According to the Center for Public Integrity-CIP, the northern province of Cabo Delgado lost about 2 billion meticais between 2018 and 2019 due to the armed attacks.
The province of Cabo Delgado, which is home to one of the largest reserves of natural gas in the world, has been the scene of armed attacks by insurgents since October 2017, a situation recently classified by the National Defense and Security Council (CNDS) as “external aggression perpetrated by Islamic State terrorists ”.
The CIP reveals that the situation of armed conflicts has contributed to the province losing in the period under analysis, about 2 billion meticais in tax revenue, which amount to approximately 27.6% of the province’s total revenue. “In this period, resources for the social sectors have seen a decrease of more than 50%, while resources for the areas of Military Defense have increased by about 451%”, says the organization.
The armed conflict in Cabo Delgado is damaging local and country public finances, contributing to low tax revenues. The productive sectors that contribute to the collection of revenues and the growth of the local economy are paralyzed or functioning well below normal in the affected areas, particularly.
“Examples are the agriculture, fisheries, tourism and trade in general. The attacks generate insecurity and instability among investors, potential investors and other economic agents in the region, which is a significant risk factor for the business environment in the province and in the country. And, because it leads to the closure of commercial establishments or the reduction of the dynamics of economic activity, due to the situation of instability, it results in a relative reduction of the tax contribution in that part of the country ”, according to CIP.
However, the attacks hamper the normal conduct of business, create disruption of normal trade routes, propitiate the reduction of investment, production and productivity in the main sectors of the local economy. In addition, in the districts targeted by attacks, the organization reports the closure of commercial establishments, due to looting and lack of products, which led to an increase in the prices of goods, a trend that is not captured by the national consumer price index.
The Integrity Center also advances that the forecast of tax collection for 2018 was of about 4.13 billion meticais, having made only 3.75 billion meticais and still, of a target of 5.1 billion in 2019, only 3.5 billion meticais were raised. It can also be observed that the difference between the revenue collected and the forecast revenue for 2015 and 2016 is greater than the difference recorded in 2017, which marks the beginning of the decline in tax collection in relation to the target in Cabo Delgado.
“The attacks have not only contributed to the reduction of tax revenue in the province, but have also led to increased spending, specifically for the military. These factors contribute to the increase in the budget deficit and the consequent increase in public debt. Another problem with this increase in military expenditure is the redirection of resources that are more than imperative to the social sectors, further fomenting the harmful implications of these conflicts ”, says the organization.
According to information in the document published by this civil society organization in 2018 to 2019, the realization of domestic investment expenditure in the education sector in that province decreased by about 52.4%, from 33.1 million in 2018 to 15.8 million in 2019 and, in the health sector, there was a reduction of 51.2% in domestic investment, from 26.7 million in 2018 to around 13 million in 2019. “In contrast, the realization of investment expenditure internal to the national military defense had an exorbitant growth from 2018 to 2019, of about 451%, going from about 678.8 million meticais in 2018 to 3.7 billion meticais in 2019 ”, reveals the document.
However, with the situation described, it is noted that Cabo Delgado may be at risk of “conflict trap”, according to the organization. “With the arrival of mega-projects in this province, the local population had a high level of expectations regarding the possibility of improving living conditions and, not feeling that they are beneficiaries of these projects, there is dissatisfaction which, combined with the precarious conditions of life, makes them easy targets for insurgents, especially young people. With the conflict, poverty increases through destruction and the consequent delay in development and, with poverty, the population is more likely to join the conflict ”, reads.
In view of this situation, CIP recommends the central and provincial government to make effective efforts to avoid conflicts, and one of the crucial ways, specifically, is to promote inclusive economic growth and development and social cohesion.
“The Northern Integrated Development Agency (ADIN) should create incentives to improve the business environment in the province, in order to attract more investments and catapult the existing ones, opening up the possibility for generating more jobs and generating income for the local population. Additionally, it opens up the possibility of widening the tax base and increasing tax collection ”, appeals the CIP.
The organization also defends the need for the provincial government to create incentives to increase productivity and agricultural and fishing competitiveness, which are the basic subsistence activities of the people of this province. Furthermore, the promotion and monitoring of income support and social security programs for the most vulnerable populations.
“The National Institute of Employment and Vocational Training (INEFP), in coordination with ADIN, should create training and assistance programs for job search and placement, particularly for young people. The central and provincial government must improve the monitoring of resources allocated to the province, so that these are effectively applied to public investment ”, he advises.
It should be noted that the attacks are threatening, increasing and reducing investments in the province, including investments in the extractive sector, which could jeopardize the State’s revenues from the exploration and production of Liquefied Natural Gas (LNG) in the Ruvuma basin . They have increased in frequency and intensity, generating in the local population the feeling that the Government does little for the safety and well-being of the population.
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