You are here

  1. Home
  2. The Donor-Designed Path to Mozambique's Debt Deal

The Donor-Designed Path to Mozambique's Debt Deal

3 January 2017

When Mozambique's US$2.2 billion of imports of arms and fishing boats – funded by secret loans involving Swiss and Russian banks and purchases from France, Germany and Israel – became public in 2016, the IMF cut off its lending and 14 donors halted budget support. Now, however, in Following the Donor-Designed Path to Mozambique’s US$2.2 Billion Secret Debt Deal, Joseph Hanlon argues that the deal was the direct result of conditions carefully created by those same lenders and donors.

After Mozambique came to independence in 1975, although nominally socialist, its image of socialism was Swedish social democracy. Health, education and rented property were nationalised but Frelimo (Frente de Libertação de Moçambique), the ruling party, tried not to interfere in economic sectors, and few companies were nationalised. Despite this, it was seen as important in the struggle between capitalism and communism and strenuous efforts by donors and lenders alike have since turned it from a socialist success story into a neoliberal capitalist one. A country in which the private sector dominates and a domestic elite dependent on foreign companies has been created.

Although taking US$2.2 billion in secret loans to create security service-owned fishing and maritime companies seems a flagrant violation of good governance, Hanlon suggests that in reality it simply follows the road shaped by these same donors and lenders. In moving the Mozambican elite away from socialism, they promoted a model in which domestic business was based on government and donor largesse. Government and the elites were given space to promote development and their own interests so long as it was done in secret and did not challenge the rhetoric.

The US$2.2 billion thus fits this pattern perfectly. And, had it not been for the unexpected drop in oil and gas prices, it would probably have been allowed to pass with little more than a slap on the wrist.

Read Following the Donor-Designed Path to Mozambique’s US$2.2 Billion Secret Debt Deal in full.

Share this page:

Research Focus Archive

Contact us

To find out more about our work, or to discuss a potential project, please contact:

International Development Research Office
Faculty of Arts and Social Sciences
The Open University
Walton Hall
Milton Keynes
MK7 6AA
United Kingdom

T: +44 (0)1908 858502
E: international-development-research@open.ac.uk