Corruption costs Mozambique big time

Mozambique’s ranking at

112 out of 168 countries

in the latest Corruption

Perceptions Index is

just a number until one sees what

impact corruption has on business

and the related flow of goods.

Corruption – or the perception of

it – is having an impact on imports

as the country has run out of foreign

currency.

Recognising the dangers

Mozambican president Filipe Nyusi,

has been on an anti-corruption drive

since he took power in 2014 – but it

has proven to be too little too late for

the international community.

In April this year the International

Monetary Fund suspended funding

to Mozambique after the discovery

of more than $1bn in previously

undisclosed government debt.

The World Bank followed by

stating that it would withhold

funding on a number of projects,

and then the G14 – a group of

14 countries which together

contributed 12% to the annual

government budget of the world’s

seventh poorest country,

according to the World Bank.

One of the

results of the

scandal has

been an almost

70% depreciation of

the metical against

the US dollar and

a roughly 40%

depreciation against the

rand.

This has had a direct effect on

the buying power of Mozambican

businesses and consumers.

The problem with corruption

is that it is contagious and it fuels

rumours and uncertainty.

Take the current spate of attacks

on vehicles and trains in the northern

Tete and Sofala districts.

Depending on who you talk to, the

perpetrators could be a resurgent

Renamo, government Frelimo troops

extorting money, bandits – or a

combination of all three.

Whoever is responsible, reported

attacks on trains resulted in

Brazilian mining company Vale

stopping shipments through Beira

and rerouting all its coal through

Nacala – along a rail line it owns

and controls and through its own

terminal.

There are reported to be significant

savings.

When FTW visited Zambia – a

prime market for Beira – forwarders

showed footage of trucks burning on

the Beira corridor.

In order to reduce risks they were

advising their clients to move their

cargo through Durban, Walvis Bay or

Dar es Salaam.

Mozambican hauliers, on the other

hand, continue running on the route

because they believe that the attacks

are isolated and the chances of a

truck with its cargo being lost is less

than that of having an accident.

But, they too are unsure just who is

responsible for the attacks.

A favourite – perhaps anecdotal -

quote from Renamo leader, Alfonso

Dhlakama, is that if he wanted to

stop a train he would destroy the

locomotive and not just have his

troops fire one or two shots through

the cab.

This was repeated a number of

times in conversations during a

recent visit by FTW to Mozambique.

What is not so anecdotal is the

return of road blocks in which

soldiers or police target cars with

foreign registrations in order to

extort money.

Having seen the reports on social

media or hearing about it firsthand

from friends, tourists are

now choosing other destinations

– perpetuating the cycle of poverty

and further reducing the demand for

goods.

Nyusi will have to do a lot more to

persuade donors and lenders that the

ruling Frelimo party is serious about

tackling corruption.