Out of Mozambique: A risky business for Lonrho

Click to follow
NHAMITANDA - When people call Tiny Rowland a buccaneer they are talking about the type of operation he runs in Mozambique. It isn't the sort of place where you or I would invest our nest egg. To travel unarmed in most of the country has been unwise for the past 10 years. And if, like Lonrho, you own huge plantations you are dependent on the weather which recently has been prone to drought. Mozambique is a risky place.

But Lonrho has tea, sugar and cotton estates in northern and central Mozambique. It grows and processes tomatoes, it is developing a game farm, runs hotels, imports vehicles, operates an airline and is developing a gold mine. It employs about 11,000 people. The managers are white South Africans or Portuguese former residents of Mozambique. The Mozambique government, lacking both capital and management capacity, conceded the estates to Lonrho but does not receive income from them for several years. In the meantime Lonrho operates them like a state within a state, with complete freedom to fly in and out of its airstrips, importing what it needs.

Some of these operations have been in the middle of war zones, where workers have been abducted or ambushed. Roads are mined. During the war the company ran its own private army headed by former British army Gurkha officers. After the peace agreement last October Lonrho not only benefited from the end of the fighting but has found new business, winning a European Community-funded contract to clear mines from thousands of miles of road and track.

I first visited the estate at Nhamitanda six years ago. By land it was only reachable along the Beira corridor, the ribbon from Zimbabwe to the coast consisting of a road, railway line and oil pipeline. The corridor was a prime target for anti-government guerrillas. During the war people fled their homes and gathered in and around the estate. Whole villages of small grass huts have sprung up. The size of the Isle of Wight, the estate looked like a plantation run by a classic charter company. It used to pay its workers in plastic tokens, exchangeable at the company store.

But for the local people it was, and is, better than the Iron Age, which is where they would be living if there was no Lonrho. They are pathetically grateful for the protection the Lonrho army has offered and for the investment and expertise the company offers. There is no other employer for hundreds of miles. It is better to be exploited than ignored.

Even Lonrho shows some sensitivity to suggestions that it's an old-style colonial company. On this estate it is departing from the traditional wage labour system. It is breaking up the huge open fields into strips which are parcelled out to local people. Lonrho ploughs, plants and sprays and individuals weed and harvest. They sell the cotton back to Lonrho and, according to the manager, they are making three or four times what they would as wage labourers.

Arminda Francisco has the largest strip and employs several people at harvest time. She inherited her original capital from her father, who was peculiar in believing that women should have property and education. And she is peculiar in wanting a rural life for her children. She points out that local people do not have the expertise, the capital or the market for selling cotton, and Lonrho has provided all three.

In a bad year Mozambique can cost Lonrho a lot of money. Last year was disastrous and the operation made a huge loss, but this year Mozambique will make Lonrho lots of money. The rains in the north have been good and came at the right time and, with the war over, the sugar and tea estates are at full production.

But will the company which sustained huge losses last year live to enjoy the fruits of the Mozambique bonanza? Its reliance on one man, once its greatest strength, may prove its greatest weakness. In the old days, local managers lived in fear of the sudden visits from Mr Rowland and his direct and alarming interventions. Now Mr Rowland is 75 and that edge is blunted. Local managers are more open and adventurous: they are even willing to talk to the press and, in private, express growing dissatisfaction with the London headquarters. Only there, in Cheapside, does it seem that the fear and secrecy remain.