The unwritten rules of doing business in Mozambique

And: Coal railways face weeks out of action

The appointment this week of a former prime minister as chairman of BCI completes the set of all five major banks in Mozambique chaired by Frelimo prominent members.

Until Tuesday, when Carlos Agostinho do Rosário was formally made chairman, BCI, a bank controlled by the Portuguese state-owned CGD, was the only bank remaining without a Mozambican and a Frelimo member in the chair.

And BCI paid a price for that. The bank had its CEO sacked in 2019 in spite of being vindicated by a court decision that shamed the central bank. His successor also paid a price, as his nomination took a full year to be ratified, while the central bank investigated such things as his academic records.

The South African-controlled Standard Bank went through a very similar ordeal before BCI. Manipulated opinion articles in the Frelimo-controlled press accused the bank of racism for not having a Mozambican at its helm. The bank got the message and appointed a former finance minister as its chairman, a non-executive position, but a symbolic sign of power and, certainly, a very well paid job.

Later, the Bank of Mozambique forced the (Nigerian) CEO out of his post amid highly questionable allegations of exchange market manipulation. Standard Bank made clear it would cooperate with the Bank of Mozambique, and left its top executive out in the cold — to defend himself in court through his own means, as the BCI CEO also had to do.

This shows how Frelimo wants the business sector to behave. You can operate under the market rules but they still have to bend the knee to Frelimo in a few areas, including the powerful oil giants operating in the country. A number of positions should be filled locally, in many cases not necessarily on merit. With a clear dose of cynicism, foreign investors seem to not mind this exercise.

The same applies internally. IGEPE, the state body in charge of parastatals and public companies, has almost two hundred unemployed ex-ministers and top Frelimo officials on its books, waiting for seats on the boards of state companies or institutions where the state is a shareholder.

By enforcing these exercises, Frelimo ensures the loyalty of its members — who can see that party membership is a route to professional success and riches.

The businesses seem to agree this is a minor problem, when making a profit is the goal.

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Today’s front pages in Maputo. Photo © Faizal Chauque / Zitamar News