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April 25, 2016

Mozambique’s fishy tale does not augur well for the future



THE recent "tuna fleet" scandal in Mozambique raises questions about whether another African success story might be heading for choppy waters, WRITES DIANNA GAMES. 

The country is facing censure over evidence that the government may be using a big chunk of $850m raised on international capital markets three years ago to buy arms and not the large fleet of fishing boats the money was earmarked for.

Earlier this month, the International Monetary Fund (IMF) cancelled the second tranche of a $285m emergency loan it had granted at the end of last year and cancelled an IMF mission to the country scheduled for later this year.

Mozambique’s credit rating has also been cut in the wake of the evidence of misuse of the money.

The capital-raising exercise was initiated by the government, which said in its investment prospectus it wanted to raise money for the expansion of the country’s newly launched and totally unknown tuna fishing company, Ematum.

The deal immediately raised eyebrows, with donors asking questions about why a country with significant development challenges would raise its debt profile to this extent just for fishing boats.

The critics of the deal were proved right when it later emerged that most of the money was, in fact, spent on security.

Africa Confidential reported subsequently that the Mozambican government raised debt to the tune of closer to $1.5bn in a series of undisclosed deals — information that has apparently shocked the IMF, which has just lent Mozambique funds to help it with its current economic woes.

The evidence has come to light in the wake of Mozambique’s attempt to restructure the bond, which it is battling to repay.

This has raised fears of a default ahead of the seven-year payment term. Read more ... 

Published in Business Day SA, 25 April 2016. Picture: Jeremy Glynn.