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Monday, 31 March 2014

Instability in Mozambique...Questions being asked?

Instability in parts of Mozambique is becoming an ever increasing concern to investors in that country's natural resource industry.

Though most of fighting may not be in the proximity of huge reserves of natural resources and other extractive industries it does pose risks.

Most of the risk would be in the disruption its causing or would cause to key supply chain routes, making key projects harder to implement. There is also the underlying risk of the situation exploding into a far much bigger conflict and spreading to a larger area.

The following is a summary of the latest occurrences of instability in that country;

1. Fighters of the main opposition party and former guerrilla movement National Resistance of Mozambique (Resistência Nacional de Moçambique: Renamo) on 16 March ambushed a unit of the national army (Forças Armadas de Defesa de Moçambique: FADM) in the hamlet of Inhamitanga, Inhaminga district, Sofala province. According to national media, more than 15 government soldiers were killed, with the rest retreating 'in disarray'.

2. Significance
While negotiations between the government and Renamo continue in the capital Maputo, the latter is keen to improve its position at the negotiating table by maintaining military pressure on the government.

3. While FADM has heavy artillery, Renamo has better knowledge of the terrain, making hit-and-run attacks with a swift retreat into the bush possible. In response, FADM is likely to mount an offensive against a nearby Renamo base in Dimba, 30 kilometres from Cheringoma. Although Renamo will chiefly target government troops, impending fighting increases the risks of damage, death, and injury to road cargo, mainly on the nearby secondary E213 between Inhamitanga and the Zambezi River, and on the primary north-south highway EN1 between the Inhamitanga turnoff and Caia.

We wait and see how the negotiations go on from here.