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Sino-Mozambican Relations and Their Implications for Forests

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Sino-Mozambican Relations and Their Implications for Forests WORKING PAPER Sino-Mozambican relations and their implications for forests A preliminary assessment for the case of Mozambique Laura A. German Sheila Wertz-Kanounnikoff Working Paper 93 Sino-Mozambican relations and their implications for forests A preliminary assessment for the case of Mozambique Laura A. German Sheila Wertz-Kanounnikoff Working Paper 93 © 2012 Center for International Forestry Research All rights reserved German, L. A. and Wertz-Kanounnikoff, S. 2012 Sino-Mozambican relations and their implications for forests: A preliminary assessment for the case of Mozambique. Working Paper 93. CIFOR, Bogor, Indonesia. Cover photo by Sigrid Ekman Sawn mill in Pemba, Cabo Delgado Province, Mozambique. CIFOR Jl. CIFOR, Situ Gede Bogor Barat 16115 Indonesia T +62 (251) 8622-622 F +62 (251) 8622-100 E [email protected] cifor.org Any views expressed in this publication are those of the authors. They do not necessarily represent the views of CIFOR, the authors’ institutions or the financial sponsors of this publication. Table of contents Abbreviations vi Acknowledgements vii Summary viii Resumo x 1 Introduction 1 2 Background 2 2.1 Brief history of Chinese influence in Mozambique 2 2.2 Governance of FDI and corporate practice 3 3 Methodology 11 3.1 Objectives and research questions 11 3.2 Methods 11 3.3 Limitations 12 4 Sino-Mozambican relations 13 4.1 Perceived features of Chinese influence in Mozambique 13 4.2 Chinese ODA to Mozambique 14 4.3 Sino-Mozambican trade 21 4.4 Chinese direct investment in Mozambique 21 5 Overview of key sectors 25 5.1 Forestry sector 25 5.2 Agricultural sector 42 5.3 Mining sector 47 6 Conclusions and implications for further research 54 6.1 Conclusions 54 6.2 Implications for research 55 7 References 57 Annex 1 List of actors interviewed 61 2 List of Chinese FDI to Mozambique from January 2000 to September 2010 62 3 Major investments in the Mozambican mining sector, 2000 to present 65 List of figures and tables Figures 1 Contribution of four existing mega-projects to key economic indices 4 2 Composition of investments involving Chinese capital from 2001 to 2010, analysed according to (a) total investment levels (USD) and (b) the percentage of investments with different capital mixes 18 3 Proportionate representation of Chinese capital in investments involving Chinese shareholding, as a percentage of total investment value, 2001- 2010 19 4 Sino-Mozambican trade, 2001-2010 22 5 Top 10 Mozambican exports to China by value, 2001-2010 22 6 Number of Chinese FDI projects (all sectors, except mining) in Mozambique from January 2000 to September 2010 23 7 Chinese FDI projects by sector (except mining) from January 2000 to September, 2010 23 8 Chinese FDI capital by sector (except mining) from January 2000 to September 2010 23 9 Spatial distribution of ‘productive forests’ in Mozambique 25 10 The evolution of operators with simple licenses, 2002-2009 27 11 Number of concessions authorised nation-wide, 2001-2009 27 12 The value of timber exports from Mozambique to China and to the world, 2001-2010 32 13 Proportion (%) of timber exports to China which are unprocessed, 2001-2010 35 14 Agricultural suitability of land available for large-scale agricultural investments 44 15 Mozambican agricultural exports with a sizeable Chinese market share, 2001-2010 45 16 Annual cash crop production in small and medium farms in Mozambique 45 17 Production areas for key Chinese agricultural exports, 2008 46 18 Producer price of sesame in Mozambique, 2001-2009 48 19 Evolution of the trade in metals, minerals and precious stones, Mozambique to/from the world 48 20 Active mining licenses by type, 2010 48 21 Distribution of active mining licenses of different types in 2010 50 22 Distribution of mining concessions by province in 2010 50 23 Recent trends in the Mozambican trade in metals, minerals and precious stones with China and the world 52 24 Total concession area by province 52 25 Proportionate share of Mozambican mining exports 53 Tables 1 Key features of the two forest harvesting regimes 9 2 Chinese aid to Mozambique 16 3 Occurrence of productive forests by province 25 4 Annual allowable cut (AAC) and licensed timber volumes by province, 2009 26 5 Investors in forestry plantations in Mozambique 28 6 Major timber operators in Cabo Delgado 31 Sino-Mozambican relations and their implications for forests v 7 Timber purchasing companies in Cabo Delgado 32 8 Degree of compliance with required documentation in the forestry licensing process in selected provinces 40 9 Data on number and concentration of forest inspectors by province 41 10 Top 10 agricultural exports from Mozambique (USD 000) 43 11 Chinese FDI in the agricultural sector 47 12 List of Chinese companies with prospecting licenses 51 Abbreviations AAC Annual allowable cut CCFB Companhia dos Caminhos de Ferro da Beira (Beira Railway Corporation) CFM Portos e Caminhos de Ferro de Moçambique (Mozambique Ports and Railways) CIFOR Center for International Forestry Research CIP Centro de Integridade Publica (Centre for Public Integrity) CPI Centro de Promoção de Investimentos (Centre for Investment Promotion) DFID Department for International Development (UK) DNFFB Direção Nacional de Florestas e Fauna Bravia (National Directorate of Forests and Wildlife) DNTF Direção Nacional de Terras e Florestas (National Forestry and Land Directorate) DUAT Direito de Uso e Aproveitamento da Terra (land use and exploitation right) EAS Estudo Ambiental Simplificado (simplified environmental study) ECA Export credit agencies EIA Environmental impact assessment EIU Economist Intelligence Unit EXIM Export-Import FDI Foreign direct investment FIAN FoodFirst Information and Action Network FOCAC Forum on China-Africa Cooperation FONGZA Forum das Organização Não-Governamental da Zambézia (Forum of Non-governmental Organisations in Zambézia) FRELIMO Frente de Libertação de Moçambique (Liberation Front of Mozambique) GDP Gross domestic product IESE Instituto de Estudos Sociais e Economicos (Institute for Social and Economic Studies) IFC International Finance Cooperation IIAM Instituto de Investigaçao Agrária de Mozambique (Mozambican Institute of Agrarian Research) IMF International Monetary Fund INE Instituto Nacional de Estatística (National Statistics Institute) IPEX Instituto para a Promoção de Exportações (Institute for Export Promotion) JSPL Jindal Steel and Power Ltd MADEM Madeira Moçambique MICOA Ministry of Coordination of Environmental Affairs MIREME Ministério de Recursos Minerais e de Energia (Ministry of Mineral Resources and Energy) ODA Official development assistance OECD Organisation for Economic Co-operation and Development ONG Organização Não-Governamental (Non-governmental organisation) ORAM Associacao Rural de Ajuda Mutua (Rural Association for Mutual Support) SADC Southern African Development Community SME Small- and medium-scale enterprises SUNAFOP Support to National Forestry Program UNCTD United Nations Conference on Trade and Development USAID United States Agency for International Development WTO World Trade Organization WWF World Wildlife Fund Acknowledgements Many individuals helped us to enter Mozambique ground the analysis, including Carlos Castel-Branco, and quickly find our footing on a topic that is as Nelsa Massingue da Costa and Carlos Muianga vast as it is complex. We are grateful for the data of the Instituto de Estudos Sociais e Económicos, contributed by David Engelhardt and George Emilio Ussene of the Centro de Promoção de Schoneveld prior to scoping, which enabled us to Investimento, Alima Issufo and Darlindo Pechisso of gain a basic understanding of patterns of trade and the Departamento Nacional de Terras e Florestas and to identify commodities for further study. Several Gracio Cune of the National Directorate of Mines. individuals provided an initial orientation to research The support provided by Dr. Mário Falcão (faculty in Maputo, including Fabrice Blazquez, Economic member of Eduardo Mondlane University) and Ing. Mission Chief of the French Embassy, Cynthia Castro (then Head of the forestry service in Cabo Donovan of Michigan University and Instituto Delgado) enabled us to gain an understanding of de Investigaçao Agrária de Mozambique (IIAM) the dynamics of the timber trade in Cabo Delgado and Rauno Laitalainen, the then Chief Technical from a diversity of perspectives. We are also grateful Advisor of Support to National Forestry Program to Rudini Maulana for his assistance in compiling (SUNAFOP). The institutional assistance of IIAM, data on mining and plantation forestry companies, in particular Carlos Dominguez and Carmelia to Dina Hubudin for providing various forms of Chebeia, connected us to various stakeholders and administrative and technical support and to Louis ensured the smooth conduct of research at a very Putzel and Andrew Wardell for their valuable busy time of the year. We are also indebted to several comments on an earlier draft. individuals who provided us with essential data to Summary Recent years have witnessed the growing diplomatic suggests that budget support is more in the interests and economic presence of China in Africa. of the recipient country as it enhances efficiency, From the establishment of the Forum on China- accountability, debt sustainability and alignment Africa Cooperation and state policies designed with national development priorities. Bilateral trade to strengthen diplomatic, cultural and economic between China and Mozambique has also seen a relations with African nations, to the rapid growth sharp and
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