Mozambique Looks to China for Financial Assistance

President Filipe Nyusi is pivoting to China for financial aid after rejection from the European Union, according to Deutsche Welle. Nyusi contends with a stagnant economy suffering from low commodity prices, and the public is growing increasingly frustrated as living costs and lacking opportunities make life harder. Mozambique has been embroiled in several major scandals, stoking widespread distrust among donors and Western nations.

President Filipe Nyusi is pivoting to China for financial aid after rejection from the European Union, according to Deutsche Welle. Nyusi contends with a stagnant economy suffering from low commodity prices, and the public is growing increasingly frustrated as living costs and lacking opportunities make life harder. Mozambique has been embroiled in several major scandals, stoking widespread distrust among donors and Western nations.

Mozambique is losing vital donors at a time when assistance is crucial, but leaders have a bad reputation due to unscrupulous governance. For instance, the International Monetary Fund (IMF) accused the country of concealing loans, and officials diverted funds from a bond program to national defense.

Moreover, Nyusi was not forthcoming about the true nature of his country’s public debt, conceding that Mozambique amassed $2 billion in debt under previous leadership. As a result, the IMF and donors have withdrawn credit and financial support from the fledging country.

Mozambique was among the most prosperous emerging economies in Africa, but policymakers failed to make good use of the Southern African nation’s rising status. Maputo has long suffered from mismanagement issues, while failing to diversify the economy into other lucrative ventures.

The government intends to pursue offshore oil exploration, but a lower-priced oil market will not allow leaders to procure substantial revenue in the energy sector. Additionally, the political landscape is plagued with factional violence between political parties. Some aid organizations are unable to set up ground operations and render aid because of rampant violence, notes Voice of America.  

The construction sector is a viable avenue for growth, but the Chinese may be of little help. Chinese investments will not necessarily benefit Mozambicans because China awards contracts to fellow investment firms as opposed to local companies, and Chinese firms usually do not use local supplies and workers. Beijing is one of Maputo’s largest creditors, but China’s presence has failed to add long-term growth to the economy.

The good news is that infrastructure projects have helped a populace that struggles with lacking roads and sanitation services, but it will not be enough to upgrade living standards for the destitute. Mozambique is among the poorest countries in the world.

China and Mozambique maintain close economic ties, but the Middle Kingdom does not have Maputo’s best interest in mind. Chinese investment endeavors have boosted Beijing’s presence in the region while gaining access to Mozambique’s precious natural resources.

Maputo has a plethora of precious minerals, including gold and platinum, and commodities will be used as collateral. With that, China is the only partner that will lend assistance, and Mozambican leaders have nowhere else to turn. The president has apologized to the international community for the scandals, but his apologies have fallen on deaf ears thus far.