On Tuesday 4 July, the European Network on Debt and Development (Eurodad) warned that the leaders of the G20 should bear in mind the hidden debt scandal in Mozambique – a country where the authorities concealed $2 billion of loans raised with state guarantee for the secret purchase of weapons.
This warning was made ahead of the G20 summit in Hamburg (7-8 July), at which Germany's Chancellor Angela Merkel hopes a new partnership with Africa will be launched to boost fresh private investment initiatives on the African continent in order to help employment and sustainable development (see EUROPE 11821).
"The Mozambique scandal highlights how mixing private finance with development aid is a huge risk. The G20 leaders must make sure that any financing initiatives for Africa put development outcomes ahead of profits", Bodo Ellmers, Policy and Advocacy Manager at Eurodad, stated.
The scandal, which erupted in 2013, led an African country strongly dependent on international aid to financial collapse, with the loans agreed by Crédit Suisse and Russian bank VTB Capital being in default.
A report by international auditors Kroll confirms that the Mozambican government secretly guaranteed the loans – supposedly to finance a programme of coastal protection and naval surveillance – in breach of its own laws. The report also reveals that large sums remain unaccounted for, according to Eurodad.
“We want the G20 to promote the establishment of a fair and comprehensive sovereign debt workout mechanism for countries such as Mozambique. This situation is not just the fault of the Mozambican officials involved. The banks which made these irresponsible loans must also bear some share of the responsibility”, Ellmers stated.
NGOs from the Eurodad network are also calling for the immediate publication of the full Kroll audit report, in order to establish who profited from this dubious operation. (Original version in French by Aminata Niang)