The USA’s Development Finance Corporation (DFC) just spent $3.6 billion in investments worldwide, with roughly half this amount going toward a sustainable future for Mozambique.
The project consists of an offshore liquefied natural gas (LNG) project created by the U.S. Anadarko Petroleum and owned by the French oil company Total SE, which will help grow the country’s economy by making it one of the biggest LNG exporters in the world. Its strategic location makes business with markets like Asia, Europe and South Africa very viable. The goal is to bolster Mozambique’s annual GDP to as high as $15 billion a year, stabilizing the country’s economy and encouraging everlasting growth.
Poverty in Mozambique
Mozambique is currently one of the poorest countries in the world, largely in part by corrupt government officials. It ranked 146 out of 180 in a 2019 transparency perception index, and in a study conducted by a Norwegian research institute, the country suffered a $4.9 billion annual increase in corruption from just 2004 to 2014 alone.
In recent times, it has been observed that poverty is decreasing in urban zones. The national poverty index as of today is around 41-46% of the population. This is good news compared to the country’s 80% poverty rate in 1990—making it at the time one of the countries most entrenched in poverty. However, the country still suffers from inequality between urban and rural zones. Poverty reduction in the south is 18%; contrastively, the north saw an 11% increase in poverty rates. However, there is hope that the United States’s renewable natural gas investments can offset this stark disparity, pushing for a prosperous and sustainable future for Mozambique.
Obstacles to a Sustainable Future in Mozambique
With new sustainable projects in action, comes the rise of Ahlu Sunnah Wa-Jamo (ASWJ), an Islamic insurgent militant group known for their terroristic attacks in small villages. Since the start of the LNG project, the group has been advancing by facilitating attacks in large city centers, even killing eight LNG project employees at a construction site near the Tanzania border.
Currently, the ASWJ does not have the arms capability of reaching the significant sites that are heavily guarded, but they still have the potential to pose a looming threat to other smaller project sites that do not have as much security. As the group advances, Total SE must take proactive measures to counteract attacks, given the unprecedented violence that has taken place as ASWJ asserts its presence amid the new oil plant.
The DFC is also giving Mozambique a $200 million loan to build power infrastructure. This will help the country become self-sufficient by using domestic gas to increase power generation, as well as providing affordable and sustainable electricity, furthering the country’s goal for a central electricity system. The country currently has one of the lowest electrification rates in the world, so this will be a massive step forward in bringing essential, environmentally-sound infrastructure, paving the way for a sustainable future for Mozambique.
The United States sees a potential future for Mozambique, and it is showing its optimism by allocating a hefty amount of its global investments into this single country alone. With this funding, the country can build up essential infrastructure like central electricity, as well as exponentially increase its national GDP with the help of the renewable LNG plant, all of which will reshape the lives of many citizens who have only known poverty for so long.
– Mina Kim