When Islamist insurgents swept deep into Mozambique’s gas-rich north last year, helicopters flown by South African private military contractors bailed government forces out of what could have been a military disaster threatening multibillion-dollar liquefied natural gas investments.

But Dyck Advisory Group is also accused of committing war crimes — indiscriminately shooting into crowds of civilians and attacking a hospital in “a pattern of repeated, reckless targeting”, according to an Amnesty International report this month that has put a spotlight on the role of private security in the war for the resource-rich province of Cabo Delgado.

DAG, which flew air support for security forces after being hired by the Mozambican national police last year, said it had commissioned an investigation. The allegations were “of great concern to the company, as we have detailed human rights policies and standard operating procedures in place to govern all our operations and take our responsibilities and obligations seriously”, it said.

In recent months, the long-festering conflict between insurgents — linked to Isis but fuelled by local grievances — and the government has intensified, rendering hundreds of thousands of people homeless and many more living under the threat of famine. Last week the US government officially designated the insurgents as a foreign terrorist group and emphasised their links to Isis.

President Filipe Nyusi has turned to private contractors to help bolster a demoralised army and tighten security around gas-related projects that could transform the economy of one of the world’s poorest countries.

Mercenaries, in particular former soldiers from apartheid South Africa and the former Rhodesia, have a long history in the region.

The privatisation of the conflict “is a major problem”, said Adriano Nuvunga, director of Mozambique’s Centre for Democracy and Development, a nongovernment organisation, in the wake of the latest allegations.

But Nyusi needed the private sector to overhaul government forces that were “in complete chaos and really demoralised” a year ago but were now showing better co-ordination, said Alex Vines, Africa programmes director at Chatham House.

The president also did not want to depend on support from regional and western governments to fight insurgents, he said. Nyusi’s ruling Frelimo party “doesn’t want to admit that it is a weakened state that needs international armies”, Vines said. “Hence we remain on this trajectory of how do you use private security.”

While Mozambique first reportedly turned to Russia’s Wagner Group, whose approximately 100 soldiers were quickly defeated by insurgents, it has now looked not just to DAG but to other companies for equipment and training.

Paramount Group, the South African defence and aerospace group, reportedly has a contract to provide vehicles and training to the army. The group said it was “restricted from commenting on the nature and scope of its customer contracts”. All of its exports received the required approval of the South African government, it said.

Burnham Global, a Dubai-based contractor staffed by British military veterans, announced last month that Paramount had acquired a stake in the company and that together they had “a multimillion-dollar contract with an African government to provide a range of military training and advisory services . . . to effectively counter an ongoing insurgency within its borders”.

Burnham Global declined to comment on whether the client was Mozambique. Other African countries from Nigeria to Mali are also fighting internal insurgencies.

The company’s training work “is guided by a strict ethical code and adheres to the highest international standards”, it said. Mozambique’s defence ministry did not immediately respond to a request for comment on Paramount and Burnham Global.

Neither Paramount nor Burnham Global employ soldiers. “We employ engineers, technicians, naval architects, designers, mathematicians, lawyers, accountants, managers etc but no military personnel or mercenaries,” Paramount said.

The presence of private companies has attracted criticism. DAG helicopters helped stop an insurgent advance last year that could have threatened the provincial capital of Pemba. But “by firing indiscriminately into crowds, attacking civilian infrastructure and failing to distinguish between military and civilian targets, [DAG] have clearly violated international humanitarian law”, said Deprose Muchena, Amnesty’s regional director for east and southern Africa.

Amnesty has also accused the insurgents and government security forces of war crimes. The government has always denied that security forces have abused civilians and insurgent prisoners.

Amnesty’s findings “reinforce the horrific nature of the insurgency”, said Jasmine Opperman, an Africa analyst at Acled. There is an urgent need for military training, said Opperman.

“You can get the best weapons and equipment . . . [but] if it ends up in government forces not being able to use them effectively, it is going to be a matter of time before they end up in the hands of the insurgency,” she said.

The proliferation of private security arrangements “makes governance more difficult” in a war that has more to do with local grievances than foreign terrorists, said Nuvunga. Civil society groups had struggled to access the terms of government dealings with private contractors, he said.

Even before any LNG production had begun, Mozambique was already the victim of a “presource curse” or corrosion of state institutions, Nuvunga said. It is vital that the Mozambican state retains the responsibility for security, not private companies, he added.

The insurgency presents a clear risk to investors. In recent months, Total has limited work on Africa’s biggest private investment as a result of the nearby attacks. Patrick Pouyanné, Total’s chief executive, said it wanted security forces to provide a stronger 25km cordon around its operation. Further delays could imperil plans to start LNG production by the middle of the decade.

“We don’t want Total to become a military entity or militarised company,” Nuvunga said. “We don’t want Iraq to repeat itself in Cabo Delgado.”