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Heady mix

By Andrew Moody and Wang Chao in Maputo | China Daily Africa | Updated: 2014-03-07 10:23

Heady mix

Mozambique is on track for exciting future as it seeks to exploit its mineral wealth with Chinese collaboration

With its Portuguese colonial architecture and pleasant avenues lined with brightly-colored acacia and jacaranda trees swaying in the Indian Ocean breeze, Maputo has almost a sleepy feel to it.

Yet it is the capital of one of the most talked-about countries in sub-Saharan Africa.

Mozambique has had high single-figure growth for most of the last decade, fueled by a construction boom, credit expansion and exploitation of coal resources. This was before the recent discovery off its northern coast of one of the world's largest known gas reserves, which will be ready for commercial exploitation in five years.

Although growing from a low base - Mozambique remains one of the poorest and most unequal countries in the world - some talk headily of it being the next Dubai within 20 years.

It is also a country with which China has had a historic association: Admiral Zheng He went there on his first voyage in the early 15th century. And when the country gained independence from Portugal in 1975, there were some 30,000 Chinese in the country's second city Beira alone with numbers unknown elsewhere.

Most of these overseas Chinese fled to Brazil and Portugal when the country became embroiled in a devastating 15-year civil war two years after independence.

Over the past decade or more a new wave of Chinese have entered the country, beginning with many China aid-funded factories in the textiles and shoe industries.

There is now a Chinese Chamber of Commerce in Maputo and local labor laws are even translated into Chinese.

It is estimated the Chinese have built a third of all new roads in the country as well as Maputo International Airport, major water schemes, the imposing Ministry of Foreign Affairs building and the national football stadium.

The latest Chinese involvement is in resources, which could be the basis of the two countries' future economic relationship.

Last year China's state-owned and biggest oil producer, China National Petroleum Corporation, acquired an interest in Mozambique's new vast gas reserves.

It paid Italian oil firm Eni $4.21 billion for a 20-percent stake in its offshore project - one of China's biggest resources deals of recent times.

This followed on from China securing a major interest in Mozambique's coal production in 2010. Wuhan Iron and Steel Corporation bought an 8 percent stake in Australian coal mining concern Riversdale Mining to develop a coking coal project in the country's Tete province.

The $800 million deal will provide China with much needed coking coal imports.

Over morning tea at the Chinese embassy just out of the city center and off the coastal road, Wang Lipei, economic counselor at embassy, says this is one of the directions in which China's involvement with Mozambique is going.

"The significance of this (the recent resources deals) is that for decades and decades Western companies have bought the rights for mining projects but have never started to explore. With CNPC coming here, they are really going to break ground," he says.

The counselor, a youthful 50-year-old, says the Mozambique economy has actually been held back by foreign companies just sitting on their resource assets.

"They have waited for them to appreciate so they can make a profit that would be good for their international stock price. Once the resources are developed, Mozambique will benefit from greater tax revenues, more jobs and better infrastructure. It will transform the country," he says.

China's trade with Mozambique increased from around $100 million in 2003 to $1.4 billion last year. China is also the sixth-biggest foreign investor in the country after the United States, Brazil, India, South Africa and Portugal.

There has also been a lot of Chinese finance flowing into Mozambique. The country received a $2.3 billion loan from China Exim Bank as a result of former Chinese president Hu Jintao's visit to the country in 2007.

Former Mozambique prime minister Aires Ali secured $165 million of similar funding when he went to Beijing four years ago.

The current president, Armado Guebuza, also received funds on a state visit to China in 2011, some of which were for a distance learning initiative, which now enables children in rural areas to be taught by teachers based in Maputo.

One Chinese company that has played a major role in the country is Anhui Foreign Economic Construction Group, which has been in Mozambique since 1998.

It was the company selected from its province as part of the national "go out" strategy and given a $20 million loan to get on with it.

With the money it built what is now the Sogecoa Apartment Hotel (although the building has had multiple uses) in Avenue Vladimir Lenine in the center of Maputo.

Zhou Jie, the 39-year-old general manager of the company's Mozambique operations, which trades under the Sogecoa name, sitting in an upper floor meeting room of the hotel, jokes that he came to Africa because he opted to study Portuguese at Shanghai Foreign Languages University.

"Portuguese is not a major language so there were fewer exams than for English and that is why I chose it. There were only eight students in my class," he says.

The company's first major projects were the Joaquim Chissano International Conference Center in 2004 and the Ministry of Foreign Affairs building a year later.

It also built the $65 million 42,000-seater new national football stadium, Estadio do Zimpeto, which was completed in 2010.

Sogecoa, which employs 100 Chinese and 600 locals in the country, is now about to start work on a $300 million five-star hotel in the center of Maputo, which may eventually be a Sheraton or other top brand.

Zhou says the company's early Mozambique years were a steep learning curve.

"When we first got here there were quite a few strikes. I think the problem for us and other Chinese companies entering Africa was that we just copied Chinese modes of operating without paying enough attention to local laws, customs and culture.

"We have since formulated a system, we hired local lawyers to deal with labor laws after about 2007 and we have followed a policy of meeting all government requirements regarding insurance and health checks for employees. Gradually things have improved."

China's political relationship with Mozambique dates back to the early 1960s when delegates from the now ruling FRELIMO (Frente de Libertacao de Mozambique), including Eduardo Mondlane, seen as a heroic figure in the liberation movement, visited Beijing.

China was one of the first countries to recognize the newly independent nation and has kept up high level contacts since with regular exchange visits.

Frederico Congolo, a former local TV presenter and also a lecturer in Asian studies at the Higher Institute of International Relations, based at Zimpeto, just outside Maputo, dismisses any notion that China is now becoming a powerful influence on Mozambique and Africa generally.

"I really don't know why the main focus is always on Africa. What is happening here is also happening all over the world. The Chinese are buying major companies in Europe such as Volvo and the Portuguese national electricity company as well as coal mines in Australia and Canada. The United States is China's biggest debtor," he says.

Congolo, who did his masters degree in contemporary international relations in China at Changchun University in Jilin province, was speaking in the courtyard of the VIP Grand hotel in downtown Maputo. He says that China's rise in Africa and elsewhere should be seen as another civilization going global.

"You had the Arab expansionism many centuries ago to eastern Africa and parts of Europe, then you had Western European colonialism and now you have China trying to go global."

Until recently, the economic relationship has been based on Mozambique leveraging Chinese infrastructure expertise.

Henan International, the state-owned construction company, is currently working on a $30 million contract on the Massingir Dam on a Limpopo River tributary, in southern Mozambique. It is also constructing the $65 million 131-km Nampula to Ribawe road.

Both projects are set to be completed this year and are financed by the African Development Bank Group.

Yue Jianfeng, the company's 42-year-old general manager, says it is quite typical in Mozambique to work on projects that are not Chinese-funded.

"Because it is international bidding, it is totally market orientated. We are often in competition against Indian or South African companies. We have a success rate of getting 60 to 80 percent of the major projects," he says.

The company is currently hoping it lives up to its score rate with its bid for the Grand Maputo Water Expansion Project, a $178 million World Bank scheme.

It has spent three years on the bid with up to 10 people within the company fully engaged on the process.

"We have technicians, lawyers, marketing people, consultants and engineers all working on bids all the time. People seem to think we just get offered the contracts but it is far from the case," he says.

Zhou Yong, the 36-year-old general manager of China Road and Bridge Corporation, came to Mozambique two years ago.

The French literature graduate from Shanghai International School has spent most of his career in Africa with the company, starting as a translator in Guinea in 1998.

"Politics is relatively normal in Mozambique compared to some African countries and it is a very stable country," he says.

"I would say the people are more hard working also. At 6 or 7 in the morning there are already people on the streets, which is not the same everywhere. There are also fewer national holidays (just nine in 2014) than in other African countries."

Zhou is responsible for more than $1 billion of current projects. These include the $315 million Maputo bypass and the 180 km Maputo to Catmebe road, whose major cost is a single span suspension bridge. Both are funded by China Exim Bank.

"The challenge is to build good quality roads that are suitable for the market. In Mozambique we are not talking about the auto routes you have in China or in more developed African countries such as South Africa, Egypt or Morocco because the traffic density is not as high. It would not make sense to build those here, although in 50 or even 20 years time that might be the case," he says.

Despite its deceptive tranquil feel, crime remains a problem in the country, particularly in Maputo. A constant headache also is an increasingly corrupt police force routinely setting up roadblocks and querying documentation just to extract bribes.

Zhou from Sogecoa lived with his wife and family until 2007 but they have since returned to China because of personal safety fears and all the company staff live in secure dormitories.

"Now with the development of the economy, the violence is getting worse with guns used with robberies. It used to be just petty theft," he says.

Sergio Chichava, a researcher with the Institute for Social and Economics Studies agrees that Mozambique has many social problems that make even being a middle-income country a far-off target.

"We would have to change many things, especially to become the next Dubai in 20 years. There is no strategic plan for development. After independence there was a clear vision where the country was going but not any more," he says.

The academic, who was speaking in the IESE's colonial-style offices in Avenue Patrice Lumumba, is a leading expert on China-Mozambique relations and was based at the London School of Economics last year.

He says that although there is much talk of South-South cooperation Mozambique's partnership is not one of equals. "There might be cooperation but it is not horizontal. I think some Mozambicans look on China as though it has some mystical power. They think these guys will teach us to develop like China," he says.

"It is the same as we think about the West, except we have this complicated colonial history with the West and they now imposes a lot of restrictions on us in terms of tied aid and China does not."

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