MOZ UNREST FRUSTRATES ESWATINI SUGAR EXPORTS

MBABANE -  The Eswatini Sugar Association (ESA) has confirmed that the disruptions in the supply chains and exports which have been caused by the political unrest in Mozambique are becoming a serious concern.

As a result of the political unrest, Eswatini, together with other countries such as South Africa, have had to find alternative routes for its products. It is a known fact that one of the key driver of Eswatini’s export growth is sugar and sugar-related products and the country depends heavily on a terminal at the port of Maputo, Mozambique, to send its raw sugar to the European Union and the United States.

This terminal, jointly owned by Eswatini, South Africa, Zimbabwe and Mozambique, has been vital for the country’s sugar industry since the mid-1990s. ESA Chief Executive Officer Banele Nyamane shared correspondence they received from their partners in Mozambique, which details the latest update. The correspondence, which was shared on Thursday states that the situation remains highly volatile. “The Ressano Garcia Border is closed, and access through Matola is blocked by protestors. These disruptions have affected the movement of goods and personnel, adding to our operational challenges,” reads part of the correspondence.

It also states that the lack of foreign exchange (forex) continues and international transactions are extremely limited. “Staff availability is also a concern, as many employees are struggling to travel to and from work. The port facilities remain operational and are guarded by military and police to ensure security. We currently have a vessel to be loaded and are preparing staff and equipment to complement the operation. “Unfortunately we do not expect any improvements of the situation, quite the opposite we expect the unrest to continue and with intensity,” it was mentioned.

Expanding on the correspondence, Nyamane said the issue of lack of foreign exchange is now a concern as spares for the plant in Maputo are procured outside of the country. Meanwhile, South African media platform, News24 reported yesterday that the unrest has prompted Tesla supplier Syrah Resources to declare force majeure, while hitting output at sub-Saharan Africa’s biggest aluminium smelter and disrupting South Africa’s chrome exports.

Contraction

It was stated that the unrest is causing domestic economic wreckage, with Standard Bank predicting the first quarterly economic contraction since 2020.  There is no sign of tensions cooling, with fears of further delays to a US$20 billion (E360 billion) natural gas export plan led by TotalEnergies. It has been reported that Venâncio Mondlane, the opposition leader commanding the demonstrations via livestream, plans to announce a fresh round of protests on December 16. Already, lives have been lost, reportedly in the hands of security forces.
The unrest started out as a protest against claims of rigging in the October 9 ballot has exploded into an outcry among marginalised youth.

Mondlane is said to have ordered that all mines in Mozambique to be closed until January 15, when he said he’d be inaugurated as president. Also reported by News24 is that Mozambique’s biggest brewery paused production on December 11 after people raided the facility, according to a statement from Anheuser-Busch InBev SA’s local unit, among the country’s top corporate taxpayers. The ESA integrated report for 2023/24 indicated that despite poor yields and the quality of sugar challenges, the organisation’s revenue was up by 13 per cent to reach E7.4 billion, when compared to the E6.44 billion recorded in 2023.

This was mainly due to the high world market sugar prices supported by a favourable forex rate.   The organisation reported that the cost of sales increased from E6.10 billion to E7.04 billion, in line with an increase in distributable proceeds. Profits that are made by the association are distributed in full to millers and growers and form part of the cost of sales.
Distribution costs incurred during the year were E69.31 million (2023:E 24.67 million), increasing mainly because of an increase in freight rates from the previous year.

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