IMF pressure may
force investors to pull out of Mozambique
World Bank says no
debt relief for Nigeria
IMF pressure may
force investors to pull out of Mozambique
Maputo (Mazambique), 27 May 2000.
New investors in Mozambique's
sugar industry may pull out if the government yields to pressure from the
International Monetary Fund to cut off protection for domestically produced
sugar. Attracted to Mozambique with the promise that the domestic market for
sugar was protected, the investors are now threatening to close down in case
government accepts IMF pressure to slash the protection.
One of the sugar factories to be
affected would be Marromeu sugal mill on the south bank of the Zambezi River. Sabotaged
during Mozambique's civil war, the mill has been rehabilitated by Sena Company
in which a Mauritian consortium holds majority shares.
Sena's manager, Anton de Wal, did
not mince his words when he spoke to 'Metical', an independent paper published
in Maputo. If the IMF forces an end to the current protectionist regime, de
Wal, whose consortium is the largest investor in the sugar sector, said:
"We will close our doors in Mozambique."
According to him, investors are
reluctant to put any more money into Marromeu, since they do not know what
position the government is taking towards the IMF demands. The investors
"want to finance the industry within a normalised situation," he
said.
The Sena Company had envisaged a
total investment of over 100 million US dollars in Marromeu. So far it has
spent 26 million dollars on repairs to the factory and rehabilitation of 2,000
hectares out of the 13,000 hectare plantation. But if the IMF has its way,
Mozambique will never see the rest of the money.
Meanwhile, a South African
company, Illovo, has been investing heavily in Maragra sugar plantation in
Maputo province.
Its planned investment in the
sector would amount to 240 million dollars. By the end of 1999, the company had
put 110 million dollars in the venture.
Mozambique has a quota for sugar
exports to the US at a guaranteed price of 400 dollars per tonne.
But what really attracted
investors was the promise of the domestic market, which the government protects
against a flood of cheap imported sugar from neighbouring countries.
The protection mechanism is a
reference price for imported sugar of 385 dollars a tonne for brown sugar and
405 dollars a tonne for white sugar. Those who import sugar that is cheaper than
the reference price have to pay the difference at the border.
The IMF knew all about this, and
initially expressed no opposition. Investors started to rehabilitate the sugar
mills and the IMF said nothing.
However, in November, a visiting
IMF team told the government that the protection on sugar should be slashed so
that by 2002 it would be no more than 20 percent above the CIF price.
Investors protest that by that
time they will be nowhere near to recovering their investments. Nor would they
be in position to compete with world market prices.
GRi…/
World Bank says
no debt relief for Nigeria
Lagos (Nigeria) 27 May 2000
The World Bank has ruled out giving
any debt relief to Nigeria, saying only heavily-indebted and poor countries can enjoy such facility.
The bank's vice president for
Africa, Callisto Madavo, stated the institution's position at a press
conference in Lagos late Wednesday, to round off his three-day visit to
Nigeria.
"Only HIPC (Highly Indebted
Poor Country) members can enjoy any form of debt relief," he said. The
World Bank official said that though he recognised the seriousness of the debt
problem, the lasting solution to the debt issue was for Nigeria to gain the
confidence of creditors.
Even then, Madavo wondered why
Nigeria was giving so much attention to the external debt at the expense of
domestic debt which, he said, was so critical to the economy since poor service
of the debt caused high interest rate, crippled growth and stunted employment.
He offered the bank's assistance
to the country in designing "an effective debt management strategy that
would balance fighting poverty and restoring healthy relations between Nigeria
and the international financial community."
Debt relief, and even outright
cancellation, has been a major issue to the administration of President
Olusegun Obasanjo, which assumed office in
May 29 1999.
Economic experts have argued that
servicing the huge external debt, estimated at between 30 and 32 billion US
dollars, was crippling the governmen'ts poverty-alleviation efforts.
On Monday, the bank granted 80
million dollars credit to Nigeria to support its universal basic education
programme, a water project and economic management. The credit grant is
repayable in 40 years and is at no interest rate.
Before travelling to Lagos, Madavo
met with a number of top government officials in Abuja to discuss the country's
economic recovery and the need for an agreement with the International Monetary
Fund.
Agreement with the IMF, it is
believed, would encourage other donors to step up their assistance to Nigeria
and to help resolve its external debt problem. At a meeting with Obasanjo, he
stressed the need for Nigeria to "move on expeditiously on
privatisation."
He said the government should
ensure that the process of privatisation "is transparent and carried out
in a way that promotes Nigeria's economic revitalisation and international
confidence in the country as a place to do business."
GRi…/