By Eugen Iladi
MAPUTO, Mozambique – Mozambique got itself in hot water over a $2 billion debt default connected to its purchase of a tuna fishing fleet, a coastal monitoring and security system and the tools to create its own shipbuilding business. There are now legal proceedings on three continents related to the transaction.
Back in 2010, Mozambique decided to secure and exploit its coastal resources. It got loans from Credit Suisse and VTB Capital. Privinvest, which has built ships for 40 navies around the world, was selected by Mozambique to build the boats and systems based on recommendations and exploratory visits to its shipyards.
Mozambique created three state-owned enterprises to receive the equipment and provide the local staff with training. The products were delivered, and the training was offered, but the three state-owned companies failed to act and did not recruit staff or operationalize the ships and systems. For most part, the vessels sit idle in port and have not been active in years. Subsequently, Mozambique defaulted on the loans, the International Monetary Fund withdrew its financial support and legal action ensued.
Several versions of this sad saga have been floating around in the Western media. On a recent trip to Maputo, I spoke to locals who tell a tale of mismanagement, corruption and fear. Most of them were afraid to talk openly about this case. But no one disagreed that Mozambique needed – and still needs – to protect its sprawling coastline. Pilfering of fish, illegal trafficking of various sorts and threats to oil-and-gas derricks abound.
The Privinvest contracts were a serious attempt to address these needs. The way the loans were structured, approved and disbursed is a separate matter and a source of continuing debate.
But the fleet of ships and the equipment were delivered to Mozambique. Anyone can see them with the naked eye in the ports of Maputo and Pemba. They are even visible on Google Earth satellite imagery.
Twenty-four fishing boats and 36 patrol boats and interceptors equipped with drones and radar systems are also sitting idle, mostly in dry dock, at the two ports.
Some local journalists and business executives with direct knowledge of port operations questioned whether the boats were ready for deployment. After all, the fishing boats stopped working years ago.
Jornal Savana editor Fernando Lima, a prominent local journalist and critic of the government, described the episode as a mixture of patriotism, corruption and incompetence by government officials. He said that while they may have genuinely wanted to acquire these ships and start those projects, they did not understand what they were buying and did not hire independent technical experts to advise them.
At the same time, a glimmer of hope is provided by Tunamar, a subsidiary of Frontier Services Group led by American business executive Erik Prince. Tunamar is doing what Mozambique was supposed to do – keep the ships operating. Tunamar has retrofitted five of the 24 fishing boats and is hoping to start fishing as early as June. Its goal is to bring all 24 ships online.
The military coastal defense and patrol boats are sitting mostly in dry dock degrading, which is a shame. More than 100 Chinese fishing vessels are plundering fisheries in Mozambique’s Exclusive Economic Zone. Clearly, these patrol ships are much needed by Mozambique.
But the three-state owned enterprises — Ematum (tuna fishing), ProIndicus (maritime security) and MAM (shipyard services) – don’t have the capacity to staff, service and operate the ships. Unless agreements are quickly implemented with private contractors, there’s a real possibility that the ships will become expensive scrap metal.
Eugen Iladi is a freelance reporter based in Virginia who covers politics, conflict, business and development in emerging markets.