The week in Mozambique was marked by events that call into question the country’s socio-economic development and, to a certain extent, directly affect the process of improving the business environment. These are issues related, for example, to the aviation sector, which is important for boosting tourism at a time when some companies are suffering from the losses caused by the general protests that took place throughout the country for almost five months.
On Thursday, 24 April, Mozambique Airlines (LAM) publicly acknowledged that the reduction of its fleet to just three aircraft is the reason for frequent flight cancellations and rescheduling, exacerbating the state-owned company’s operational crisis.
According to the carrier’s spokesperson, Alfredo Cossa, the company faces a serious limitation in its passenger capacity following the withdrawal of two CRJ 900 aircraft operated by South African CemAir, which terminated the contract unilaterally and without prior notice.
‘We are constantly rescheduling flights, which are subject to a cancellation process. These cancellations and rescheduling are the result of a lack of passenger capacity,’ said Cossa.
As is public knowledge, LAM has been facing operational problems for several years related to a reduced fleet and lack of investment, with a number of non-fatal incidents reported, which experts attribute to poor aircraft maintenance.
Data show that in 2021 alone, LAM recorded a loss of more than 1.4 billion meticals (21.7 million dollars) in 2022, with 448.6 million meticals (6.9 million dollars), in 2023 with 3.9 billion metical (60.5 million dollars) and in 2024 with 2.2 billion metical (34.1 million dollars).
Also this week, African countries were taken by surprise with the announcement of the suspension of several development projects funded by the United States of America (USA), because the US government agency Millennium Challenge Corporation (MCA) will suffer ‘significant reductions’ in the number of employees and in some programmes.
According to the information released, the measure will be implemented by the Department of Government Efficiency (DOGE), led by billionaire Elon Musk, and is expected to result in the dismissal of 320 employees, as well as the cancellation of donations to 40 countries where development projects are underway.
The MCC has been involved in Portuguese-speaking countries such as Mozambique, and projects focus on areas such as water and sanitation, roads, agriculture and land ownership, with the aim of attracting private investment and promoting growth.
Last year, the government announced the creation of an institution to manage more than US$537 million (33.9 billion meticals), of which US$500 million (31.6 billion meticals) was donated by the Millennium Challenge Corporation. The US funding was earmarked for Compact II, and the commitment was signed on 20 September 2023 at the Capitol in Washington, in the presence of the former Mozambican head of state, Filipe Nyusi.
Another prominent issue was the British court’s authorisation for the shipbuilding group Privinvest to appeal the ruling that ordered it to compensate the Mozambican state for approximately US$1.9 billion (119.7 billion metical) in connection with the so-called ‘hidden debts’ scandal.
The decision was handed down by the UK Court of Appeal, although the date for the hearing has not yet been set. In its ruling, dated 16 April, the court considered that there was ‘a real prospect of success’ in the arguments presented by the company’s defence.
A representative of Privinvest explained that the trial conducted by Judge Robin Knowles was compromised by the alleged deliberate omission of documents by the Mozambican state.
‘We are constantly rescheduling flights, which are subject to a cancellation process. These cancellations and rescheduling are the result of the lack of capacity to transport passengers.’
The initial ruling, handed down in July 2023 by the London Commercial Court, ordered Privinvest to pay $1.9 billion to the Mozambican state for bribing senior public officials to secure state guarantees on loans taken out by the public companies ProÍndicus, Ematum and MAM between 2013 and 2014.
The debts, totalling US$2.7 billion (170 billion meticals), were concealed from Parliament and international partners and only made public in 2016, precipitating an unprecedented financial and reputational crisis in Mozambique.
Text: Cleusia Chirindza
