Mozambique: Airport company with no path out of financial crisis

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Mozambique: Airport company with no path out of financial crisis

7:37 CAT | 20 Apr 2021

Nacala airport. [File photo: Conexão Lusófona]

The management of the publicly owned Mozambique Airports Company (ADM) has admitted that it does not know how to solve the severe financial crisis facing the company.

“In economics, there is never one, single solution”, claimed Saide Junior, the ADM Financial Director, interviewed in Monday’s issue of the independent newssheet, “Carta de Mocambique”. “Recapitalising the company is one way. Another could be leasing out the airports and diversifying the business”.

“Right now, we are posing several hypotheses for making the company sustainable”, he said. “We are studying the matter with specialists”.

The company, he added, still believes in the possibility of combining various solutions in order to reverse the current critical financial situation. The studies under way, Junior added, form part of the company’s five year plan, but he could not say when they would be completed.

The key problem is that ADM made substantial investments in the past which have not had the desired results. The most disastrous was the construction of Nacala International Airport, on the basis of a loan of 125 million US dollars. The airport has never been able to attract international traffic, and the only air company using it is Mozambican Airlines (LAM) for two flights a week between Maputo and Nacala.

There is heavy interest to pay on the loans, and the company has never come clean about the bribes involved in building the airport in the first place. In 2016, the Brazilian building company Odebrecht admitted to paying bribes of 900,000 US dollars in Mozambique. The details have never been made clear, but the Nacala Airport was far and away the largest Odebrecht project in Mozambique.

Odebrecht ran a world wide bribery ring, and in 2017 a United States federal judge ordered Odebrecht to pay fines of 2.6 billion dollars in fines for violations of the US Foreign Corrupt Practices Act.

But it remains unclear who were the beneficiaries of the Odebrecht bribe in Mozambique, and the ADM management keeps its mouth tightly shut on this question.

Saide Junior told “Carta de Mocambique” that the company’s accounts are in such a dire state that “its own capital is going dangerously into negative territory”.

The audited accounts for the 2018 financial year noted that the company’s liabilities, estimated at 5.7 billion meticais (about 95 million dollars at current exchange rates) exceeded its current assets of 3.8 billion meticais. This, the auditors warned, called into question ADM’s ability to continue operating. Since then, the situation can only have deteriorated, due to the economic impact of the coronavirus pandemic.

But Junior played down the crisis, and insisted that the company will continue to function.

Source: AIM