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29 March 2021 | Story Prof Theo Neethling | Photo Johan Roux
Prof Theo Neethling is from the Department of Political Studies and Governance at the University of the Free State

The Cabo Delgado province in the northernmost part of the long Mozambican seaboard is now home to Africa’s three largest liquefied natural gas (LNG) projects; these projects have attracted many of the world’s major multinational energy companies, accompanied by massive LNG investments. There can be little doubt that the discovery of rich LNG reserves is a potential game changer for Mozambique’s economy and the development agenda of the country. It is potentially an opportunity for the rapid advancement of a country that currently ranks close to the bottom of the United Nation’s Human Development Index. World Bank data annually ranks Mozambique as among the poorest countries in the world.

Mozambique ‘has hit the jackpot’

Since 2011, rich LNG reserves have been discovered off the coast of Cabo Delgado in the Rovuma Basin. With the discovery of major offshore gas fields, many observers have been prompted to suggest that Mozambique, one of the poorest countries in the world, ‘has hit the jackpot’ – and recently, it has been claimed that by the mid-2020s, Mozambique could become one of the top ten LNG producers globally. Together, the gas projects are estimated to be worth $60 billion, and this could obviously revolutionise Mozambique’s economy of $15 billion.

However, despite the billions in investments by major multinational energy companies since 2012, the people of Cabo Delgado are yet to see the material benefits from these projects. One of the biggest risks for international investors in the LNG industry is the many unknowns associated with the threat posed by the militant Islamic movement, Ansar al-Sunna, which has especially been active in the Cabo Delgado province since 2017. Whereas Ansar al-Sunna, locally known as Al-Shabaab, initially advocated the ‘purification’ of Islam in Mozambique by preaching a moving away from the practices of the mystical traditions of Muslim Sufis – who are the majority of Muslims in Mozambique – and projecting Sufis as degenerate, the movement eventually made it clear that its goal was to impose Sharia law (Islamic law) in Cabo Delgado.

Since independence in 1994, the central government of Maputo has lacked a monopoly over the means of violence in its territory and its long coastline. In this context, Renamo regularly clashed with the central government in a 16-year civil war that claimed more than a million lives. Fast forward to the future – Ansar al-Sunna with its ISIS links now poses the main security threat to the Mozambican government and its armed forces.

The situation has gone from bad to worse

The escalation of violence and armed conflict since early 2020 has raised some pressing questions over the future of LNG investments, and even put the future of the LNG industry at high risk. Obviously, the foreign companies with their substantial investments feel threatened, especially at the current stage where final investment decisions have to be taken.

In recent months, the situation in Cabo Delgado has gone from bad to worse. In November 2020, dozens of people were reportedly beheaded by Islamic militants in northern Mozambique. Now the beheadings and bloodshed have spread to the town of Palma; taking the bloodshed to another level. This is not good news for the LNG industry in Mozambique, as Palma is supposed to become the manufacturing hub where hundreds of skilled workers will be located.

Amid the development of an increasingly alarming human rights situation towards the end of last year, including the killing of civilians by insurgents, the United Nations High Commissioner for Human Rights, Michelle Bachelet, has appealed for urgent measures to protect civilians in what she described as a “desperate” situation and one of “grave human rights abuses”. She also stated that more than 350 000 people have been displaced since 2018.

In conclusion, there is little doubt that Islamist insurgents have managed to increase the scale of their activities in Cabo Delgado, and that the lack of governance and a proper security response by both the Mozambican government and Southern African leaders make this a case of high political risk, which can potentially jeopardise the successful unlocking of the country’s resource wealth. Until now, the main LNG installations and sites have not been targeted or directly affected, but the security risks to these vast investments – and Mozambique’s development potential – are certainly on the increase and posing a threat to the LNG industry.

Opinion article by Prof Theo Neethling, Department of Political Studies and Governance, University of the Free State 

 


News Archive

Trading innovative ideas for academic bursaries worth R275 000
2015-11-09


The top three individual bursary winners with TATA and UFS representatives. From Left:  Naquita Fernandes, Henrike Prinsloo, Lebohang Motsisi, Stefan Strampe, Dr. Johan van Zyl, Jehan van Vuuren, Sanjeeb Lahiri and Salomien Boshoff.
Photo:  Lize Van Den Berg

Learning from industry experts is essential for students’ development. When that learning eases the financial burden of tuition fees, it is even better. TATA Africa has ensured that students from the University of the Free State (UFS) earn academic currency for displaying leadership and business skills.

Jehan Van Vuuren walked away with R40 000 in his student account, Hendrike Prinsloo earned herself R30 000, Stephan Strampe has R25 000 less to worry about when the 2016 academic year arrives, and seven other students managed to save their parents R20 000 each.

These top 10 Strategic Marketing students from the UFS Department of Business Management and Department of Communication Science took up the challenge of devising strategic concepts to be implemented by the Africa branch of TATA Group companies.

TATA Group is a multinational conglomerate which specialises in a wide range of products and services, such as automobile manufacturing, hotel accommodation, construction, textiles, food and beverages, amongst other enterprises operating under its banner. On 15 October 2015, the company’s Head Office representatives signed a cheque for R275 000 to reward the creative input of our students.

Lesle-Ann George won an academic bursary worth R20 000 for her individual effort, and was also part of one of the best four groups that won R10 000 each. She said the competition was an opportunity of a lifetime. The financial aid will be channeled towards the BCom Marketing Honours degree she intends pursuing next year.

The students’ ideas included market research for TATA motors, the development of a mobile application for the Taj Hotel, as well as innovative student-oriented social media, and guerrilla marketing strategies.

“This collaborative partnership between TATA Africa and UFS has provided the students with an opportunity to learn from key role-players in the industry and, in turn, to gain practical exposure to real-life industry happenings,” said Naquita Fernandes, a Business Management lecturer and the competition’s co-organiser.

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