The ‘Secret Loans Affair’ and Political Corruption in Mozambique

In 2016, the ‘secret loans affair’ sprung on to the Mozambican political scene with the discovery that three government-owned companies – controlled by the military intelligence – had borrowed around US$2 billion without informing either the Mozambican parliament or Mozambique’s donor community. Suspicion soon emerged of corruption and about the politicians involved. Donors and the government hired the audit firm Kroll to investigate, but by 2018 the full contents of its report remained unpublished. This lack of transparency jeopardised the Mozambican government’s standing with the public and the development partners, contributing to an economic crisis and Mozambique defaulting on its debt commitments.

The secret loans case casts light on the role of political corruption in Mozambique. This chapter argues that this affair and the political economy of systemic corruption help explain how Mozambique was plunged back to its current state of high debt, high poverty and low growth conditions. The chapter tracks the evolution of the political–economic elite at the helm of the Frelimo party in the post-independence era and looks at the dual role of political corruption: as a quest for enrichment (the formation of an economic elite) and then as a means to secure political power (the consolidation of the political elite).