MOZAM­BIQUE BANK STAND-OFF HURTS ECON­OMY

The Sunday Independent - - PEOPLE - VIC­TOR KGOMOESWANA Vic­tor Kgomoeswana is the au­thor of me­dia com­men­ta­tor and pub­lic speaker on African busi­ness af­fairs.

IT IS one of those “he said, she said – we are all dead” sit­u­a­tions. Plac­ing 465 000 bank­ing trans­ac­tions in a coun­try – and 14 000 in­ter­na­tional – in jeop­ardy is some­thing the South­ern African De­vel­op­ment Com­mu­nity (SADC) can ill af­ford.

Last week, the Mozam­bi­can econ­omy was plunged into chaos by a tus­sle be­tween Biz­first and Simo. Simo is the Mozam­bi­can In­ter­bank Com­pany (51% is owned by the Bank of Mozam­bique) while the Biz­first is a Por­tuguese en­ter­prise that pro­vides the com­puter soft­ware that drives the Simo net­work.

“The Simo net­work cov­ers most banks in the coun­try, and hence most debit cards and ATMs. When Simo goes down, it takes most of the coun­try’s elec­tronic trans­ac­tions with it,” said a re­port by na­tional news agency Aim.

At the heart of the stand-off is a pay­ment dis­pute. The Bank of Mozam­bique de­nies Biz­first’s claim that it owes any­thing or that it has not paid li­cence fees for the soft­ware.

By Mon­day, pri­vate busi­nesses were re­port­ing losses of about

$82 000 a day, ac­cord­ing to the Con­fed­er­a­tion of Mozam­bi­can Busi­ness As­so­ci­a­tions. Who can sur­vive – and for how long – if their sales were cut in half by a bun­gle that no­body wants to take re­spon­si­bil­ity for?

The African De­vel­op­ment Bank Group (ADBG), in its lat­est Coun­try Eco­nomic Out­look, de­scribes this sit­u­a­tion as a “com­bi­na­tion of de­clin­ing prices for tra­di­tional ex­port com­modi­ties, per­sis­tent drought ef­fects from El Niño, in­ter­nal mil­i­tary con­fronta­tions and large de­creases in for­eign di­rect in­vest­ment”. With its FDI down 50% and the 2016 GDP growth lower, at 3.8% from 7% in the past decade, Mozam­bique does not need a dis­rup­tion of this mag­ni­tude.

The eco­nomic down­turn was ag­gra­vated, ac­cord­ing to the ADBG, by the gov­er­nance cri­sis of 2016, re­duced ex­ter­nal fi­nanc­ing and donor sup­port. It shall be re­called that the gov­ern­ment, un­der pres­i­dent Ar­mando Gue­buza, took out loans of $2 bil­lion se­cretly in 2013/14. The debt was un­cov­ered in 2016, when Felipe Nyusi re­placed him. This, among oth­ers, forced the In­ter­na­tional Mon­e­tary Fund to pause its Standby Credit Fa­cil­ity. About 14 donors fol­lowed suit, de­priv­ing Mozam­bique of about $500 mil­lion a year.

This, plus a wors­en­ing tiff be­tween the gov­ern­ment and Re­n­amo, a fall in com­mod­ity prices, with­drawal by some key in­vestors in the re­sources in­dus­try slow­ing the GDP growth to 4.7% last year. AFBG projects growth of 5.3% this year as coal pro­duc­tion and agri­cul­tural ac­tiv­ity rise.

The gov­ern­ment ought to have been more vig­i­lant. A coun­try’s bank­ing sys­tem is like blood flow through the veins of the econ­omy. Dis­rupt­ing it threat­ens the sta­bil­ity of not only Mozam­bique but a large chunk of the SADC.

The only pos­si­ble es­cape route, apart from the more ex­pen­sive and time-con­sum­ing over-the-counter trans­ac­tions, would have been cell­phone pay­ment.

Head of Stan­dard Bank in Mozam­bique was quoted in the O País news­pa­per: “I am cer­tain that we will not reach Christ­mas with this dif­fi­cult sit­u­a­tion.” Christ­mas? One would fancy a much higher sense of ur­gency in an emer­gency.

Africa is Open for Busi­ness,

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