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Government Wants to Restructure Unsustainable Public Companies

Government Wants to Restructure Unsustainable Public Companies

The government has hired a consultant to study the model that should be followed to restructure public companies, which analysts say represent a very heavy burden for the state, with accumulated debt of around US$500 million.

Initially, the consultancy, whose results should be known by the end of this year, will cover four companies that, according to the Institute for Management of State Holdings (IGEPE), are no longer strategic.

It should be noted that the US$500 million debt of all public companies and companies in which the state has a stake, are mainly with commercial banks and suppliers of goods and services, and companies such as LAM, Electricidade de Moçambique, and Petróleos de Moçambique have already reached an unsustainable level of debt, according to IGEPE.

Among those covered is the Mozambican Insurance Company (EMOSE), which operates in a competitive market with other insurers, even generating a conflict of interest, as the State is both regulator and service provider.

“I am of the opinion that the Government should think of another management model for the Mozambique Airlines company (LAM), so that the State stops supporting it,” said economist Lucas Ubisse.

For economist António Francisco this restructuring work should have been done long ago, because public companies represent quite a heavy burden for the State.

“Public companies should bring benefits to the State and contribute to revenues, the quality of services and to force other companies to become competitors,” emphasised that economist.

He referred that it is up to the State to design the role of public companies, clarifying how they should become efficient, especially to stop bringing more burdens to the State.

However, jurist Armando Nenane does not know how this will be done, because “there are vested interests in public and state-owned companies”.

For Nenane, “corruption in public companies is a generalised phenomenon, and the fact that the people who run these companies are not recruited through technical competence, but through coptation and political trust, that configures nepotism in management”.

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