Natural Gas and Albacore: What Tuna Says About the Future of Mozambique

This piece was originally posted by our colleague, Laura Henson, in the Environmental Change and Security Program at the Wilson Center and can be found here on their blog, the New Security Beat. 

A 20-year peace accord between Mozambique's two major political parties was brought to an abrupt end last fall. A series of violent skirmishes between FRELIMO and RENAMO resulted in at least 10 deaths, dozens injured, and fears that the country might relapse into the kind of political violence seen during its civil war, which left more than a million dead. RENAMO claims its frustrations stem from a fraudulent electoral system and social inequality, but some observers have suggested their motivations may be less benevolent: making sure they get their piece of the country's newfound natural gas wealth.

Long off limits due to limited technology, a grueling 16-year civil war, and Portuguese colonial rule before that, Mozambique's hitherto untapped coal and hydrocarbon deposits are now available for foreign investment. Extensive coal mining has already resulted in rapid gross domestic product growth over the last decade, and international petroleum powerhouses Andarko (American) and Eni (Italian) plan to begin exporting liquid natural gas from Mozambique's offshore deposits by 2018. But if the exploitation of these natural resources is to lead to broader socioeconomic development – almost 60 percent of Mozambique's population makes less than $1.25 a day – RENAMO has a point in one respect: the government needs a deliberate multiuse natural resource management plan that goes further than naming potential socioeconomic benefits on paper and ensures the implementation of sound health policy and improvements in education at the local level.

A recent government investment in Mozambique's tuna industry may indicate that FRELIMO does indeed plan to invest more in local job creation and socioeconomic development. According to a 2008 report by the Food and Agricultural Organization, Mozambique's fishing sector employs 90,000 people. But 90 percent of these are in artisanal – small-scale or single family – operations. If managed justly, the development of a larger, more organized national tuna industry could increase the livelihood stability and economic prosperity for many of these people while keeping marine resource wealth within the country.

How the government balances the development of a national tuna industry and its offshore gas fields – which overlap tuna migration routes – will be an important test for the burgeoning coastal nation.

Can Tuna Thwart the Resource Curse?

The potential for major investment in the tuna industry came suddenly this September, when a new government-owned company, EMATUM, made headlines for issuing the country's first ever USD-denominated bond: $500 million to support a national tuna fleet, which a French shipbuilder expects to  deliver by 2016. A large portion of the bond has already helped purchase new vessels, and EMATUM has slated other portions of the bond for an operations center and related training, according to the bond prospectus.

Given FRELIMO's track record – Mozambique was downgraded from an electoral democracy after the widely criticized 2009 presidential elections by independent watchdog organization Freedom House – a brand new company receiving a high profile investment may seem like evidence of corruption to some. "It does raise the question as to why the government would issue a government guarantee for this size to a fairly unknown government agency in the fishing industry while there are a large number of other perhaps more constructive projects with a higher return in that economy," Standard Bank's Yvette Babb told Reuters. According to a report from Bloomberg, there's also evidence that the patrol boats may ultimately carry arms, which apparently was not explicit in the prospectus for creditors.

But despite how it looks, the abrupt investment may not be nefarious, according to David Michel of the Washington, DC-based Stimson Center. Rather, it may be a real sign that Mozambique is serious about capitalizing on one of its few comparative advantages in the global economy.

According to Mozambique's 2012 National Report to the Scientific Committee of the Indian Ocean Tuna Commission,  almost 6,000 metric tons of tuna were reported caught off the coast in 2011 (comparable to reported catch off the United States' Atlantic coast in the same year), and climate change studies suggest East Africa's catch potential may increase in the next few decades. But only foreign fleets currently receive licenses for tuna fishing in Mozambique's exclusive economic zone, sending most of the value added from tuna products to ports overseas. The bond's new vessels could provide local employment, while the operations center and new strategic plan encourage fleets to land catch from domestic waters in local ports, enabling Mozambique to add value to their tuna products before exporting. Finally, the purchased patrol vessels – armed or not – could also improve enforcement capacity and curb losses from illegal, unreported, and unregulated fishing, which costs tens of millions of dollars annually.

If tuna contributes significantly to the national economy, the industry could also help Mozambique avoid the "resource curse," as it is commonly called – a phenomenon in which natural resource exploitation in developing countries results in instability, corruption, and poverty rather than improved quality of life for local citizens. Tuna fishing is an industry in which many Mozambicans already have the skill and expertise to contribute, unlike natural gas extraction. As long as there are fish in the sea, it could be a healthy addition to what would otherwise be a hydrocarbon- and coal-dominated national economy.

To read the rest of this piece, please click here and you will be directed to the New Security Beat, the blog of our colleagues in the Environmental Change and Security Program.

Sources: AllAfrica, African Development Bank Group, Andarko, BBC News, BDlive, Bloomberg, Fish Info and Services Co. Ltd, Global Forum on Agriculture Research, The Guardian, Guernica, ICF International, IRIN, Libération, Marine Resources Assessment Group Ltd, The New York Times, ReliefWeb, Stimson Center, The Sydney Morning Herald, UN Development Program, UN Educational, Scientific, and Cultural Organization, UN Population Division.

Photo of Mozambican flag, courtesy of Flickr user Liv Unni Sødem.