By Herman Ramos
In the heart of Africa, hopes for better living conditions collide with the harsh realities of systemic corruption that severely strangle development at its core, leaving the population in unprecedented poverty. Mozambique stands as a stark example. Recent revelations from the Centro de Integridade Pública (CIP) have shed light on a million-dollar fraud scandal within the country’s Housing Development Fund (Fundo para Fomento de Habitação-FFH).
According to CIP, the Mozambican Government will have to pay, in the coming years, a million-dollar debt to the Exim Bank of India. The million-dollar debt was incurred in 2013 for the execution of a housing project whose works never materialized. Causes include a series of financial and procedural irregularities involving the company contracted to carry out the work and the entity responsible for the project.
A debt of 47 million US dollars borrowed by the Mozambican Government from the Exim Bank of India is at stake, for the construction of 1200 houses in the provinces of Tete (400), Cabo Delgado (400), and Zambézia (400), in a project led by the Housing Development Fund (FFH).
Milagrosa Calangue, the lead researcher investigating the Millionaire fraud in FFH Procurement, demonstrates how a series of irregularities, including failures in the procurement processes of the Housing Development Fund (FFH), hindered the execution of the project to build 1200 houses, benefiting the population of the provinces of Tete (situated in the Central region of Mozambique), and Cabo Delgado, and Zambézia (situated in the north region of Mozambique), and harmed the Mozambican state by around USD 14 million, not counting the debt interest, assessed at over USD 18 million.
Driven by a quest for transparency and accountability, the Center for Public Integrity (CIP) embarked on a journey to uncover the truth behind the stalled housing project. Leveraging the Right to Information Act as their weapon, they sent a letter dated November 3, 2023, seeking clarification from the FFH regarding the project’s status and efforts to hold the contractor accountable for breaching the terms of their contract. Despite the legal obligation for a response within the mandated 21-day period, the entity’s silence speaks volumes, leaving critical questions unanswered and accountability in question.
Based on the 2021 report by the United Nations Development Program, approximately 1.3 billion people across the globe are living in poverty. In the case of Mozambique, the numbers are incredibly high with over 70% of the population, which is more than 22 million people, in difficulty. Additionally, out of these 22 million people, 63% are living below the poverty line. This is especially true in rural areas, where homes are often constructed using low-quality and traditional materials. Yet, amidst the gloom, projects like the housing initiative mentioned offer a glimmer of hope, promising to transform lives and uplift communities. However, the stark truth remains: this promising project has crumbled into ruins, leaving young people grappling with dashed hopes and uncertain futures. For those who once held onto dreams of acquiring a home and building a better life, the reality of unfulfilled promises hits hard. Compounded by the country’s staggering debt and soaring living costs, the road ahead seems fraught with challenges, making it increasingly difficult for them to realize their aspirations of decent housing and stable employment.
This situation is part of one of the latest events, concerning the pattern of governance breakdowns and rising of debts that not only jeopardize the economic and social nation’s stability but also its long-term development prospects.
If such scandals go unnoticed, they could continue to undermine the country’s progress without anyone realizing it. Additionally, the problem can be exacerbated by the wrongful allocation of revenues generated from valuable resources, such as natural gas, with a portion of it being deviated to secretive debt repayments, which means that only a small part or reduced allocation of revenues originated from the exploration of different resources will be invested in public infrastructure such as schools, hospitals, etc.
One of the significant examples of governance failure and financial mismanagement was the discoveries in 2016 through international media that the Mozambican Government had contracted a debt or borrowed over 2 billion US dollars from banks and international creditors to finance state-owned enterprises for a coastal protection project (involving the country’s coastal surveillance, construction, and repair of ships, tuna fishing, etc.), without the necessary approval from the Mozambican parliament.
This loan involved the issuance of state guarantees by the Minister of Finance with the knowledge of the President of the Republic and the approval of the Bank of Mozambique. However, since this process did not go through the Assembly of the Republic, it was not only an illegal loan but also a secret or confidential one. This means that essential democratic oversight was circumvented.
Furthermore, after the discovery and with cuts in external support (from the World Bank, FMI, etc), the Mozambican government found itself cornered and under huge pressure and trying to pay off debts with non-existent funds, as the loan amounts disappeared and only small traces of the project remained and the gas exploration did not start to generate revenues yet to canalize them to pay the debts. Due to this situation, and exacerbated by cuts in external support from institutions such as the World Bank and IMF (International Monetary Fund), the government found itself in a difficult situation.
As a result, the country was unable to repay its debts due to a lack of funds, which led to a national crisis. The cost of living increased, and interrupted Mozambique’s development trajectory, as Mozambique was one of the top 10 economies in the world in rapid growth for two decades.
The impact of hidden debts in Mozambique was catastrophic, particularly for the poor population who were already struggling to make ends meet. The loans only added to their misery, making it even more difficult to break free from the poverty cycle. Meanwhile, the elite benefited from the loans, further widening the wealth gap. Public debt such as this also makes it harder for the government to provide crucial services to the people, putting a greater burden on citizens to pay higher taxes. Illegitimate debts like these only serve to exacerbate the problem, leaving the poor to bear the brunt of the high costs. The indirect consequences of these debts, such as political instability and social unrest, only added to their misery.
This situation illustrates a case where a group of people serving their interest (since reports mentioned that many officials receive bribery for the acceptance of the project) in the name of the nation put a country in a deep crisis. Despite revelations of widespread bribery among officials involved in project approvals, justice was delayed until 2022 when a trial finally commenced. However, this trial has been deemed a farce, as it failed to hold high-ranking individuals accountable, earning it the label of a “sham trial.” The International Monetary Fund’s suspension of support to the state budget underscored the severity of the situation, highlighting the urgent need for clarity and accountability. This case serves as a glaring indictment of Mozambique’s weak governance system, characterized by corruption, abuse of power, and a lack of transparency and accountability, ultimately eroding public trust and impeding the nation’s progress.
During the COVID-19 pandemic, many developing nations relied on international aid to bolster their healthcare system. In these terms, the government of Mozambique requested in April 2020 assistance from the International Monetary Fund and cooperation partners to implement vital mitigation measures in the fight against the COVID-19 pandemic. These resources were allocated to different sectors, however, recent revelations from an audit conducted by the Administrative Court have uncovered alarming discrepancies.
A report dated September 2023 revealed the misappropriation of over 24 million euros intended for COVID-19 prevention and mitigation efforts. The National Institute of Social Action, tasked with managing these funds, was found to have diverted significant amounts without evidence of the contracted services—a stark manifestation of systemic corruption and weak governance.
This case highlights a cyclical process of issues: despite the availability of funds, many projects did not move from the papers despite the resources being supposedly allocated for contractors to execute the different activities according to different tenders, unexecuted, underlining once again the lack of transparency and accountability within the government. Similar problems afflicted other projects and organizations linked to the state, some of them at irreversible risk of financial bankruptcy and others immersed in debt constituted a fiscal risk for the State. This represents a perpetuating vicious cycle of inefficiency, corruption, and mismanagement of public resources. Yet, these publicized cases likely represent only the tip of the iceberg. Behind closed doors, undisclosed debts protected by government secrecy and bribery continue to undermine the country’s development, exacerbating socio-economic disparities and perpetuating dependence on external aid.
The issues of corruption, debt, lack of accountability, transparency, and bad governance in Mozambique, are a reflection of the numerous challenges faced also in the continent.
The case of Zimbabwe, as depicted in the “Gold Mafia,” a four-episode documentary series by the Qatari state broadcaster Al Jazeera, unveils a troubling narrative of government involvement in a sophisticated money laundering scheme revolving around gold exports. The documentary accuses members of Zimbabwe’s government, including President Mnangagwa, of complicity in facilitating illegal gold and diamond trade, with allegations ranging from protecting smugglers to accepting bribes.
Recently, the United States of America imposed economic sanctions on 11 senior Zimbabwean officials, including President Mnangagwa, and three Zimbabwean entities, citing alleged corruption and grave human rights violations. These sanctions serve as a reminder of the international community’s concern over corruption and its repercussions since only when the international community shows concern or interest, is when the governments start to take action.
In Namibia, former Fisheries Minister Bernhardt Esau and former Justice Minister Sacky Shanghala face accusations of accepting millions of dollars in bribes from an Icelandic fishing company. This scandal underlines the pervasive nature of corruption across the region, where public officials exploit their positions for personal gain at the expense of the nation’s resources and well-being.
South Africa, too, struggles with the repercussions of corruption, particularly evident in the mismanagement of funds allocated for combating the COVID-19 pandemic in 2020. Dubious contracts and fraudulent activities have led to the loss of millions of dollars, exacerbating the socio-economic challenges faced by the country.
These cases or situations verified around the continent are not isolated incidents but symptomatic of a broader systematic ensemble of issues plaguing Africa and rooted in corruption. Thousands of government officials and their associates are implicated in illicit schemes aimed at diverting public assets and abusing power for personal enrichment.
Corruption compromises governance systems and erodes public trust, contravenes development, and perpetuates poverty, especially in Africa where there are abundant resources and if well explored can become one of the most developed continents.
Corruption, bad governance, and lack of accountability are not just words, they are a reality that ordinary people face every day. These issues exacerbate the struggles of the population, making it difficult for them to access basic services such as healthcare and education due to the embezzlement of funds meant for these purposes. Even when resources like gas are exploited, the revenues generated are used to pay off debts, postponing or limiting the benefits of these resource revenues to citizens. The effects of corruption are far-reaching, and the lives of ordinary people suffer the most. A mother in a rural village may not be able to provide education to her children because corrupt officials have stolen the funds allocated for education.
Alberto Ricardo is a passionate entrepreneur who strongly believes in transparency. In our conversation, Alberto shared his struggles as a business owner in the country. He spoke about how the high cost of living and reduced purchasing power of consumers have made it increasingly difficult for his business to generate profits. It’s a struggle that he shares with many other business owners in the country. What’s more, he’s faced with numerous bureaucratic hurdles and demands for bribes from corrupt government officials, which has made it even harder for him to succeed. His case shows that corruption not only affects the economic and social development of a country but also has a profound impact on the lives of ordinary people.
It is crucial that we, as individuals and as a society, recognize the impact of corruption on our lives and communities. Corruption not only undermines the trust we have in our institutions, but it also perpetuates inequality and injustice. Now more than ever is time to address these issues and work towards a more transparent and accountable system that benefits everyone.
To address corruption, well-elaborated efforts both at the national and international levels must take place. Is now time that the African Union and relevant stakeholders and partners adopt proactive measures to promote good governance, transparency, and accountability. And this is only possible with the establishment of robust mechanisms to combat corruption, including stringent anti-corruption laws and effective enforcement mechanisms.
Furthermore, there is a need for greater cooperation among African nations to tackle cross-border corruption and money laundering schemes. Collaborative efforts, supported by international partners, can enhance investigative capacities and facilitate the prosecution of corrupt officials, sending a strong message that impunity will not be tolerated.
Finally, the fight against corruption is fundamental to Africa’s progress and prosperity. Without decisive action to root out corruption and promote integrity in governance, the continent risks being mired in poverty and dependency, undermining the aspirations of its people for a better future.