Mozambique is a Dutch business

Development aid and promoting the foreign interests of Dutch businesses like Shell and Heineken are coupled in the world's fifth poorest nation. Critics aren't convinced it's a good deal.

Girl in Ilha Mozambique. Image credit Stéphane Neckebrock via Flickr (CC).

In Mozambique, about half of the 29.7 million inhabitants are living under the official poverty line, many of them as impoverished farmers. After decades of above-average growth (compared to other sub-Saharan economies), about 80 percent of Mozambicans work in agriculture. It’s a sector which successive governments—from the Portuguese colonizers to the democratically elected Frelimo—have historically failed to develop, experts explain. Instead, they focused on developing profitable, capital-intensive “mega-projects” in the extractive sector, in which foreign investors were more than willing to invest. Mozambique exports coal, aluminium, and gas—soon, much more of the latter as foreign companies plan to develop a massive gas field discovered off the country’s coast in 2011.

The country is also no stranger to natural disasters—and global climate change is making the storms more frequent and severe. The latest hurricanes—Idai in March and Kenneth in April—flooded the port city of Beira and the northern province Cabo Delgado, killing hundreds. The lack of public funds to develop decent drainage systems and coastal protection around Beira were painfully visible in the pictures of the city in the aftermath of Idai.

A business approach to aid

The Netherlands has been active in Mozambique for decades, spending, in recent years, about €30 million of its annual development budget on rural development, water projects in the Southern African country. The Dutch offer expertise to address challenges for Mozambique that are similar in nature to those The Netherlands has experienced in the past, such as Dutch disease—the negative economic consequences from large-scale gas exports on other sectors in the economy—and threats to low lying areas from rising seas.

The Dutch also contribute via companies which have an increased interest in Mozambique since the discovery of its massive offshore gas field. For example, the Dutch oil and gas company Shell is planning the construction of a gas to liquid (GTL) plant in Mozambique, a mega project worth a possible $5 billion dollars. Heineken has predicted increased demand for beer in Mozambique and is constructing a new brewery, an investment worth about $96 million. Development aid and promoting the foreign interests of Dutch businesses are seen to reinforce each other. Since 2012, aid and trade policies now fall under the Ministry of Foreign Trade and Development Cooperation.

This trend has been criticized from the start by development experts and NGOs, with the effects on the ground in Mozambique also raising concerns. Internal documents obtained through a freedom of information act request by Platform Authentieke Journalistiek (PAJ) and described in one of its reports, revealed that the Dutch embassy in Maputo cooperated with and lobbied in favor of Shell before it won a public tender in 2017 for the construction of a GTL plant. One of the documents is a thank you note to the Dutch Ambassador, Pascalle Grotenhuis, sent on December 4th, 2015, ending with: “Your dedication to trade and investment opportunities in Mozambique has been of immeasurable value to our activities and the future of our project.”

Another report of PAJ outlines concerns over land grabbing in the zone where gas companies plan to build onshore facilities, including where Shell’s plant is to be built. Other companies have also been cited for dubious practices in this regard. Anadarko, a US gas company, has been sued by Mozambican lawyers for illegally expropriating land. Mozambicans interviewed by the Dutch NGO Milieudefensie indicate that Shell misled people into signing agreements about land and relocations. The internal documents also reveal that the Dutch government lobbied the Mozambican state for a bilateral tax break that would be favorable for Shell and other Dutch companies.

Beira master plan 2035

As experts in water management, the Dutch are intensively involved in development plans around the port city of Beira, recently flooded and destroyed by hurricane Idai. The “Beira Master Plan 2035” was developed in 2012 by a coalition of Dutch public and private players. Its aim is, on paper, to protect all citizens of Beira, rich and poor, against the storms and floods, through coastal protection and housing projects on higher, safer lands.

However, as the latest PAJ report describes, the plan is in fact a collection of business plans for which investors are yet to be found. As an internal document from the Netherlands Enterprise Agency from 2016 notes, the master plan would provide “multiple opportunities for the Dutch business community.” Yet, to date, very little of the plan has been realized, as Peter Letitre—a representative of Deltares, one of the institutes designing the masterplan—explained. It has been particularly difficult to find investors for coastal protection as it “limits damage, but does not generate income.”

The housing project included in the plan has also been criticized, for serving wealthier Mozambicans. As the Netherlands Environmental Assessment Agency (PBL) wrote in a 2018 report: “On paper the plan is aimed at all the city’s inhabitants… However, the road layout and plot sizes lead us to suspect that ultimately the richer middle classes will be the ones who have the money to build homes in this new plan.”

Further Reading

Long live Ruth First

The great South African writer and activist, Ruth First, was assassinated by a letter bomb sent by the South African Security Police in Maputo, Mozambique on this day, 17 August, in 1982.