When greed kills a nation

2016-11-06 06:18

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It was not that long ago that Mozambique was the darling of global financial institutions and international investors.

Boasting average growth of just 6.3% in the past 15 years – which peaked at over 13% in 2004 – the country was the poster child of the correct application of prudent economics.

Factors driving the growth were political stability, investment in infrastructure, and the discovery of gas reserves and other minerals.

What was also a crucial ingredient during this time was policy predictability during the tenure of former President Joaquim Chissano.

Those were happy, optimistic times in the land of Eduardo Mondlane and Samora Machel.

Mozambicans walked with confidence, knowing that even as they were still ranked among the poorest nations in the world, their country was slowly climbing out of misery.

That mood has changed significantly in recent years and very dramatically in recent months.

Today Mozambicans are decidedly depressed.

The tenure of Armando Guebuza, Chissano’s successor, was characterised by rampant corruption among the governing elites.

Although no direct corruption could be attributed to him while he was in office, his family’s fingerprints were all over infrastructure developments and mega projects.

Guebuza also oversaw the descent of Frelimo from a proud liberation movement into a cesspool of greed and self-aggrandisement.

By the time Guebuza left last year and gave way to Felipe Nyusi, Mozambicans had come to accept that he had been God’s way of punishing them for a sin they could not quite put their fingers on.

They were glad to see the back of him and happy that he could do no more harm.

They did not bargain for the bullet that would strike the nation in April this year.

That is when it was revealed that Guebuza, his finance minister and others had gone behind Mozambicans’ backs and secretly borrowed nearly $2 billion (R27 billion – 10% of the fiscus) from overseas institutions.

The amounts included an $850 million loan for shipping company Ematum, $622 million for maritime security company Proindicus and $525 million for MAM Asset Management.

Guebuza and his mates hid the loans so well that until April, neither Parliament nor the government nor partners such as the International Monetary Fund (IMF) had any idea they existed.

How they planned to hide the debt forever is a great mystery.

What is an even greater mystery is how they spent the money, because the ships they supposedly bought were not up to standard and are in disuse.

The money seems to have been channelled around in strange, convoluted ways.

The IMF and other developmental partners have withdrawn assistance to Mozambique pending a forensic audit into the whole affair.

The impact on the Mozambican economy has been immense.

The global economic slowdown and mismanagement under Guebuza have slowed growth to about 3.6% and the World Bank is warning of “significant downward risks”.

The bank says even though the coming on stream of new gas discoveries will push growth to 6.9% by the end of 2018, this will have little impact on the economy.

The strain of Guebeza’s unauthorised debt is just too burdensome on the fiscus.

The April revelations, the reaction of international partners and the likelihood of Mozambique defaulting or having to restructure debt repayments have seen the value of the metical plunging rapidly against the US dollar, the euro and the rand.

Since Mozambique imports heavily from these three markets, the pain is being acutely felt by the people.

The inflation rate has gone from 4.74% in October last year to 24.9% this past September.

Severe austerity measures now being introduced by the government include a complete freeze on all nonessential spending.

The only items that are completely safe from the freeze are public service salaries and social grant payments.

In case you are by now yawning, there is a point.

This week this lowly newspaperman arrived back from a 24-hour sojourn to Maputo (during which he mercifully missed a nonevent at Mbombela Stadium) and found a nation in the grips of state capture frenzy.

The details of how a motley clique had attempted to mount a silent coup were all over the news, prompting a wave of anger and indignation among citizens.

South Africans already had extensive knowledge about the spiderweb of corruption centred on President Jacob Zuma and the Saxonwold shebeen owners, but this was concrete confirmation of the extent of the rot.

The stories of the capture of the Mozambican state by Guebuza and his pals and the impact thereof were still vivid in my mind as the Public Protector’s report played out through the night and the following days.

What the Mozambique experience teaches us is what can happen to a nation if greedy crews are allowed to seize the state for their own purposes.

These crews become brazen and arrogant, and bring untold harm upon the citizenry.

It may have taken a while for us all to wake up to the Gupta disease, but we did.

Read more on:    imf  |  joaquim chissano  |  samora machel  |  mozambique

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