Cabo Delgado security concerns driving investment out

Cabo Delgado security concerns driving investment out

According to the independent news source “Carta de Mocambique,” the British business Plexus, which had agreed to buy cotton from 50,000 small-scale farmers in the province of Cabo Delgado in northern Mozambique, has abruptly stated that it is withdrawing, citing security concerns.

According to Nick Earlham, the chief executive officer of Plexus, “Our intelligence suggests that the problems in Cabo Delgado will continue to worsen” and “No bank will advance money to Plexus to buy cotton because of the security situation,” were statements he made on Tuesday during a speech in London.

He added that 50,000 farmers are expecting Plexus to buy their cotton and, if this does not happen “they will be furious”.

Earlham said that the energy sector in Cabo Delgado (that is, the natural gas projects) “should become a partner of agriculture to win the confidence of local farmers and bring peace”.

These statements are less than honest. First, most of the cotton in Cabo Delgado is in the province’s southern districts (Montepuez, Balama, Namuno and Chiure), which are those least affected by Islamist terrorism. And second, Plexus is in serious financial difficulties, which have nothing to do with security.

Plexus is the only company which has the concession to buy cotton from Cabo Delgado farmers. But in 2020, it proved unable to pay the farmers for the cotton it bought. It was 1.5 million dollars in debt. Even its own 100-strong workforce went on strike, protesting that they had not been paid for four months.

In February 2020, Agriculture Minister Celso Correia promised to find a solution. And he did. According to “Carta de Mocambique”, Correia found two million dollars, which the government gave to Plexus so that it could pay its debts to the peasant producers.

Now this government has turned its back on the government and on the Cabo Delgado peasants. It made the announcement that it intends to pull out in London – but, according to the paper, it has not yet informed the government.

In 2020, Plexus said it needed ten million dollars to overcome a financial crisis blamed on mismanagement. The two million dollars from the Mozambican government was clearly not enough to fill the gap.

The Plexus website says it buys from 165,000 farmers which would make it the largest cotton company in Mozambique.

It is not yet clear whether any other company can be persuaded to take over from Plexus and buy the Cabo Delgado cotton.

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