Mozambique committed to international law after 'tuna bond' ruling
Fie photo: Savana
The Bank of Mozambique has withdrawn the special registration of the two executive directors of the GAPI Investment Company, Anabela Mucavele and Antonio Souto, thus effectively decapitating one of the few financial institutions in the country that was set up for development purposes.
According to a report in Friday’s issue of the independent weekly “Savana”, the letter withdrawing the registration, dated 4 June, was signed by Emilia Mabunda, director of the central bank’s department of regulation and licensing, but the order was given by the governor of the Bank of Mozambique, Rogerio Zandamela.
The letter justified the removal of Mucavele and Souto on the grounds that they did not meet “the criteria of fitness” for holding their posts. It claimed that GAPI was guilty of “systematic disregard for the norms that govern the functioning of institutions of credit”.
It claimed that GAPI was “technically bankrupt”, and its solvency ratio was below the minimum of eight per cent set by the central bank. These claims are contradicted by GAPI’s 2018 annual report, which claims a solvency ratio of 23.94 per cent. GAPI’s own funds, far from being negative, as the central bank had claimed, are positive to the tune of 591 million meticais (about 9.5 million US dollars).
GAPI had a post-tax profit of 22.7 million meticais in 2018, and equity of 170 million meticais. The accounts were audited by a reputable company of auditors, Deloitte, which had no reservations about them.
The GAPI shareholders held an emergency meeting on Wednesday at which, according to a GAPI source cited by “Savana”, they decided to adopt “a conciliatory position, taking measures to facilitate a better understanding with the regulatory authority (the Bank of Mozambique)”.
Souto, who founded GAPI, immediately resigned “in order to dedicate himself to new challenges of the group of private investors who support GAPI”.
The GAPI shareholders include the Community Development Foundation (FDC – headed by former education minister Graca Machel), the Mozambique Red Cross, IGEPE (the government’s Institute for the Management of State Holdings), and the Confederation of Mozambican Business Associations (CTA).
According to “Savana”, the conflict has been brewing since at least 11 March when the Bank of Mozambique called representatives of the GAPI shareholders to a meeting, which Mucavele and Souto were barred from attending, and where the central bank merely made accusations without giving its targets a chance to defend themselves.
The next day the central bank sent the GAPI board a note imposing measures, including restrictions on GAPI funding. The Board responded with a proposal containing a plan which it believed met the requirements for supervision. The only response was the removal of Mucavele and Souto.
By then GAPI had contacted Prime Minister Carlos Agostinho do Rosario. This letter (which has so far gone unanswered) pointed out that “for three decades GAPI has participated in financing projects designed in partnership with various state bodies in order to promote the private business sector, the economic and financial inclusion of household and small business people in the rural areas, and innovation on the part of a new generation”.
It believed the problem was the central bank’s failure to understand the nature of GAPI. It was supervising GAPI as if it was a bank taking deposits from the public, when in reality it manages non-reimbursable funds which finance development programmes.
This was covered by a government dispatch of 2006, which the current management of the central bank is ignoring.
The central bank’s latest moves against GAPI risk sabotaging a programme to rehabilitate small companies affected by the two cyclones that struck Mozambique in March and April. On 4 June – the same date as the Bank’s letter removing Mucavele and Souto – the CTA, the FAN (Business Environment Foundation) and GAPI agreed to launch a special fund to help these businesses.
At this launch, CTA chairperson Agostinho Vuma praised the initiative as demonstrating the capacity of Mozambican organisations to work together to support the country’s businesses. GAPI had already collected from various bilateral and multilateral organisations towards this fund.
Now this fund and various other GAPI programmes run the risk of being paralysed.