Bar­clays warns on Moz FDI

CityPress - - Business - GOD­FREY MUTIZWA busi­ness@city­press.co.za

Bar­clays Africa’s Mozam­bi­can unit ex­pects for­eign di­rect in­vest­ment (FDI) to slow in the coun­try as com­pa­nies scale back or post­pone in­vest­ments af­ter rev­e­la­tions of pre­vi­ously undis­closed govern­ment debt and the first de­fault on a stateguar­an­teed loan.

In­vest­ment in gen­eral would also be hurt by credit down­grades, ris­ing debt and a weak­en­ing lo­cal cur­rency, Bar­clays Bank Mozam­bique said in re­ply to City Press’ ques­tions.

How­ever, the bank sees the ef­fect of these as short term, with its longterm fu­ture an­chored by gas de­posits.

“We ex­pect a slow­down on in­vest­ment, par­tic­u­larly for­eign di­rect in­vest­ment, which will have an im­pact on the bank­ing sec­tor growth and short­age of for­eign cur­rency avail­abil­ity,” the bank said.

“In the long term, Mozam­bique re­mains one of the most at­trac­tive mar­kets in the re­gion, with ex­pected growth rates of high sin­gle dig­its or even dou­ble-digit growth.”

Mozam­bique was plunged into cri­sis ear­lier this year when the In­ter­na­tional Mone­tary Fund found that the govern­ment hid as much as $1.4 bil­lion (R21.3 bil­lion at the cur­rent ex­change rate) in state guar­an­tees to state-owned com­pa­nies.

The World Bank sub­se­quently led in­ter­na­tional donors in sus­pend­ing aid to the south­ern African na­tion un­til the govern­ment made a full dis­clo­sure of its for­eign debt.

Fi­nance Min­is­ter Adri­ano Maleiane has con­ceded that state-owned Mozam­bique As­set Man­age­ment had missed a May 23 $178 mil­lion loan re­pay­ment to Rus­sia’s VTB Bank, the coun­try’s first de­fault.

He said talks were con­tin­u­ing, how­ever, and he urged both par­ties not to de­pend on a state bailout.

Bar­clays said an im­me­di­ate con­se­quence of the cri­sis, which has seen rat­ings agen­cies S&P Global and Fitch down­grade the coun­try, was an in­crease in bad loans, though that would be mit­i­gated by the low level of un­se­cured pri­vate debt.

How­ever, the bank is urg­ing Pres­i­dent Filipe Nyusi’s govern­ment to quickly con­clude the ne­go­ti­a­tion process for the ex­port of gas to help pay for the bur­geon­ing for­eign debt and re­store con­fi­dence in the mar­kets.

Bar­clays Bank Mozam­bique, which is among Mozam­bique’s five largest banks, said it was con­tin­u­ing to in­vest in the coun­try, in­clud­ing launch­ing Ready to Work, a project that seeks to help young­sters pre­pare for em­ploy­ment and en­trepreneur­ship.

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