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Mozambique research: Enabling peace-positive investment in fragile settings

May 3, 2024
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Mozambique faces both significant challenges but also opportunities to progress in its social and economic transition to a peaceful and prosperous country. Public development finance and private investment have a critical role to play in helping redress many key challenges related to fragility, underdevelopment, inequality and the creation of sustainable livelihoods, while also realising the country’s significant opportunities.

Investment approaches that support more equitable development across the country provide critical and much needed infrastructure, while delivering services and livelihoods is an important part of wider nationally-led efforts to prevent conflict and consolidate peace. If such investment can be based on deeper engagement with local populations, be structured to more evenly share benefits while truly addressing local needs, it can support wider social cohesion and resilience as well as the responsiveness of the state.  Investment approaches that do so may be more trusted, provide greater certainty and also lower risk.

But this requires a differentiated approach – new partnerships, more networked ways of connecting local communities with international public and private investors, and a greater focus on the social and political context and the needs of the local people.

Conflict dynamics in Northern Mozambique are intricately linked to issues related to livelihoods, perception of benefit and economic inequality. The private sector, or lack thereof, has a significant influencing role in this.  Access to livelihoods and patterns of socio-economic exclusion linked to the – real or perceived – distribution of resources are major aspects of both the political-military conflict between the opposing sides Mozambican National Resistance RENAMO and Liberation Front of Mozambique FRELIMO, as well as of the armed insurgency in the country’s north. Combined with the presence of significant natural resource wealth, the conflict drivers are also closely connected to the role and nature of private sector activity. As the recent history of extractive investment in Northern Mozambique has shown, investment approaches that externalise their inherent risks onto society will result in unintended outcomes, not only for the proximate people and communities but also for the investments themselves. In this context, the behaviour and operations of development finance institutions have significant potential impacts on the conflict dynamics within the country.

In 2023, with the guidance of Mozambique’s Ministry of Economy and Finance, Finance for Peace and the African Development Bank embarked on a joint research project aimed at providing key policymakers and international development actors with an analysis of potential investment opportunities that can support peace, as well as recommendations for how future approaches can grow the pipeline for peace-positive investment. The research provides an in-depth examination of the private-sector landscape in Mozambique, with a focus on the north of the country, identifying near-term and medium-term opportunities for conflict-sensitive private sector engagement. It also outlines private sector development challenges and recommends reforms and policy actions to mobilise private investment and support private-sector development.

This joint study trials a new approach to peace and development finance in Mozambique. It also aims to build synergies, enabling partners to take positive steps towards transforming approaches to stabilisation in post-war and conflict-affected contexts, and complements ongoing national and international efforts in Mozambique, including the Northern Mozambique Resilience and Integrated Development Program (PREDIN) and the Plan for Recovery and Reconstruction in Cabo Delgado (PRCD). Being a pilot, the study’s results will pave the way for subsequent work, including more in-depth investment design requiring scaled-up technical assistance.

Thus, Mozambique stands at the forefront of the agenda pursued by partners such as Finance for Peace and the African Development Bank, according to which the groundwork of peace-positive investments is being laid. The international advocacy efforts to bring these concepts to broader, multilateral arenas come at a critical time for Mozambique, potentially serving as a model for other contexts.

Stay tuned for the announcement of the next phase of this joint in-country work, as well as the publication of this research in June 2024.

© Finance for Peace 2023