A $2bn loan scandal sank Mozambique’s economy

THE LATEST exhibition by Nelsa Guambe, an artist from Mozambique, is a startling chronicle of her country’s predicament. Strange faces stare from a collage of newspaper headlines about corruption. “Sharks of Maputo”, reads a clipping pasted onto the tie of an unnamed government minister. A grotesque beast—captioned “the monster of the West”—looms over a city, grasping at a shoal of fish.

The inspiration for these jarring images is a colossal debt scandal, which has sunk Mozambique’s economy and rocked its political elite. Between 2013 and 2014 three state-backed companies took on more than $2bn of questionable debt, guaranteed by the government (equivalent to about 13% of GDP). Some $1.2bn of it was borrowed in secret, behind the backs of parliament and the public. The hidden loans were revealed in 2016, but only now is justice catching up with the alleged conspirators, who are accused of pocketing millions. A string of court cases this year has drawn in a billionaire shipbuilder, a trio of ex-Credit Suisse bankers and a former finance minister.

The context for the three deals was that interest rates in the rich world were low. Investors could find better returns in Mozambique, where huge natural-gas reserves had been found offshore. A plan evolved across three continents. In Mozambique a clique of officials created...

Read More