Business
Mozambique Political & Economic Update
Mozambique Political & Economic Update.
About this update from Pacsco Limited
[{"type":"text","content":"\n \nRNS Number : 9436V Agriterra Ltd 21 April 2016 \n\nAgriterra Ltd ('Agriterra' or 'the Group')\n \nUpdate on the political and economic situation in Mozambique\nand\nAgreement of terms for new lending facilities\n \nAgriterra, the AIM listed Africa focussed agricultural company, with maize and beef operations in Mozambique and cocoa operations in Sierra Leone provides an update on the political and economic situation in Mozambique and its current operations.\n \nAs shareholders may be aware, the political situation in Mozambique is currently under considerable strain. A recent IMF report on Mozambique published in January 2016 identified \"political tension\" and the \"failure to find a permanent solution to the growing tension\" between Frelimo and Renamo as the most significant risks in Mozambique. At that stage there was limited impact of these risks on our operations.\n \nSince January 2016 the situation has deteriorated. Local Renamo militias are now entrenched in some rural areas in the Tete and Manica provinces, where the Group has a number of its operations; ongoing attacks on vehicles on the main trunk roads also present a real risk for the movement of people and goods in the country.\n \nDespite efforts by the authorities to broker a diplomatic solution, it now seems possible that further conflict will follow, in particular in the rural areas of the traditional Renamo strongholds such as Zambezia, Manica and Tete. \n \nTo date, the Group has not suffered any economic loss but it is possible that the Group's operations may be disrupted in the future. Of particular note is the potential restriction on its maize purchasing operations which reach deep into the rural areas of the Manica, Sofala and Tete provinces; movements of the Group's beef products may also be affected.\n \nIn addition to the political tensions in Mozambique, the economy is suffering from a weakening in the local currency, the Metical; since May 2015, the Metical has depreciated by around 50% against the US$, and by 20% against the South African Rand. The resulting increase in the cost of imported goods is having a real effect on the purchasing power of the local population. To date this has benefited our grain operations, where we have continued to produce our staple food ...