Mozambique Agrees to Pay Corrupt Brazil Debt - in Exchange for Support for Security Council Seat


Mozambique has agreed to repay $224 mn in corrupt loans from Brazil, apparently in exchange for Brazilian support for Mozambique to be elected in 2022 to one of the non-permanent seats on the UN Security Council. The deal was made in a internet meeting on 11 February between the Mozambican foreign minister, Verónica Macamo, and her Brazilian counterpart Ernesto Araújo. Interestingly, it appears that Finance and Justice ministry people were not present. The meeting concluded with statements that Brazil would support Mozambique for the Security Council seat, and Mozambique would repay if the debt was restructured to have a longer repayment time and no extra interest for defaulting.

Mozambique refused to repay loans to the Brazilian development bank BNDES for two major projects with contractors caught up in the lava jato (car wash) scandal - Odebrecht and Andrade Gutierrez. Both were considered in default, and Brazil's Export Guarantee Fund began paying BNDES in 2017.

One non-payment is for $177 mn for Nacala airport, now an unused white elephant. The project was promoted and constructed by the Brazilian company Odebrecht, which has admitted in a settlement with US authorities it paid a $900,000 bribe to Mozambicans to gain agreement and 0.1% of the value of the contract to an official of the Brazilian president's foreign trade office to gain approval of the BNDES loan. Details of the Odebrecht US settlement showed how cheap it is to bribe Mozambicans, who cost less than any other country Odebrecht was dealing with. The bribe was 0.5% of the airport's inflated costs. Former Transport Minister Paulo Zucula has been charged with accepting $315,000 in bribes. Former Finance Minister Manuel Chang, still in detention in South Africa as part of competing extradition requests, is charged with taking a bribe of $250,000.

The other non-payment is for the Moamba Major dam, now paralyzed because the Brazilians halted the work because of Andrade Gutierrez. Ironically the dam is urgently needed to provide water to Maputo, and there are no suggestions of corruption on the Mozambican side, but Gutierrez was heavily involved in corruption in Brazil. On 29 October 2020 President Filipe Nyusi said the government was still trying to find the funds to resume work on the dam. But it appears China has turned down requests for funding.

For more than a year, Mozambique has been quietly lobbying for one of the African seats on the Security Council, and now appears to have the backing of the African Union. President Nyusi told the African Union virtual summit on 6 February that Mozambique had applied for the place.

(Lusa 13 Feb; Noticias 8 Feb; MOPHRH 29 Oct 2020; this newsletter 393, 399, 461)

$8.5 million was siphoned off from military  and police supplies in 2018 and 2019, when soldiers in Cabo Delgado were complaining about shortages of supplies, reports Nelson Mucandze in the first issue of a new newspaper  Evidencias  (9 Feb). Mucandze says that 600 million meticais (then $8.5 mn) was paid from government funds to a small trader in Maputo, Armazens Anita. The huge order was for supplies for Cabo Delgado, which could have been purchased from larger suppliers in Pemba. But instead of sending supplies to Cabo Delgado, Armazens Anita transferred the money to personal bank accounts. Two Mozambicans banks noted the large transfers and reported them to banking authorities as suspect.

Tender for Inhambane Hotel School  illegally cancelled, according to CIP (11 Nov 2020, 14 Feb 2021). Donors rehabilitated four training schools. The city of Inhambane did a national tender in March 2020 to run the hotel and school there, which was won by a local hotel company Manguela Light. But the Ministry of Science, Technology and Higher Education on 20 March 2020 signed a contract with SMS Catering, without public tender, and apparently without telling the city authorities who announced the tender winner in April. President Filipe Nyusi got caught in the dispute, and in a bizarre visit to inaugurate the school on 24 July, refused to do so, on the grounds that the bathrooms had not been rehabilitated. CIP points out that SMS catering, owned by the airline LAM and the airports authority, had been involved in a major fraud and managers were convicted of stealing money from LAM. CIP argues that the contract with SMS is illegal because it was done without tender and is for 25 years, when the legal limit is 10. Furthermore SMS is paying only half the rent offered by Manguela in the local tender. CIP researcher Borges Nhamire argues that the intervention of the ministry was to prevent the decentralisation of the awarding of contacts, which it wants to keep within the Maputo clientelism network.

Food warehouse looted  in Inhassunge, Zambezia. Food had been pre-positioned before the rainy season and was not needed or victims of tropical storm Chalane in December, so was held in the reserve. When officials went to collect the rice, beans and cooking oil for victims of Cyclone Eloise, they found the warehouse empty. (DW 29 Jan)

Extractive industries

The impact of Vale on Moatize has been negative  rather than positive, says Camilo Nhancale, president of the civil society group Kuwuka. "Local communities do not feel any benefit from the presence of Vale. On the contrary, the affected communities are more rebellious than before", he said. Instead of helping development, foreign investments in Mozambique create conflicts and increase poverty. Brazilian coal-miner Vale never attempted to build local links or support local business, and Tete province's second city, Moatize, is a ghost town. Communities are economically and socially poorer than before the coal companies arrived. The impact of Vale on Moatize has been negative rather than positive, but now Vale is departing, leaving nothing behind in Moatize. ( Carta de Mocambique  9 Feb)

Court orders Vale to pay community $190,000  for building a fence that cut the path the villagers used to reach their fields, which forced them to abandon their farms and livelihoods. The Tete provincial court on 26 January awarded 48 famers 300,00 Meticais ($4000) each. (Lusa 28 Jan)

Community rights are being violated  with respect to resettlement and receiving the 2.75% of government income that is supposed to go to local communities, said the lawyer's association (Ordem dos Advogados de Moçambique, OAM). The report covers only 2018 and 2019, but points to resettlement issues with the Cabo Delgado gas, Tete coal companies Vale and Jindal, MRM rubies, and Kenmare heavy sands. And it fingers the government for failing to transfer money to local communities. ( Carta de Mocambique  28 Jan)

Mozambique could see a mining boom , according to conference promoters Africa Oil and Power (12 Feb). Mozambique has commercially significant deposits of coal, gold, graphite, ilmenite, iron ore, titanium, copper, tantalum and bauxite. Demand for precious minerals and metals is increasing, just when oil and gas demand is falling. As well as opportunities for international mining companies, there should be a big market for suppliers across the value chain, in providing mining and refinery equipment, maintenance services, machinery and automation equipment.

A gas fired power station just 40 km inside South Africa  will use gas from Mozambique, according to proposals from DNG energy. The company would build an above-ground branch pipeline from the existing pipeline that takes gas from Inhambane to South Arica. ( Lowvelder  15 Oct 2020 & 10 Feb 2021)

Comment: South Africa's refusal to cooperate is behind its electricity crisis.  For 15 years the South African electricity parastatal Eskom has not been able to generate enough electricity and has been forced into rolling blackouts, called "load shedding". And for more than two decades, Mozambique has been trying to develop new electricity generation, particularly the Mphanda Nkuwa dam in Tete. Nationalism is trumping both regional cooperation and the environment. South Africa refuses to sign the long term electricity supply contracts required for Mozambique to raise the investment funds. And at a time when the world is reducing coal burning, South Africa remains committed to expanding domestic coal-fired power stations for its base electricity supply.  jh

Other news

Along the Limpopo, lessons of the disastrous 2000 flood have learned

Heavy rain has caused some flooding in the south of Mozambique, with more rain predicted for tomorrow (Tuesday). This has combined with rain in South Africa, Botswana and Zimbabwe to fill reservoirs and flood rivers. The Limpopo River valley is very flat and the best land is near the river. "Since the floods of 2000, we have been working to raise families’ awareness so that they have two houses, one in the risk zone where they practice agriculture and breed livestock and the other in the safe zone, where they keep their valuable assets. Because families have followed the advice, we have no need to create accommodation centres," said Manuel Machaieie, Gaza delegate of the Disaster Risk Management Institute (INGD).

Flooding along the Limpopo has affected 43,000 families and 32,000 hectares of crops, according to INGD. Low lying areas of Chokwé, Chibuto and Guijá are affected, with 5000 people evacuated from Chokwe. Two roads in Guija have been cut.

In Manhica and Magude districts of Maputo province some villages are isolated because roads are flooded. There was flooding in the cities of Maputo and Matola, generally in poorly drained areas that often flood. ( O Pais  15 Feb, DW &  Noticias  12 Feb)

Further north, a bridge over the Natete River between Ribaue and Malema in Nampula province is closed because a bridge pillar has been washed out.

We post the government's  Daily flood reports -

Covid-19 increase has stopped . Infections and deaths have been at a constant level for the past four weeks, but remain high, at ten times the December level. Last week there were 5339 new cases and 76 deaths. Covid-19 remains a disease primarily of the capital metropolitan area, with 78% of deaths in Maputo city and 6% in Maputo province (which includes Matola). South Africa opened its borders today, which means more cases will be brought from South Africa.

The graphs below are for new cases per week and deaths per week, from Miguel de Brito.  The most recent week on the right is 7-13 February; the three bars on the left are the last three weeks of December.

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