Mozambique’s Tuna Fleet Rusts Away As Debt Crisis Deepens

Mozambique’s Tuna Fleet Rusts Away As Debt Crisis Deepens

A fleet of two dozen fishing vessels bought by Mozambique through an international loan are sitting idle and rusting away at a harbor in the capital Maputo, as the country sinks deeper into financial woes after lenders withdrew their funding last month.

The boats, which were paid out of a $850 million loan arranged by Credit Suisse and Russia’s VTB in 2013, were meant to be a modern tuna fishing flee that would spur development in the Southern African country.

The government-backed bond was sold with estimates that Mozambique was catching 200,000 tonnes of tuna a year worth $200 million, but it later emerged that this was grossly overestimated.

In 2015, Ematum, the company that operate the tuna fishing boats, said it has caught just $450,000 worth of tuna, compared with sales of $18 million forecast in the bond prospectus.

“Let’s start with Ematum. It’s a great idea. Call it what you want, it was brilliant. But let’s look into the economic foundations. If it was for the tuna, that would imply that the boats would have started fishing as soon at they left France. But they don’t fish. The boats are in Maputo and they don’t fish,” economist, Ragendra de Souza, told africanews.

The vessels have now become monuments of government mismanagement and heavy lending by Western banks that have buried a promising African economy in a deep debt crisis, according to a Reuters report.

Mozambique, a country that emerged from a 16 years civil war in 1992 and became a poster nation for best economic performance, has attracted a lot of investors over the years to funds is infrastructures on a promise that it huge offshore gas find will uplift it into a middle class African nation.

But a fall in oil prices on the international market has hurt the country’s economic prospects and exposed the under belly of its debt crisis.

Its currency shed a third of its value in 2015, something that has concerned investors.

In addition to these external shocks poor debt management and lies by the country’s financial institutions has jolted international lender, who are now questioning how deep the debt crisis in Mozambique could be.

The oil producing nation was in 2013 accused of using $500 million of the $850 million government-backed bond, meant for buying the tuna fishing boats, on police vessels and other security equipment.

Last month, several lenders suspended disbursement of funds pledged to the country after it emerged that it had hidden nearly a billion dollars in debt from the International Monetary Fund (IMF).

The undisclosed loans, both of which went to state-owned companies, add the equivalent of around 10 percent of gross domestic product to the government’s known debt burden, Public Finance International reported.

Mozambique’s credit rating has also been cut in the wake of the evidence of misuse of the money.