004-6. Family sector outgrower schemes for sunflower, vegetables and other crops collapsed. The number of peasant families producing tobacco fell sharply. The dreams of a commercial agriculture boom in Manica driven by foreign investment and foreign farmers proved to be a mirage.

And yet, there are many Mozambicans and a handful of Zimbabwean and other foreign farmers able and ready to increase production. If they had more support they could grow rapidly and create a genuine Manica miracle.

Agriculture is seen as the driving force for Mozambican development, but the failure of the Manica experiment shows that commercial agriculture cannot be developed without substantially increased government support at all levels. Foreign investors and NGOs cannot build the base for the take-off that is needed.

The belief has always been that if Mozambique creates the right conditions, then foreign investors will fly in and develop the country. But it is not working. Sussengenda in Mancia province is the perfect example: there is a good road, electricity, cellphones, a good district administrator, available land and water, and a good business climate. But there is no development. Foreigners are not flocking in to invest.

Mozambique’s donor-driven strategy until now has been to create the conditions and then hold out its hands to beg for foreign investment. On his recent tours, president Armando Guebuza has been telling peasants to stop holding out their hands begging. In a series of articles, I argue that the same lesson applies to the government - it is time to stop holding out its hands to beg for foreign investment. Instead, it is time for Mozambique to invest in its own development.

Mozambique’s report on the performance of the budget support donors, published in April, ends with a challenge: Will the donors change their aid from being "pro-poor" to being "pro-development"? The report asks a pointed question: Why are the "donors so absolutely sure that a poverty reduction strategy should be focused on delivering to the poor what they cannot afford because of being poor?" Would it not actually be more "pro-poor" to invest, for example, in irrigated agriculture and small and medium agro-industrial firms which would actually reduce poverty by raising incomes?. These questions are raised in a series of papers below. All were published in Mozambique in May 2006.

 

Icon - Microsoft Word document The Manica miracle is over (36 kb)

Icon - Microsoft Word document O milagre de Manica acabou (38 kb)

Icon - Microsoft Word document Will government and donors invest in the economy? (54kb)

Icon - Microsoft Word document Será que governo e doadores investem na economia? (63 kb)

These articles, and the issues raised, were the subject of a public debate on 24 May 2006 organised by the Confederaçâo das Associações Económicas de Moçambique (CTA).

Icon - Microsoft Word document Notícias reported the debate in its economic supplement on 26 May. (33 kb)

Manica governor Raimundo Diomba gave a series of interviews challenging our Manica Miracle article. He said all Zimbabweans are still farming and no jobs have been lost, and he had not been officially informed of anything different.

Icon - Microsoft Word document Noticias reports on the comments of Manica governor Raimundo Diomba (23 June 2006; 56 kb)

A presentation on commercial agriculture in Manica by Brendon Evans, vice president of the agriculture and commerce working group of the Confederaçâo das Associações Económicas de Moçambique (CTA), and the most successful of the Zimbabwean farmers in Manica, showed commercial agriculture jobs in Manica fell from 4345 to 350 in three years. Evans argues that foreign investors are being worse treated than local farmers and money is being extorted from them. He also says policy changes are needed for all farmers, foreign and national, if the commercial agriculture sector is to be competitive.
 

Icon - Microsoft Power Point document Brendon Evans presentation in Garuso, Manica (24 October 2006; 492 KB)

Icon - Microsoft Power Point document A report on commercial agriculture in Manica prepared by the Associação Comercial e Empresarial de Manica (ACIAM) and presented in Maputo by Brendon Evans (17 May 2006; 315 kb)

The Zimbabwean farmers simply want to regain in Mozambique the "priviledged VIP treatment" they had in Zimbabwe, wrote journalist Victor Machirica in a series of columns in the daily Noticas. He says white Zimbabweans are claiming special treatment compared to black Mozambicans. They should be treated as refugees and not as investors.

Icon - Microsoft Word document "Monte Binga" columns by Victor Machirica, Noticias (9-18 Dec 2006; 56 kb)

Conflicts over tobacco and development policy

A new tobacco factory employing 1600 workers opened in Tete city and thousands of peasants in Chifunde district of Tete complained to President Armando Guebuza about mistreatment by the same tobacco company. Both occured in May 2006 and show what happens when two different development priorities come into conflict.

Icon - Microsoft Word document The tobacco debate - priority for factories or peasants? (27 kb)

Icon - Microsoft Word document O tabaco em questão - prioridade para fábricas ou para camponeses? (30 kb)

Vilmar Roses

The donor promoted exporter that failed

Vilmar Roses was one of Mozambique’s flagship foreign investment projects, exporting flowers to the Netherlands from Manica. But Vilmar closed early in 2006.

The project was controversial because it was funded by Dutch and Nordic development agencies, PSOM and Norsad.

Icon - Microsoft Word document Article by Joseph Hanlon detailing the history and donor links. (6 June 2006; 36 KB)

Icon - Microsoft Word document AIM report on Vertical 30 May 2006 article on the collapse (30 KB)

A former manager says the project was "fraudulent" and that Norwegian aid money through Norsad stayed in the Netherlands and only "a small percentage" was ever transferred to Mozambique. Not only was there insufficient money for salaries, but there was no money for electricity for the cool room and for sprays, so flower quality deteriorated, leading to the closure.

Icon - Microsoft Word document Bryan and Katherine Saunders chronicle of Vilmar Roses and letter to Norwegian embassy. (16 March 2006, posted 15 December 2006; 57 kb)

The collapse of the donor-funded Vilmar Roses has been picked up in the Nordic press.

Icon - Microsoft Word document "Norsad tries to sell collapsed flower business in Mozambique - may lose €1mn", from AfricaScan, 30 June 2006 (38 kb)

Several website trumpeted their role in the success of Vilmar Roses. Those sites on 6 June 2006 included:

Icon - Adobe Acrobat pdf document USAID (572 KB)

Icon - Microsoft Word document Technoserve (59 KB)

Icon - Microsoft Word document Flodac (24 KB)