Ending Violence In Mozambique Will Require United Effort; African Energy Chamber Stands Ready To Assist

I won’t sugarcoat it: The situation in Mozambique’s northern Cabo Delgado province is dire. Armed conflicts between security forces and the militant Islamic group, Ahlu Sunnah Wa-Jamo (ASWJ), known locally as “al-Shabab” even though it has no connections to the Somali group with that name, have left dozens of people dead and displaced thousands since last fall.

The violence is not new: The insurgents have been mounting brutal attacks within Cabo Delgado since 2017. Some argue that these brutal incidents are a response to poverty and feelings of marginalization among the residents of the province. Others claim ASWJ is motivated by a desire to control the region’s vast natural gas and mineral resources. Government leaders have blamed global jihadism. Any certainly, many of these factors have played a role in the current situation to varying degrees.

In any case, the violence is now escalating and intensifying the area’s misery. People live in constant fear. Families are struggling to feed themselves. Many are still reeling from the aftermath of Cyclone Kenneth, which struck in 2019, as well as the ongoing COVID-19 pandemic, so this situation is a particularly painful blow.

The violence is not only contributing to deaths and hardship, but also perpetuating the cycle of poverty and desperation that helps feed terrorist activity in the first place. It is jeopardizing one of Mozambique’s most promising paths to economic growth and diversification: strategic development of the area’s offshore gas reserves. In early January, Total began removing staff from the site where it is leading efforts to build onshore facilities for the Mozambique LNG (liquefied natural gas) project. It did so after fire was exchanged between government troops and insurgency members in Quitunda, the resettlement village Total built for local people who’d lived within the boundaries of the site.

Mozambique LNG is still alive, but progress has been delayed. And we don’t know how yet conditions in Cabo Delgado will impact other projects in the area. The stakes are high: Total’s Mozambique LNG is only one of three consortia that are slated to invest close to US$60 billion in large-scale LNG projects over the next few decades.

All of this is troubling. But there is hope. There is a path to a lasting solution. And the African Energy Chamber would like to help. Our goal is to offer solutions and to finance peacebuilding measures and a negotiation initiative.

To be clear, I’m talking about working toward a thoughtful, well-planned roadmap to peace and stability, not throwing money at the problem.

I’m certainly not talking about paying the militants in hopes of appeasing them, as some have proposed. This is a bad idea. A payoff cannot be expected to solve a complex, volatile problem like this. It might provide a temporary bandage, but it would not be a cure. Without more meaningful solutions, other armed groups could easily replace the current one.

What I’m calling for is the beginning of a dialogue. We recommend an investment not in payoffs, but in socio-economic projects that would empower youths in the region. We recommend replacing desperation with hope. We recommend replacing promises with tangible shows of support and respect for the community. That’s how we can create stability and make Mozambique less vulnerable to violence and turmoil.

We’re also convinced that arriving at a solution will require an “all hands on board” effort: Both the international community and oil and gas industry stakeholders have roles to play, ranging from financial support to contributions of expertise and resources.

Here are some of the steps that will get us there, along with potential hazards we must avoid along the way.

Mozambique’s Military Needs Support — Not Mercenaries

Mozambique’s armed forces are struggling to contain the insurgents, who appear to be increasingly more sophisticated in their tactics. I agree with Jasmine Opperman, an Africa analyst with the conflict-monitoring group, Armed Conflict Location and Event Data (ACLED), who recently pointed out that government forces are in a defensive mode. “They are spread thinly, and the insurgents have too much leeway in terms of time and pace with which they move, and in terms of attacking at free will,” Opperman told VOA News.

Mozambique should not be spending valuable resources on foreign guns for hire: That creates, at best, a checkmate that could drag out indefinitely. It would be much wiser to invest in Mozambique’s military and to devote national resources to creating stability through socioeconomic programs.

Mercenaries are not Mozambique’s only option. Mozambican troops should be properly trained to address the insurgents effectively while protecting – and rebuilding the trust of – civilians. They must have the resources they need to be successful. To achieve this, the international community should provide financial and training assistance. Once the training is complete, the troops would take the lead in protecting communities, and Mozambique could send the foreign mercenaries home.

We Must Empower Communities

But Mozambique’s military response is only part of the answer. To develop a long-lasting solution, we should think about the kinds of things that make an area ripe for insurrection. Desperation. Feelings of powerlessness. Of being unseen and unheeded. One factor contributing to those feelings in Cabo Delgado is a sense among the people there that gas projects like Mozambique LNG will turn into another instance of the resource curse, becoming enterprises that benefit a select few while bringing hardships down upon surrounding communities.

It doesn’t have to be that way. I already believe that community members stand to benefit from Total’s Mozambique LNG and other gas initiatives because of the long-term opportunities they will create to ease the area’s widespread energy poverty, support capacity building, and contribute to economic diversification and growth. But I realize that community members need to know they can count on tangible benefits; they don’t want to be asked to trust in potentials or opportunities on the horizon. That’s why we must create a framework that ensures community members reap concrete benefits from the LNG project sooner rather than later. I suggest creating a community trust, an oil-money management strategy that I wrote about in my book, “Billions at Play: The Future of African Energy and Doing Deals.” This would allow an agreed-upon percentage of LNG project revenues to be set aside to meet residents’ most pressing needs — needs they themselves identify — which might include infrastructure, widespread power access, healthcare, education, and jobs.

This would be doable with the cooperation of Mozambique’s government and the oil and gas companies operating there.

As I wrote in my book, establishing carefully managed trust funds for communities can overcome a multitude of problems.

Instead of watching an elite few put petroleum revenues into their pockets while they deal with the consequences of extraction, everyday Africans would see tangible benefits in their own communities.

Individuals would finally have a say on how oil revenues are invested and how returns are spent. Their voices and insights would be valued and capitalized upon.

Communities would not have to rely on governments to be ‘middlemen.’ Companies would make the payments directly into the fund.

Communities could invest fund returns into programs that translate into improved quality of life and job opportunities. As a result, disenfranchisement, desperation, and violence would decrease.

Give Rebels a Safe Way Out

Our strategy must also consider the concerns of those who already have been recruited into the insurgency. Rebels need to feel they have another option – not just that their communities will be treated fairly, but also that they and their families can safely move forward.

To achieve this, Mozambique’s government should be prepared to create an amnesty deal for the rebels. Government leaders will need to reach out to militant groups and begin a confidence- and trust-building process that will, hopefully, culminate in a mutual ceasefire agreement. That should be followed by a disarmament and demobilization project, one that oil companies in the area should back.

This Must Be a Cooperative Effort with all Energy Companies

What’s more, the oil and gas industry should work with the government to make sure that Mozambique’s massive natural gas reserves, and efforts to capitalize upon them, truly benefit local communities. And, both government leaders and oil and gas companies need to inform, educate, and build awareness among the people of Cabo Delgado — from elders and youths to militants to local authorities — of the critical importance of a successful ceasefire and the need to support President Filipe Nyusi’s administration in its determined bid to ensure a sustainable solution to the current crisis.

I call upon the U.S. and French governments to support Mozambique’s efforts. Building stability and ongoing economic opportunities is in their countries’ best interests. The Biden and Macron administration have a unique opportunity to use economic support to develop one Africa’s most promising economies.

President Nyusi and Mozambique’s leadership has embraced the support of oil and gas industry stakeholders and the international community. They must deepened their ties and to work with them to develop long-term solutions – strategies that transition Mozambique from reacting to attacks and crises to proactively preventing violence and setting the stage for a better future. And as all of this unfolds, we must support the government in its efforts to maintain open communication:

Currently, insurgents are creating disorder and disrupting economic development in the region.  We need to give President Nyusi’s government our unlimited support and empower his team. We need to offer hope and support the aspirations of everyday citizens in the region. We need to do this together, starting now.

For decades, many of Africa’s oil- and gas-producing states followed a predictable pattern. They treated their oil and gas primarily as raw materials that could be sold abroad for a quick profit, rather than as a means of supporting efforts to make more lasting changes in the economy of the nation as a whole.

This pattern has had unfortunate consequences. It discouraged investment in local capacity, and it fostered the development of arrangements under which most residents of the producing states could not see how the large amounts of money earned from oil and gas exports were improving their lives. In other words, it allowed most hydrocarbon revenues to flow back to the home offices of international oil companies (IOCs) or to go to national oil companies (NOCs) that transferred funds to local governments — and, in many cases, to individual government officials, along with their friends and family members.

Africans already know that focusing on oil exports doesn’t yield the best results. They already know that it ignores the need for long-term investment and fosters corruption.

But corruption isn’t the only issue. Africans also know that the old pattern of focusing on commodity exports doesn’t do enough to put their economies on track for long-term growth and keep them there.

They know, in other words, that the old habits don’t create jobs.

At least, maybe they don’t create large numbers of jobs. Or maybe they don’t create the kind of jobs that last long enough or have enough impact to lead to real change.

And why should it be that way? Africa’s oil and gas resources have the potential to accomplish so much good for the continent’s people – and that includes creating training and job opportunities across multiple sectors, which is one of the keys to sustainable economic growth. This can be accomplished by strategically harnessing oil and gas to monetize value chains and diversify economies. And to do that, we need to create an environment that enables new businesses to launch and thrive.

As the Chamber’s 2021 Africa Energy Outlook says, “Using the stimulus afforded by the natural resources to stimulate jobs in other economic sectors with higher labor intensity is where a significant amount of jobs can be created.”

So it’s time to broaden our view of Africa’s oil and gas resources. Instead of treating them only as a revenue source, we must approach them as a path towards a very important goal: empowering Africans to improve their own lives.

Local Content for Local Jobs

Africans understand the necessity of breaking free of old patterns, and they’ve tried to address the challenge with policy changes. In Angola’s case, they have sought to thwart old oil habits of the past by embarking on a fundamental reform of how the sector works. This entailed taking away regulatory powers for the sector from the national oil company Sonangol and giving those to the newly created National Oil, Gas and Biofuels Agency (ANPG). The restructuring of the sector, that resulted in the creation of the ANPG and the reorientation of Sonangol, is arguably one of the greatest achievements of H.E. Diamantino Pedro Azevedo, Angola’s Minister of Mineral Resources and Petroleum who was brought in to reform the sector. This enabled Sonangol to embark on its own restructuring, at the core of which is the sale of non-core assets and a withdrawal of what Sonangol is expected to do; be a competent partner to foreign operators, and cost efficiently run its own operations. These changes, though very recent, have already stated bearing fruits. The newly created agency, under the chairmanship of a recognized industry expert Paulino Jeronimo, has moved swiftly, to usher in the implementation of new local content guidelines. They have also refocused their efforts on making new acreage in Angola attractive for investment, in an effort to stop the expected decline in output, mid to long-term.

In more general terms, though, they’ve also introduced policy initiatives that aim to create jobs. In Angola, the government recently rolled out a new legal regime for local content requirements after two years of concertation with the various stakeholders.

President João Lourenço, who introduced the new rules last month, has made the job-creation angle clear. He has described Presidential Decree 271/20 as a way to promote Angolan commercial entities’ participation in the development of the oil and gas sector. He has said he hopes the new measure will encourage IOCs to obtain goods and services (including raw materials) from local providers and to replace foreign experts with local workers.

Presidential Decree 271/20 also stresses the Angolan government’s desire to strengthen “national entrepreneurship.” It states that foreign technical assistance and management contracts must include provisions for the establishment of detailed training and professional development programs and the transfer of expertise and technology.

Training Across Sectors

This all sounds like a good idea — and a plan for concrete action as well. Presidential Decree 271/20 doesn’t just talk about increasing local content; it also replaces all the previous local content measures approved between 2003 and 2009. It offers a more detailed description of the factors that qualify an entity as an Angolan company and outlines the procedures that will allow the government to keep an up-to-date list of the parties that are pre-qualified to bid for contracts with IOCs

But does it really go far enough?

In some ways, it does. And by that, I mean that I’m glad to see that the decree talks about the need to make sure that Angolan workers have access to detailed, effective, and sophisticated training programs— and about the need to include provisions for such training in foreign management and technical assistance contracts.

In other ways, though, I’d like President Lourenço and his government to go further. I’d like them to think about exactly what kind of training might serve Angolans best. For example, what if they decided to prioritize training in information technology (IT) and operational technology (OT) skills? Might they find that workers who learn how to operate the control systems used to maximize the efficiency of, say, gas pipelines also turn out to have the skills needed to operate similar equipment in manufacturing plants? And might such workers turn out to have something even more useful, such as the skills needed to set up and promote a new tech hub that could serve as another new source of jobs?

A More Expansive View of Oil and Gas

I also think there’s room for Angola to take a more expansive view of oil and gas. That is, I think the government ought to look further down the value chain so that its new policies don’t emphasize conventional upstream, midstream, and downstream operations (and the ways that Angolan companies can support them) while overlooking other opportunities. Oil and gas aren’t just raw materials to be exported. They can also serve as feedstock for the production of petrochemicals, fertilizers, and other value-added goods. They can be used to power energy-intensive industrial facilities such as manufacturing complexes. They can also fuel power plants that increase domestic electricity supplies to such an extent that life gets better for residential and business customers alike.

In turn, all of these new enterprises will have to hire people. They will need construction workers to build their physical plants, skilled and unskilled workers to keep their facilities running, IT and OT experts to operate and maintain the digital systems that help maximize efficiency, contractors to provide services such as food and transportation, and so on. In short, they will create jobs — and in so doing, they will show that oil and gas amount to something more than exportable raw materials.

Furthermore, if Angola can pull this feat off — if it can use its new policies to lay a foundation for job creation that both includes and transcends oil and gas — it will be in a position to show other countries in Africa how to do the same thing. It will be able to set an example capable of inspiring Africans who want to see the old patterns of hydrocarbon development broken.

Global impact and market stability

Finally, it is important to acknowledge the role that Angola and its current Minister of Mineral Resources, Petroleum and Gas, Diamantino Pedro Azevedo is playing as president of the conference of ministers of OPEC. Without market stability and a realistic price environment for crude globally, all potential benefits from the industry in Angola will be short-lived. OPEC Plus’s January 5th 2021 agreement to allow some of its members to cautiously increase production in February and March in a coordinated manner, is also due to Diamantino’s tact and experience. It is even more encouraging for the global oil markets, that Saudi Arabia is backing the current OPEC Plus deal with additional cuts of its own. This is good for Angola’s oil sector and Angolan jobs.