Bernardo APARÍCIO
Chief Executive
STANDARD BANK MOZAMBIQUE

Banking on Mozambique’s potential

Mozambique

Bernardo Aparício, chief executive of Standard Bank Mozambique, talks to The Energy Year about stimulating energy demand through targeted project financing and the key role to be played by natural gas in Mozambique’s energy transition. Standard Bank Mozambique provides financial products and services to retail and corporate clients, including project financing, treasury services and international banking.

What is Standard Bank’s assessment of the Mozambican economy?
Mozambique’s economy has evolved in two distinct phases. The early 2010s were a boom period, with GDP growth soaring to around 8% and Mozambique rising to the forefront of African economies. However, this progress was disrupted from 2016 onwards by debt and rising inflation. Growth was further hindered by Covid-19.
Thankfully, the tide is turning again. Since 2017, the country’s policy makers have been focused on building macroeconomic resilience, a quality that’s highly attractive to investors. The central bank’s monetary policy has stabilised the metical and kept inflation under control. Mozambique was one of the first African nations to regain control of inflation after the pandemic, which currently sits comfortably below 4%.
Looking ahead, renewed investor confidence and solidifying economic fundamentals give us reason to be optimistic. We expect to see a return to the high-growth environment of the past. In 2023, the economy grew by 5.5% and this year we anticipate a similar result. As projects reach FIDs and gas production kicks in, Mozambique could see years of double-digit growth.

How attractive is the Mozambican energy sector from an investment perspective?
Mozambique’s wealth of resources makes it an attractive investment destination. Vast gas reserves have been discovered and more are expected to emerge with further exploration. Beyond gas, there’s excitement about mining, from coal to gems, heavy sands and rare earth minerals crucial for the tech industry. Mozambique has the resources to play a strong role as a supplier to emerging chip and computer-driven sectors.
Mozambique’s abundant sunshine, wind and water resources are a perfect combination for power generation. Standard Bank believes the country has the potential to be a major energy supplier in the region, rivalling even South Africa, although this will hinge on how the Southern African Power Pool and regional demand for power will evolve. If regional demand continues to grow, Mozambique is well-positioned to expand its role and become a key contributor.
Standard Bank has a long history of supporting foreign investors in Mozambique. We have financed major projects across numerous sectors, from Vale’s initial investment to gas-to-power projects and large infrastructure developments such as the port of Maputo. Our expertise in facilitating foreign investment makes us a trusted partner for businesses entering the Mozambican market.
We have dedicated teams, knowledgeable economists and an investment banking team that has structured some of the largest deals in the country. Our operations teams have extensive experience helping investors navigate exchange controls, and we’re the largest bank facilitating foreign payments. These are just some of the things that make Standard Bank a comfortable choice for investors coming to Mozambique.

What role is Standard Bank seeking to play in Mozambique’s LNG mega-projects?
We are committed to supporting large-scale projects that drive Mozambique’s development. We recognised the TotalEnergies-operated Mozambique LNG project as a driver of social and economic progress, and we were eager to participate with our capital.
Given our strong relationship with TotalEnergies and the project partners, and our extensive expertise in the energy sector, we were comfortable taking a prominent role, even in thought leadership. We also conducted the macroeconomic studies for Rovuma LNG that supported some of the key project decisions. In 2017, Standard Bank together with the Commercial Bank of China, a 20% shareholder of Standard Bank Group, were one of the lenders to the Coral Sul FLNG Project.
We believe gas can play a crucial role in Africa’s energy transition and we believe we can support the country’s development and the world’s transition to green energy sources simultaneously.

What other Mozambican energy projects is Standard Bank involved in?
We’re a key player in Area 1, on Area 4’s onshore and offshore developments and in the Temane ecosystem. We hope to play a leading role in the Mphanda Nkuwa hydropower project, where we anticipate local banks will be involved as well. In essence, whenever transformational projects emerge, Standard Bank is interested in providing support. It’s a fundamental part of our business model.

Standard Bank has committed USD 13.3 billion to sustainable projects across Africa. What specific challenges are you targeting to address in Mozambique?
Mozambique is blessed with a diverse mix of energy sources that can be developed for a variety of purposes. The biggest barrier to their development is often demand. Who will buy the energy? Demand is closely linked to economic development, which in turn relies on GDP growth.
We believe the first step is to develop available resources sustainably. Doing so stimulates economic growth, which brings increases in energy demand as new industries emerge or become reinforced and household consumption rises. This, in turn, drives the need for more energy production. We are confident that the initial focus needs to be on developing wealth, through resources, to create energy demand.
Standard Bank can support this productive cycle. We have broad expertise within our group, including project finance and general energy knowledge. We’re one of the few banks with a fully-fledged investment banking team in Mozambique, so we can advise clients locally. Additionally, we have a local team dedicated to the energy sector that is staffed by Mozambicans with a deep understanding of the market. Our skilled human resources set us apart in this market.

What role do you see PPPs playing in Mozambique’s energy sector?
To be successful, PPPs require balance and trust. Thankfully, Mozambique has a track record of respecting the interests of the private sector and honouring the existing rights of projects, even following regulatory changes. Such legal stability is a key factor for investors. Negotiations may take time, but the focus is on achieving fair deals for all parties involved.
Apart from gas, we have seen successful PPPs in gas-to-power projects, as well as in a growing number of solar projects. Some of these projects have been operating for a decade, which demonstrates the strength of Mozambique’s PPP framework. 10 years of successful operation requires that both sides be willing to prioritise the project’s needs and work towards achieving balance. When investors ask about Mozambique’s PPP environment, we confidently describe it as stable and fair.

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