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Small business, and the return and reconstruction of Mocímboa da Praia

Ensuring sustainable return of displaced people in northern Cabo Delgado will depend to a great extent on ensuring that local businesses can re-establish themselves. But the challenges in terms of security, basic infrastructure, and financial services are considerable

By Peter Bofin, Cabo Ligado. First published in the Cabo Ligado Monthly: July 2022, on 18 August 2022

The Cabo Delgado insurgency, counterinsurgency operations, and future solutions are inextricably entwined with private sector interests at all levels. Concern for the prospects of the liquefied natural gas (LNG) project at Afungi precipitated direct military intervention, and subsequent aid, diplomatic and military cooperation initiatives. The spread of the insurgency south has threatened both domestic and foreign mining interests, and potentially state revenues. But small trading enterprises in Cabo Delgado too have been considerably disrupted, with trade links to Tanzania broken, urban centers depopulated, and property damaged or destroyed. Ensuring sustainable return in the north of the province will to a great extent depend on ensuring that local businesses can re-establish themselves. The challenges in terms of security, basic infrastructure, and financial services are considerable.

On 27 July, the Cabo Delgado authorities organized a meeting to bring together private sector leaders in Mocímboa da Praia, and establish the Conselho Empresarial Distrital, or District Business Council. With the theme of “The Economic Recovery of Mocímboa da Praia,” the meeting demonstrated the government’s eagerness to speed up return to the town, and the central role it is assigning to the private sector in this. The meeting reflected a desire for businesses to return in order to attract people to return on a larger scale than is happening now. This desire is shared by some business operators themselves, who are eager to return to their hometown, and restore their property and businesses.

Since early June, Mocímboa da Praia residents who had fled to Quitunda in Palma have been returning with the support of the Rwandan security forces. Returnees arrive once a week, but with just over 3,500 expected in total from Quitunda, the return of a cohort who have lost most is unlikely to be sustainable. For return to work, the capital and business connections that sustained employment and supply chains for a pre-conflict population of over 60,000 people will be necessary. July’s meeting targeted elements of the better off cohort who were able to make the longer journey to Pemba, and re-establish themselves in business. It is expected, though not assured, that initial support, which may be supported by TotalEnergies, will be expanded in the future to support businesses in the renovation of property and initial trading capital.

There are some interlinked challenges facing the authorities and businesses interested in return. These range from bureaucracy and oversight of payments, to physical security in Mocímboa da Praia town and environs. Bureaucracy presents, at least in the short term, the most easily addressed problems. Some businesses have seen their registration lapse during the conflict and will need assistance to re-establish credentials in order to access support. In the short term, this can be addressed relatively easily for the small number of businesses concerned, but in the longer term will require addressing systems of business registration, taxation, and more.

Re-establishing business will have to include adequate oversight to minimize opportunities for financing of the insurgency. The insurgency was initially driven by businessmen: research conducted in 2018 identified seven businessmen in Mocímboa da Praia suspected of financing the insurgency in its early days. Such links are suspected to still exist, according to one businessman from the town. Financial services are currently non-existent in the town, with the exception of mobile money platforms such as Mozambique’s M-Pesa, e-Mola, and mKesh. The mobile payment platforms of other countries in the region such as Tanzania and Kenya are also in use in the province. Businesses will rely on mobile payment platforms to support transactions within northern Mozambique and with suppliers in Cabo Delgado’s economic hinterland in Tanzania. Such transaction risk should not be an obstacle to the development of small trading or processing enterprises in the short term. While there will be a need to monitor mobile transactions for counterterrorist purposes, channeling support through organized business groups, which can vouch for members, will likely be the most effective means of addressing this risk.

Businesses face two physical security risks from two main quarters. The most critical one is from the insurgents. Mocímboa da Praia town was overrun by insurgents in August 2020, and retaken one year later by the FDS. Return has been slow since then, with the first systematic organized returns starting in June this year. Businesses keen on re-entering Mocímboa da Praia are aware of the risk presented to supply routes on the EN380, a route which once again now requires a military escort, but the town itself remains secure.

One businessman attributed the security of the town to the presence of the Rwandan Defence Force (RDF) with an approach that prioritizes community engagement, but in doing so highlighted the second source of risk, the FDS itself. They compared unfavorably the situation in Macomia, where arrest of small business operators by the FDS is not uncommon, to that in Mocímboa da Praia, attributing the difference to the high profile presence of the RDF. How long this will remain in place may prove to be the key factor in ensuring return to the town, as it has thus far in Palma to the north.

Tempting a cadre of business operators to the town is not without risk. One obvious risk is that it may present a significant rent seeking opportunity to those in public administration, and the agencies supporting the move. The corollary of this is that it will draw attention away from the needs of the more vulnerable returnees. In research released in August, the Rural Environment Observatory (OMR) identified as a distinct category of displaced persons from Mocímboa da Praia the “economically more affluent individuals” who were able to establish themselves in Pemba early in the conflict, and benefit from the “humanitarian aid industry,” as termed by the OMR in ways that more vulnerable rural populations without the means to migrate could not.