Mozambique’s complicated international financing is coming under increasing pressure, although the East African government continues to receive support from China. Mozambique has struggled in recent times to make payments on its various debts and its rating has been downgraded by a number of agencies.
Furthermore, the country has shown some signs of sliding back into violence, with a number of worrying reports on tension between the ruling party, Frelimo, and its historic opponent, Renamo.
A mass grave was said to have been found in the province of Sofala in April, near Gorongosa, although the government has denied these reports. The leader of Renamo, Afonso Dhlakama, is believed to be hiding in the Gorongosa region.
There have been a number of alleged assassination attempts against Dhlakama in the last 12 months, including an attack on his motorcade in September 2015.
Transparency International issued a statement on May 25 condemning the abduction and shooting of Jose Macuane, in Maputo. He was in a serious condition and has been hospitalised, the NGO said.
Macuane is an activist who has been critical of corruption in Mozambique’s government. The attack has been read as a warning against those seeking to scrutinise the government’s actions.
“Corruption fighters speak for the people, they hold governments to account and they must have the freedom to speak openly about government problems and how to fix them,” said the vice chair of Transparency International, Elena Panfilova.
The statement went on to note the call for a forensic audit of government accounts on the question of US$2 billion of debt, “amid allegations of corruption and kickbacks that [have] ultimately lined the pockets of government officials while leaving the people of Mozambique to pay the bill”.
Mozambique’s GDP growth slowed in 2015 to 6.3%, in the face of economic and political challenges, according to the African Development Bank’s (AfDB) recent report. The country’s faltering economy has put pressure on its ability to make payments, including on bonds such as that issued by Empresa Mocambicana de Atum (EMATUM), the so-called “tuna bond”. This had been sold on the basis that funds would go into improving the country’s fishing prospects but cash was sidetracked into providing new security vessels.
Reports last week suggested a payment of US$178 million, owed to Russia’s VTB Bank, had not been paid, although no notice of default was given on the loan, which had been provided to Mozambique Asset Management (MAM). A finance ministry spokesman told Bloomberg that talks were under way on the payment with a view to restructuring the debt.
The lack of clarity on Mozambique’s debts has caused some consternation from international lenders, such as the International Monetary Fund (IMF). A letter from the Group of 14 donors said there had been a “serious breach of trust, poor governance and lack of fiscal transparency”.
Demands are growing on Maputo to come clean on the true state of its debts and obligations, while donors have asked for Mozambique to provide insights into the shareholdings of MAM and a second government-backed company, Proindicus.
Fitch Ratings downgraded Mozambique to CC, from CCC, on May 23. The agency noted the existence of US$1.4 billion in previously undisclosed loans, including those to MAM and Proindicus, which are guaranteed by the sovereign. “Fitch now estimates annual public debt service costs to have almost doubled due to the hidden loans, to around 4.5% of GDP,” it said.
Meanwhile, China National Petroleum Corp. (CNPC) announced on May 24 that it had signed a co-operation agreement with Empresa Nacional de Hidrocarbonetos (ENH). Mozambique President Filipe Nyusi visited Beijing on May 18 and oversaw the CNPC deal with ENH, alongside Chinese President Xi Jinping.
Under the deal, the two companies have agreed to work together in the oil and gas arena, including on exploration, production, processing and marketing. Specifically, it said, CNPC will participate in exploration and production in Mozambique, promoting gas field services and also cultivating “technicians and managerial talents for Mozambique's oil industry”.
CNPC entered Mozambique in a deal, signed in 2013, with Italy’s Eni. Under this agreement the state-backed Chinese company acquired an indirectly held stake of 20% in the block. Eni is working on a plan for onshore liquefaction, alongside Anadarko Petroleum, while also developing a floating LNG (FLNG) plant on the Coral field.