Switzerland – Mozambique, bad governance

06.12.2021, International cooperation

The credit scandal facilitated by Credit Suisse in Mozambique has clearly revealed to that country’s citizens the contradictory nature of Switzerland’s role in reducing poverty and inequality.

Switzerland – Mozambique, bad governance

A woman selling dried fish at the Central market in Maputo, Mozambique.
© Alfredo D'Amato / Panos Pictures

The author, Faizal Ibramugy, is a journalist in Nampula in northern Mozambique and a media operator.

Switzerland has been cooperating with Mozambique since 1979, and as of 2012 – the year when the loans involved in the so-called “hidden debt” (dívidas ocultas" ) were negotiated – the Swiss Agency for Development and Cooperation (SDC) has been focusing on three priority areas: besides economic development and health, also governance. The continued development of a natural resource-endowed country like Mozambique can only take place through good governance and responsible investment. This is why Swiss support in this field is welcome. However, the scandal surrounding the “hidden debt” is now undermining all its endeavours.

For years Mozambicans have been taught how to govern, how to manage public funds, how to avoid illegal and corrupt practices, which could harm the state, and how to operate transparently. This is the good governance that the Swiss have been transmitting to Mozambicans through their various interventions to further the country’s advancement. Never would Mozambicans have imagined that the economic representatives of a country that gives them lessons in the sustainable management of economic resources would make common cause with their corrupt government. Those involved defrauded the State of over 1 billion dollars, even after feasibility studies had shown that the agreed loans were not sound.

Here, the saying “do as I say but not as I do” is a perfect fit. Mozambicans were being taught not to be corrupt, but employees of Credit Suisse have clearly shown that corruption matters more to them than the transparency that is proclaimed in almost all projects and programmes funded with Swiss money.

Debt forgiveness is not enough

Now that Credit Suisse must shoulder some of the blame by paying a financial penalty of 475 million dollars to the USA and the United Kingdom and granting debt forgiveness worth 200 million dollars to Mozambique, most Mozambicans now hope that this is an opportunity to demand full debt forgiveness before the courts.

In my view however, this would be far from sufficient. Official Switzerland – which supports Mozambique’s aspiration toward the decentralised, equitable and transparent management of resources by state institutions – would moreover have to admit that their efforts of more than 40 years have made no impact. Despite major efforts, Mozambique has failed to appropriate this knowledge, just as Credit Suisse bank employees have shown themselves incapable of issuing a loan in full transparency.

A new governance handbook

Today Mozambicans are saddled with a debt that was approved by deception, in a criminal association of bankers and powerbrokers. Mozambique is confronting an unprecedented disaster, the satisfactory management of which requires not just forgiveness, but also a rethinking of the strategy for promoting good governance.

If this financial scandal that has rocked Mozambique is any indication of what the country has learned over the decades from Switzerland about governance and the management of public affairs, all I can only say is that it is worth nothing. What is urgently needed is a new handbook of governance, transparency and integrity, one that teaches Mozambicans that they themselves are at the top of government. Failing this, cooperation between Switzerland and Mozambique, which was being built on solid foundations, will degenerate into a crying shame, on the back of the “hidden debt” affair.