29 May 2019

Southern Africa: Mozambicans Don't Want to Pay Back the Money

Photo: Ryan Rayburn/IMF, Flickr
Manuel Chang, Minister of Finance of Mozambique, gives a statement to the media during the African Financial Ministers Press Briefing at IMF Headquarters during the 2014 IMF Spring Meetings in Washington, D.C.
analysis

Mozambicans are seemingly again getting the short end of the stick. With enough problems on their hands, including the aftermath of devastating cyclones and terror attacks in the country's north, it now emerges that high-ranking politicians responsible for practically bankrupting the country a few years ago could get off lightly.

Last week South Africa's Justice Minister Michael Masutha ordered that former Mozambican finance minister Manuel Chang, a key player in the US$2.2 billion debt scandal, be extradited to his home country to stand trial. Chang was arrested at OR Tambo airport in December on fraud and corruption charges. A South African magistrate ruled that he could be extradited to either Mozambique or the United States (US), where he is wanted on charges relating to the same scandal.

It involves loans from corrupt bankers in the United Kingdom (UK) and Russia to state-owned corporations linked to a few individuals in government, including Chang. The officials are alleged to have pocketed up to US$200 million in the three separate deals to buy tuna fishing trawlers and military patrol vessels.

It shouldn't come as a surprise that regional solidarity within Southern Africa has triumphed

The US, where several bankers and middlemen have been charged and one is now standing trial, is not happy with the decision. In a statement released by the US embassy in Pretoria, it says the country 'notes with great disappointment' that Chang won't be extradited to the US.

This is not the first decision by South Africa to irk the US in the past few months, yet it probably shouldn't come as a surprise that regional solidarity within Southern Africa has triumphed. Whatever South Africa's motives, some believe Chang will get off lightly, and the facts won't be revealed as they would had the case been heard in a US court.

Uncertainty also remains over whether Chang has immunity from prosecution because he is a parliamentarian. Civil society campaigner Jorge Matine, who heads the Budget Monitoring Forum, told ISS Today in Maputo recently that Chang might get a short sentence or not go to jail at all. 'We think this is just window dressing before elections. It's not as if there is a new narrative around combating corruption.'

Matine questions the government's commitment to getting to the bottom of the loan scandal. A special investigation unit has not been set up, and insufficient resources have been channelled to the probe. Matine alleges that not only were bankers and middlemen from Europe, Dubai and Russia involved in the scandal, but also secret service agents from Angola and Namibia, and a former South African army commander.

Civil society campaigns aim to force Mozambique's government to not pay back the loans

Twenty people have so far been arrested, but over 100 are said to have been involved. Those arrested include the son of former president Armando Guebuza, on whose watch it happened in 2013 and 2014.

Following the decision on Chang's extradition, former Mozambican Bar Association head Gilberto Correia also accused the government of using the arrest of Chang 'for propaganda purposes'. 'The fact that Mozambican justice is discredited and tries to gain credibility in electoral years is worrying,' he wrote. Presidential and parliamentary elections take place on 15 October.

Correia was 'perplexed by the South African decision' which was taken by a minister 'on his way out' following South Africa's elections. He believed the outgoing government should have stuck to routine tasks and not taken highly political decisions such as this.

Who takes the blame for the debt scandal has been top of mind for many people ever since it was revealed in 2016. Following the discovery of the hidden debt, Mozambique's currency plunged and subsidies on basic goods were lifted. International donors suspended all further aid to the country.

That is why civil society organisations are now stepping up a campaign to force the government to not start paying back the loans. The Centre for Public Integrity has launched the Eu Não Pago Dividas Ocultas! (I will not pay the hidden debt!) campaign. The centre says the country has suffered enough following the discovery of the debt and that those responsible should bear the cost.

Ahead of elections, government doesn't want voters to know that it's planning to restructure the debt

The government has indicated that it is planning to restructure the debt on two loans from Credit Suisse and VTB Bank of Russia. Those in power clearly don't want this message to get out. Earlier this year, campaigners wearing Não Pago T-shirts at a demonstration in Maputo were surrounded by police and told to remove the garments. Civil society activists told ISS Today that they were under pressure to drop the campaign, especially in the run-up to elections.

Several civil society groups have joined the campaign, including the UK-based Jubilee Debt Campaign that helped get debt relief for poor countries in the 1990s. It believes that apart from the crooked bankers who were part of the hidden debt swindle, international financial institutions are unjustly punishing the country.

Following Cyclone Idai in March that left thousands of people without homes and livelihoods, the International Monetary Fund accorded an emergency loan of US$118.2m to Mozambique. Jubilee believes this should rather have been a grant - instead of another loan - for the country that has been hit by another catastrophe. It called it a 'shocking indictment of the international community'.

The expectation is nevertheless that Mozambicans will be paying off the debt for years to come. As a consequence, the discovery of huge liquid natural gas and oil finds in the Cabo Delgado province - the same province experiencing attacks by extremist groups - could turn out to mean very little for ordinary Mozambicans. Already there is speculation that some of the expected proceeds of the gas have been put up as surety for the restructured loan repayments.

Liesl Louw-Vaudran, ISS Consultant

In South Africa, Daily Maverick has exclusive rights to re-publish ISS Today articles. For media based outside South Africa and queries about our re-publishing policy, email us.

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