Norwegian "aid" to Mozambique has destroyed companies and introduced a disease which will devastate the banana industry, costing far more jobs than have been created by that aid.
Mozambique: Another Norfund fiasco as Matanuska goes bust
By Joseph Hanlon
The banana plantation in Monapo, Nampula, that was supposed to be a model for foreign farm investment and was promoted by Norfund, has finally gone bankrupt, at huge cost to Mozambique. Norfund is Norway's government owned development finance institution which is funded from the aid budget, and has had a string of failures in Mozambique.
Matanuska was one-third Norfund ($27 mn invested) and two-thirds Rift Valley, It started in 2008, and at the peak had 2500 workers and was exporting 1400 tonnes of bananas a day. However, in 2013 the plantation was found to have Panama disease, which had never been seen in Africa before and devastates the bananas. Panama disease is caused by the fungus Fusarium oxysporum which lives in soil and enters the plant through the root, blocking the flow of water and nutrients. The fungus lasts in soil for decades and cannot be managed with chemical fungicides. It is easily transmitted in dirt on shoes and car tyres, and is probably impossible to control. Over the next few years it will probably spread across Mozambique.
Antonia Vaz, the head of plant pathology at Mozambique's Ministry of Agriculture, says the disease could destroy the banana industry in Mozambique in just a decade. (APA, 20 Mar) And it could spread to the rest of Africa. It came to Mozambique on the boots of two workers from the Philippines, Vaz said. (BBC 1 Feb 2018) In its early years there was a rapid turnover of management at Matanuska and poor local control, and the lack of phytosanitary control meant dirty boots were not checked.
Having allowed the poor management and introduction of a devastating disease, Norfund withdrew from Matanuska in 2014. This is not Norfund's only failure in Mozambique. It backed the 2011 take-over by a European company of the successful and locally run King Frango in Nampula; the new owners replaced the local management with Europeans, who drove the company into the ground. It was finally passed to a locally run company who salvaged it. The Nordics do not have a brilliant agricultural investment record; a decade ago a Nordic aid-funded investment company Norsad, along with the US and Dutch, funded Vilmar Roses in Manica. Former managers called the project fraudulent and said the Norsad money was siphoned off to the Netherlands.
Norfund was also an important investor in microcredit banks when that was fashionable a decade ago, but proved to be only of use to the urban middle class buying household goods; they had no development impact and most have closed.
Norfund's main investments in Mozambique are now in real estate, where it is competing with money launderers and global commercial investment funds. An odd areas in which to invest aid funds.
Norfund is also a partner in a 40 MW solar power plant in Mocuba, Zambezia, where construction began earlier this month. The $76 mn plant is owned by Scatec Solar (52.5%), EDM (25%), and Norfund (22.5%). The World Bank has put in loans of $38 mn. The company has signed a 25-year agreement to sell the power to EDM which will be fed into the grid.
Do donors have no liability?
Norwegian "aid" has destroyed companies and introduced a disease which will devastate the banana industry, costing far more jobs than have been created by that aid. Actions to resist the spread of Panama disease will cost tens of millions of dollars, surely more than Norway invested in the banana plantation. Norway's aid to Mozambique is about $30 mn per year. Cleaning up the Matanuska mess will cost more than one year's aid. Can Norway simply walk away and wash its hands of the damage it has done?
Mozambique's notorious $2 bn secret loan was promoted by Credit Suisse, a Swiss company based in London. Credit Suisse must have known that Mozambique could never repay that loan. The cost to Mozambique will be equivalent to 60 years of Swiss aid or 30 years of British aid. Norway's sovereign wealth fund is the second largest investor in Credit Suisse and government pension funds are also invested in the bank. Members of the Mozambican elite do not have clean hands, and Mozambique is being punished by these donors because of the elite's greed, yet they do not punish the bank they own and control and which corrupted the elite. It will take years of aid to repay Credit Suisse and its investors.
Norway, the UK and Switzerland are long term supporters of Mozambique, and have for many years promoted their companies in Mozambique. Surely when harm is done by their aid and their companies, they cannot simply turn their backs. Do they feel no responsibility?