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Cablegate: Mozambique: Visit to Two Northern Provincial

VZCZCXRO4586
RR RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #1260/01 2720927
ZNR UUUUU ZZH
R 290927Z SEP 06
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 6132
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLMC/MILLENNIUM CHALLENGE CORP 0091
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 04 MAPUTO 001260

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E.O. 12958: N/A
TAGS: BEXP ECON MZ
SUBJECT: Mozambique: Visit to two Northern Provincial
Capitals - Lichinga and Nampula

Ref: Maputo 1158

MAPUTO 00001260 001.2 OF 004


Sensitive But Unclassified - Handle Accordingly. Not for
Internet Distribution

1. (U) This report summarizes observations from an August 28
- September 1 trip taken by the Econ/Pol chief to Lichinga,
the small town that serves as the capital of Niassa province
in Mozambique's far north, and Nampula, the bustling capital
of neighboring Nampula province. Lichinga's most striking
aspect is its isolation, with its distance from the coast
and main transport corridors magnified by poor (dirt) roads
and nearly non-existent railroad service. It also has the
lure of Mozambique's wild frontier, with its resources
largely untapped. Nampula, on the other hand, is maturing
into the North's prosperous commercial center. Para 10
contains business confidential information about the OPIC-
supported Nacala railway line.

--------
Lichinga
--------

2. (U) Lichinga sits on a plateau at 4,000 feet above sea
level, surrounded by a 5-10 mile radius of relatively
fertile agricultural land cleared of forest cover.
According to one internet gazetteer, the town has a
population of over 100,000 but this figure probably includes
all the outlying communities - the downtown is very small
and criss-crossed by only two or three main streets.
Lichinga developed in the late 1960's, mainly as a
Portuguese colonial outpost against FRELIMO rebels launching
attacks into northern Mozambique from bases just across the
border in Tanzania. One resident told emboff that he
remembers as a boy seeing lions outside train carriage
windows on the town's outskirts. The lions have long since
gone, mostly shot or driven out during the post-independence
civil war (1977-1992).

3. (U) Lichinga is linked to the rest of the country mainly
by a 200 km dirt road southward to Cuamba, at the bottom of
Niassa province, which sits astride the (OPIC-supported)
railroad line that connects Malawi with the Mozambican port
of Nacala. Of lesser importance is a rail spur from Cuamba
to Lichinga that largely parallels the Cuamba - Lichinga
road. The Portuguese built this rail spur to Lichinga in
the 1960's for military reasons, but it declined into
irregular use after independence and has been very poorly
maintained. As tracks fell into disrepair, service declined
from weekly to monthly to finally, in the past year, once
every several months. Two other links - a road running
eastward that is paved roughly half of the 400 km distance
from Lichinga to Pemba, on the coast, and a dirt road 80 kms
in length down to the Lake Niassa town of Metangula - round
out its main transport connections. It is worth mentioning,
too, that travelers driving north from Lichinga 150 kms on a
dirt road that degenerates into a track can reach the
Tanzanian border south of the city of Songea, and that
growing trade and traffic is reported over this frontier
(including Tanzanians who mine small-scale gold deposits in
the bush north of Lichinga and carry it back to Tanzania).

---------------------
Transport Connections
---------------------

4. (U) Transport connections bear examination because a
visitor to Lichinga upon arrival is soon struck by this
provincial capital's isolation. There is comparatively
little traffic in the town, and on trips to the outskirts it
seemed to emboff that the number of people pushing bicycles
loaded with goods greatly outnumbered the few cars or trucks
that passed. At a roundtable hosted by emboff for local
business leaders, speakers repeatedly groused about supply
difficulties due to poor transport links. According to one
businessman from the construction sector, during the rainy
season in 2005 the city went several months virtually
without fuel and without any concrete, since the roads were

MAPUTO 00001260 002.2 OF 004


too muddy for trucks with heavy loads and the railway didn't
function. All supplies that must be trucked in are marked
up heavily because of transport delays. Local produce - and
emboff was told repeatedly by various sources that the
highlands around Lichinga could become very productive in
grains and legumes - only trickles out of the province,
again because of transport difficulties.

--------
Forestry
--------

5. (U) Several foreign investors have ambitious plans for
forestry projects in Niassa province. Eucalyptus and
southern pine are being introduced in two separate
plantations east and north of Lichinga. Swedish money is
backing one project, which already includes a small sawmill,
while the other plantation, Tenga, is financed by a South
African company. Eucalyptus grows quickly, with seedlings
becoming trees ready for cutting in only seven years. Both
plantations include eucalyptus trees that are already
several years old, and the investors expect to be harvesting
eucalyptus trees starting in 2010. Pine, however, will take
20 years to mature and thus represents a much longer term
investment. At both locations emboff was told that viable
(non-dirt) road links or a working railroad would be
essential to their business, since most of the wood would be
sold outside the province.

----------------
Manda Wilderness
----------------

6. (U) Emboff met with Patrick Simkin, manager of the Manda
Wilderness lodge north of Cobue, a small town lying on Lake
Niassa about 100 kms north of Lichinga. Simkin, who has
been running the lodge for nearly a decade, said that last
year the Manda Wilderness concession won an award in Europe
for its success in integrating the community with its
wilderness preservation efforts. Travel to and from the
lodge from Lichinga is arduous and expensive - requiring
four hours via a 4-wheel drive car down to the lake and then
a 45 minute boat ride. This is the main reason that most of
the lodge guests arrive via Malawi. The small Malawian
island of Likoma, in the lake off Cobue, has an airstrip,
and guests frequently fly in there from Lilongwe. Another
favorite arrangement is to ride the Lake Niassa ferry around
the lake, getting off for two days at Manda and then getting
back on when the ferry makes its next circuit. Simkin
reported that the tourist business was doing quite well,
with August his busiest month ever because of the European
holiday season.

----------
Macadamias
----------

7. (U) Niassa province holds what may count as Mozambique's
most mature macadamia nut plantation. Emboff visited the
2,500 hectare site, which lies 150 km east of Lichinga near
the road to Pemba. Six South African investors are partners
in the project, all of them from the Nelspruit area in South
Africa where there are numerous macadamia groves. While the
first nuts will not be harvested for several more years, the
project manager is hopeful that the investment will prove
very successful and enable them to double the area planted
in macadamia. He reported that the provincial government
has been very cooperative, causing no undue delays provided
paperwork was in order.

8. (U) The macadamia plantation manager's father told emboff
that he had just started a 500 hectare jatropha plantation
nearby (which emboff did not see), and that he had great
expectations for this product in the near future as a source
of bio-diesel (jatropha oil plus ethanol can easily be
turned into diesel). He reported that he had already begun
to receive inquiries from prospective buyers in Germany and
the US.

MAPUTO 00001260 003.2 OF 004

-------
Nampula
-------

9. (U) Nampula is a growing urban center located at the
eastern foot of the hilly uplands, about 100 kms inland from
the coast. According to the same internet gazetteer
mentioned in para 2, its population has grown to nearly
400,000 (a figure that, similarly, no doubt includes
surrounding communities). It lies at the intersection of
the country's main north-south highway and the east-west
railway line linking the deep-water port of Nacala with
Malawi. Nampula is a bustling city by Mozambican standards,
to say nothing of a comparison with remote Lichinga. The
hotel where emboff stayed in the center of town had a busy
breakfast dining room, and shares its premises with a
several-story high block of newly opened shops and offices.
Two other impressive tall glass and steel hotels are being
built. The governor of Nampula province spoke of economic
progress in both the city and province, while at the same
time - as is the wont of officials in Mozambique - appealing
for assistance for a whole litany of projects, from wells to
roads to health care centers. Emboff was impressed by
several Nampula city council members, who described in
detail some of the infrastructure challenges they face in
providing water and sewage services to the rapidly growing
urban population. (Comment: They were seemingly unaware of
planning by the GRM for water and sanitation work in Nampula
under the Millennium Challenge Corporation compact expected
to be signed next year. Embassy recommends MCC
representatives meet with Nampula city council members to
review MCC's objectives the next time they are in Nampula.
End comment.)

--------------
Nacala Railway
--------------

10. (SBU) While in Nampula emboQ met with Fernando Couto,
one of the principal private investors in the consortium
operating the OPIC-supported Nacala railway line, the
Corridor Desenvolvimento do Norte (CDN). Couto relayed that
one of the two American investors in the consortium, the
Railway Development Corporation (RDC), had agreed verbally
to sell its shares to Couto. RDC wanted out, he said, now
that the consortium would not be bought out by the Brazilian
coal giant Companhia do Vale do Rio Doce (CVRD). With the
prospect of becoming even more invested in CDN, Couto said
he was in Nampula to prepare to take over managing the
railroad directly. One of his immediate goals, he added,
was to improve service on the Lichinga spur, and he told
emboff that he hoped to have a train running up to Lichinga
in several weeks time. (Note - He succeeded. According to
press reports, a CDN locomotive arrived in Lichinga on
September 16, needing only 27 hours to climb the 200 km
route up from Cuamba to Lichinga. Previous trips had taken
as long as several weeks due to the need to repair the track
as the train moved up the line. End Note.)

-------
Cashews
-------

11. Emboff called on Antonio Miranda, who manages a large
cashew processing plant in Nampula environs, for a report on
efforts to revive Mozambique's cashew processing industry.
Miranda was very upbeat about recent developments, saying
that his and a half dozen other plants were processing
increasing volumes, well on their way to approaching levels
last seen in the mid-1990's. He said that in 2005
Mozambique processed 50,000 tons. In several years time the
figure would be 100,000 tons. Miranda reported that he also
was trying to tap the macadamia market, and had planted
several thousand hectares in macadamias in the Gurue area of
neighboring Zambezia province. Asked what he thought of the
prospects for jatropha as a source of bio-diesel, Miranda
was not very positive. He pointed out that promoting bio-

MAPUTO 00001260 004.2 OF 004


diesel involved much more than just growing jatropha: diesel
processing plants would be necessary, ethanol would have to
be imported, and arrangements would be required with fuel
companies now serving the diesel market. He said he had
opted not to get on the jatropha bandwagon for these
reasons.

--------
Chickens
--------

12. Emboff's last stop in Nampula was at a chicken hatchery
outside of the city run by an ex-Zimbabwean white farmer
named Cunningham. Cunningham was very enthusiastic about
the prospects for raising chickens in Mozambique, which he
believed offered better agricultural conditions for chicken
rearing than his native Zimbabwe. While giving a tour of
his new facility, a large warehouse with several incubator
machines imported from the United States, he said he would
soon be building a slaughterhouse where chickens would be
killed and plucked and the meat packaged for sale locally
and export. In the interim, he planned to distribute chicks
to farmers in the community, with the promise to buy them
back once fully grown. Through this "out grower" scheme,
his chicken farm would provide an income to hundreds of
local Mozambicans.

-------
Comment
-------

13. The economic development of Lichinga, and indeed all of
Niassa province, is constrained by its poor transport links.
The Swedes have funded the paving of roughly half the
distance along the road from Lichinga to Pemba, but the
vital road and rail connection to Cuamba still awaits
assistance. CDN's recent success in running a train to
Lichinga is an encouraging step, but improving the road is
probably much more important than rehabilitating the
railroad. Nampula's immediate economic prospects are much
brighter, and could offer investment and trade opportunities
for American business.

Raspolic

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