Mozambican NGO warns of “technical bankruptcy” in the state-owned companies sector

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Mozambican NGO warns of “technical bankruptcy” in the state-owned companies sector

12:53 CAT | 28 Feb 2020

File photo:: Twitter / @CDD_Moz

Mozambican non-governmental organisation (NGO), the Centre for Democracy and Development (CDD), yesterday warned of a state of technical bankruptcy in the state-owned corporate sector, demanding a restructuring process including clear and credible reform.

“The government is not conducting the process of restructuring the business sector of the State in a serious and swift manner, and continues to drain public funds into dubious companies,” CDD director Adriano Nuvunga said.

For Nuvunga, the state business sector’s condition of technical bankruptcy benefits the ruling party, the Liberation Front of Mozambique (Frelimo), which he says in some cases looks at these institutions as “a slush fund”[saco azul].

“For example, Petróleos de Moçambique [Petromoc] is clearly in technical bankruptcy, but is kept operating inefficiently in the market because it allows a political agenda, draining money for the ruling party,” Nuvunga says, warning that the government continues to issue financial guarantees to Petromoc, even though it is insolvent.

In August last year, the chairman of Petromoc’s board of directors, Hélder Chambisse, admitted the company was insolvent, given that it owed banks12 billion meticais, had accumulated losses in excess of three billion meticais in the past three years, along with its 50% market share, now down to 24%.

Nuvunga says Petromoc is one of many examples of Mozambican state-owned enterprises that need serious restructuring, alongside Mozambique Airlines (LAM) and Mozambique Airports.

In 2018, LAM saw its board of directors dissolved in an extraordinary general meeting called to analyse the company’s financial situation, at a time when the air carrier was facing serious financial problems.

Mozambique Airports then had their accounts frozen by court order following revelations of an €11 million debt claimed by the liquidation commission of the defunct Nosso Banco, in addition to debts of €238 million to commercial banks.

Adriano Nuvunga has doubts about the benefits of privatising these companies, as “the deficiencies of the Mozambican private sector are clear”.

“The Mozambican private sector is a cheater sector, and lives at the expense of the state. We have yet to see a company resulting from privatisation succeeding,” Nuvunga concludes.

Source: Lusa