Mozambique

Between 2013 and 2016, three Mozambican government-controlled enterprises discreetly borrowed $2 billion from major international banks to buy a tuna-fishing fleet and surveillance vessels. Mozambique’s then finance minister, Manuel Chang, signed guarantees that the government would repay the loans, which were critical reassurance to lenders who would otherwise have avoided the brand-new enterprises. The companies defaulted on the loans, leaving Mozambique with a $2 billion debt, about 12% of the nation’s gross domestic product at the time. A country that the World Bank had designated one of the world’s 10 fastest-growing economies for two decades was abruptly plunged into financial upheaval. The scandal was only uncovered in 2016 after Mozambique defaulted on these hidden debts, prompting the International Monetary Fund and international donors to halt funding and plunging the country into an economic crisis. The case of the Republic of Mozambique v. Credit Suisse International and others [2024] dated July 29, 2024 and heard in the High Court of England and Wales (Commercial Court) has reinvigorated the prospect of pursuing justice in foreign courts, especially in cases involving complex international financial misconduct and irresponsible lending practices.

Paper IV of the African Sovereign Debt Justice Network Paper Series

With the looming post-Covid 19 crisis and the potential loss of liquidity in the banking market, the Islamic financial system (internationally known as "Islamic Finance") may provide an alternative to the African banking model for customers and could provide additional ways for domestic banks to finance themselves.

The African Sovereign Debt Justice Network brings to you an update of African sovereign debt news and updates on events and happenings on and about Africa that reveal how sovereign debt issues are engaged by the various stakeholders.

The News and Events published every week include conferences, major developments in the field of International Economic Law in Africa at the national, sub-regional and regional levels as well as relevant case law.

The African Sovereign Debt Justice Network brings to you an update of African sovereign debt news and updates on events and happenings on and about Africa that reveal how sovereign debt issues are engaged by the various stakeholders.

The African Sovereign Debt Justice Network brings to you an update of African sovereign debt news and updates on events and happenings on and about Africa that reveal how sovereign debt issues are engaged by the various stakeholders.

The Privinvest Group, (“Prinvinvest”), an Abu Dhabi, United Arab Emirates based holding company operating in the shipbuilding industry, has obtained a decision in the proceedings against it introduced by Mozambique to be stayed in favor of arbitration. The decision rendered on March 11, 2021 pertains to a jurisdictional dispute brought under Section 9 of Mozambique’s 1996 Arbitration Act relating to the competence of the arbitral tribunal.

The African Sovereign Debt Justice Network brings to you an update of African sovereign debt news and updates on events and happenings on and about Africa that reveal how sovereign debt issues are engaged by the various stakeholders.

The Mozambican case of odious debt is an illustration of several similar cases around the world whereby consultants from multinational corporations identify development countries with something of value, such as minerals, and persuade the authorities of these countries to secretly take on huge development loans with banks. In most cases, the money never reaches the countries. Rather, the money is transferred directly from the banks to contractors and the countries are then left with massive debts. Resources and companies from developing countries are given as collaterals for these loans. Therefore, the resources that countries should use to invest in development are transferred to service these odious debts. In summary, this is what happened in Mozambique.