Mozambique cracks whip on financial sector quackery

Bank of Mozambique

Bank of Mozambique

from ARIMANDO DOMINGOS in Maputo, Mozambique
MAPUTO, (CAJ News) THE cancellation of trading licences of two credit unions and five bureaux de change is the latest in a series of crackdowns by authorities to bring sanity to Mozambique’s financial sector plagued by years of impropriety.

Bank of Mozambique (BM), the central bank’s apex financial institution, has revoked the licences of Women’s Credit Union of Nampula and Savings and Credit Cooperative as well as the bureaus namely Acácio Câmbios, Al-Meca, Executivo Câmbios, Sara Moçambique and Sarbaz Câmbios.

BM has ordered their liquidation.

Rogério Zandamela

Bank of Mozambique governor, Rogério Zandamela

Rogério Zandamela, the central bank governor, used the powers vested on him by the Law on Credit Institutions and Financial Companies to revoke the beleaguered institutions’ licences.

While the affected institutions cited unviable business environment among other reasons, BM has lamented the infringements of the laws and regulations controlling the activity of local credit firms and financial institutions.

The action taken against the credit unions and five bureaux de change is the latest crack of the whip by Zandamela since his ascension to the post in 2016.

This was a time Mozambique was reeling from the disclosure of a debt of about $2 billion apparently corruptly secured by some state-owned security companies between 2013 and 2014.

Since assuming office, former International Monetary Fund regional director Zandamela has swiftly initiated reforms to retain compliance to legislation by the financial sector.

Felipe Nyusi

Mozambique president Felipe Nyusi

In October, BM imposed sanctions on 20 local financial institutions for violations of the Anti-Money Laundering and Anti-Terrorist Financing Act.

The sanctions, as the central bank stated, were due to a lack of identification and verification of customers, continuous vigilance of business relations and lack of reporting on suspicious transactions.

Such irregularities could have dire consequences in a country that has in recent years been plagued by terror perpetrated by Islamist groups north of the country where hundreds of people have been killed.

During the clampdown by the central bank, industry executives have been suspended.

There have been no holy cows.

The year Zandamela assumed office, he sanctioned the closure of Nosso Banco, owned by the National Institute of Social Security (INSS), due to insufficient capitalisation and inept management.

Earlier, the central bank had suspended Moza Banco whose issues were threatening the wellbeing economy.

The volatility in the financial sector comes at a time Mozambique is enduring the aftermath of the debt scandal that nearly collapsed the economy.

An economy largely reliant on foreign aid suffered its worst crisis after the debts were only disclosed in 2016.

It is believed at least $200 million of the loans were spent on bribes to political leaders and other officials.

Atumane Simango, a financial expert, said, “The sector is full of quackery, hence it is timely that the central bank addresses these anomalies to complement government efforts to tackle graft.”

The government of President Felipe Nyusi was re-elected in October following a campaign partly premised on tackling corruption.

“We shall wage a tough battle against corruption. Corruption stifles development,” president Nyusi said on the campaign trail.

President Nyusi’s Front for the Liberation of Mozambique (FRELIMO) has been in power since independence from Portugal in 1975.

– CAJ News