Mozambique 30 June 2017: After Kroll, where next?
Good afternoon. The news this week was dominated by the Kroll Report, published last Saturday after months of waiting. We have covered it in depth this week, and have put all our articles on it in once place:
Also this week, Zitamar began trialling a new product for paying subscribers: a daily round-up of the best-of-the-rest of news on Mozambique. Non-subscribers can see what they’re missing with today’s edition, which we’ve made free to read.
FREE TO READ: In the News in Mozambique – 30 June 2017
We ended this week with an in-depth analysis of what will happen next in Mozambique, now that the Kroll audit has been published (in summary form at least). The dominant theme is, as we reported last weekend, that the Mozambicans involved did not collaborate with the auditors - meaning IMF and donors have a dilemma on their hands.
SEE: Analysis: More questions than answers after Kroll audit disappoints
SEE: Lack of Mozambique cooperation hampers Kroll report
The Mozambique government is itself still facing the question of what to do with the $1.7bn debts that they still have. The holders of the sovereign bond are arguing to disown the ‘dodgy guarantees’, so that Mozambique can concentrate on repaying the bonds.
SEE: Bondholders say Mozambique should refuse to pay ProIndicus and MAM debts
What seems certain is that none of the three companies will be able to contribute in any meaningful way to paying off the debts they incurred.
SEE: Kroll: company management ‘unqualified, inexperienced and ineffectual’
Mozambican civil society agrees with the bondholders - up to a point - that the dodgy debts should not be honoured, and are keeping up the pressure for prosecutions of those involved.
SEE: Mozambique civil society calls for criminal investigations on ‘hidden debts’
After the lenders’ protestations at the start of the week that their fees were being misrepresented, Zitamar took a closer look and found they’d charged a total of $126m on the original loans and the repeat business they got from their ultimately futile attempts to help Mozambique avoid defaulting on them.
SEE: Mozambique paid $126m in fees to arrange and restructure ‘hidden debts’
The ‘contractor fees’, Credit Suisse pointed out, did not pay for the loans to be arranged. Rather, as we explain, they kept the interest rates cosmetically low - disguising the true cost of the financings.
SEE: Mozambique lenders kept interest rates low through hefty ‘contractor fees’
The Kroll Report was not the only game in town this week, however. Mozambican President Filipe Nyusi took to social media today to say that “peace depends on all Mozambicans,” but the Mozambican armed forces, on whom peace depends more than most, today missed a deadline for withdrawing troops from positions in Gorongosa.
FREE TO READ: Mozambique forces remain in Gorongosa despite promise to withdraw
There was more bad news on the debt front, as Brazilian development lender BNDES confirmed it considers Mozambique to be in default over BNDES’ Nacala airport loans.
SEE: Brazilian state pays out for Mozambique airports default
And finally, two items from the mining sector. Nyusi found a reason to be cheerful in his home province of Cabo Delgado, re-opening the long defunct Ancuabe graphite mine; and Pallinghurst Resources pretty much sewed up its acquisition of Gemfields.
SEE: South African investor closes in on Gemfields
SEE: Mozambique President re-opens country’s first graphite mine
Have a great weekend.