Equitable use of natural resources supports democracy in Mozambique

Liquefied natural gas, gold, precious stones and graphite. Mozambique on the southern coast of Africa has a long and impressive list of natural resources. Since 2017, Finland has been supporting Mozambique’s Parliament and regional parliaments in promoting equitable use of revenues from gas and extractive industry.

“According to Mozambique’s law, part of the revenues from extractive industry should benefit the people and communities close to mining towns and gas terminals. Our aim is to ensure that the money will no longer stay in the capital alone,” says Riikka Raatikainen, Senior Specialist for Development Cooperation at Finland’s Embassy in Maputo.

Extractive industry accounts for nearly 10 per cent of the gross domestic product of Mozambique.

Raatikainen says that because the national and regional parliaments have increased their supervision of the industry, the Government of Mozambique has been able to intervene in business activities on two mining sites on grounds of environmental problems. Training has been organised for parliamentary committees, raising the general competence of members of parliament and committee officials in natural resources and extractive industries.

Who gets the profits and why?

Eija Mustonen, Programme Manager at the Political Parties of Finland for Democracy (Demo Finland), says that while the 2014 legislative package on the activities and land-use rights of the extractive industry was a success in itself, we have not yet heard the last word on the equitable distribution of natural resources at the national level and among different actors. Mining companies do not own land in Mozambique. Instead, their operations are based on land-use rights. 

“The Bank of Mozambique has proposed the establishing of a sovereign wealth fund that would invest profits from land-use rights and natural resources. It would operate roughly along the same lines as Norway's massive oil fund. It is essential to discuss the use and rules of the sovereign wealth fund. I am glad that Mozambican Members of Parliament have enough knowledge about the different types of sovereign wealth funds and other countries’ experiences of them,” Mustonen says.

It takes time for good governance to grow strong, according to Raatikainen. A project funded by Finland has been organising training on the impacts and supervision of natural resources and extractive industries especially for members of the Mozambican parliamentary committees on commerce and environment and on human rights.

Mustonen explains that Mozambicans take a great interest in the supervision of the extractive industry and the Finnish legislative process. “Last spring, a group of Mozambican Members of Parliament visited the Finnish Parliament. They were eager to hear how different stakeholders, civil society organisations and local people were involved in the drafting of Finland’s latest Mining Act.”

Conflict delays development

The optimistic estimates of the proceeds from natural resources have petered out to some extent since many international investors and companies has withdrawn from the area since an Islamic insurgency started in the province of Cabo Delgado. The years-long dire situation in the northern parts of the country is reflected as general uncertainty in the capital, too. How does all this affect the democratic transition in Mozambique?

 “Democracy is a relatively recent development in Mozambique, and a single party has dominated the political system for years. Young people should be encouraged to participate politically to a greater extent. This way we can promote a better vision of the future. There are some positive developments, too. Corruption is a punishable offence, and it looks like the culture of impunity is starting to break down and at least some wrong-doers are being called to accounts,” Raatikainen estimates how the Mozambican political culture is changing.

Tex: Karoliina Romanoff