Mozambique: CIP fears “hidden privatisation of LAM”

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Mozambique: CIP fears “hidden privatisation of LAM”

7:24 CAT | 20 Apr 2023

File photo: Notícias

The Centre for Public Integrity is asking how the company that will lead the management of LAM was selected, criticising the concealment of information about the contract, and fears future costs.

The Mozambican government announced earlier this month that the company Linhas Aéreas de Moçambique (LAM/Mozambique Airlines) would be managed by an international team led by South African company Fly Modern Ark, which formally took on the management of the country’s state-owned air carrier on Tuesday.

According to the Minister of Transport and Communications, Mateus Magala, this solution is intended to “improve the value of LAM”, with the country’s flag carrier able to take advantage of the South African company’s aircraft and management capacity.

However, in a recently published report, the Centre for Public Integrity (CIP) questions how the company was selected and warns that it had previously been discounted by the Government of Zimbabwe after asking for 25% of Air Zimbabwe’s shares in exchange for equipping the country’s national airline.

READ: CIP: “New LAM manager company has no experience in airline management”

In an interview with DW, Egas Jossai, author of the CIP report, says that, as details of the agreement between the state and the South African company are still not known, it is not possible to predict any “gains”. In fact, we may be facing the “hidden privatisation” of LAM, he warns.

DW Africa: What benefits can this management bring to LAM?

Egas Jossai (EJ): The question that should be answered would be: How did this company come to be selected by the state? Because, if we look at it, it is a company that has no experience in resolving or reviving airlines in the situation LAM is in. This already leads to a certain distrust of civil society in what is behind the agreement signed between the state and the South African company, taking into account that this company will bring its own means to operate in the national market. So the question is: What is the Government of Mozambique going to give in return?

We are not in a position to see what the gains will be, given the concealment of information by the competent authority regarding the contract that was signed with the South African company.

DW Africa: What are these returns which could be at stake here?

EJ: Taking into account the modus operandi of the South African company, normally when it presents a proposal to improve an airline, it demands shares in return. According to the government, the privatisation of LAM is not contemplated. But we also know that, taking into account the modus operandi of that company, we may be looking at the hidden privatisation of LAM.

DW Africa: This international management will bring more aircraft and equipment to LAM. Leaving aside for a moment the method of selecting the company, which the CIP questions in its report, can we not say that there will be benefits for Mozambicans?

EJ: Mozambique can benefit, yes, because, according to the minister himself, there will probably be a reduction in airfares. Currently, tickets are extremely expensive, which causes some people to prefer to travel abroad, since that is more economical than travelling within the country.

DW Africa: So, improvements are expected, but there are also fears.

EJ: The biggest fear is at what cost we will have these improvements. Because there is no point in having an improvement while we are mortgaging something, a momentary improvement that will then cost us a lot in one, two or three years. So we have to carry out a cost-benefit assessment. To what extent are these benefits – that we will have now – viable according to future projections?

DW Africa: It was announced that the new LAM management commission will remain for six months, which can be extended. Given the magnitude of the company’s problems, will six months be enough for structural changes?

EJ: I have serious doubts. Six months or even a year is a very short time, taking into account the serious problems that LAM has. These six months will certainly be extended for another six months or a year, in order to try to dig LAM out of the hole it finds itself in.

Source: Deutsche Welle