Missed payment in Mozambique and Angola jeopardize Brazilian investment in Africa

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A debt in Mozambique and a difficult negotiation in Angola are putting at risk the business of the Brazilian National Bank for Economic and Social Development (BNDES), which finances projects in Africa.

According to a report published by the Brazilian newspaper Folha de S. Paulo, the Mozambican government has failed to repay US$15 million (EUR 13.3 million) for the construction of Nacala airport, representing two installments of the financing that the BNDES granted to Brazilian company Odebrecht to execute the work.

The situation is significant because Brazil is one of Mozambique’s main foreign investors, and large South American companies such as mining company Vale often need financing for ventures in the African country.

In Angola, the BNDES is negotiating to avoid the loss of guarantees associated with the Lauca hydroelectric project, another Odebrecht venture.

The Angolan government wants to reduce these guarantees on the grounds that the Brazilian public bank cancelled the second phase of the project, budgeted at US$1.3 billion (EUR 1.1 billion). The first phase of the Lauca hydroelectric plant has already cost US$500 million (EUR 446 million). The negotiation is considered important since last year Angola stopped depositing the guarantee sums, in breach of its contract with BNDES.

The suspension of the payments was retaliation for the Brazilian bank interrupting transfers to contractors investigated by the ‘Car Wash’ police investigation into the deviation of public money in Brazilian state organs and also in the financing of contracts for private companies that work outside the country, such as Odebrecht.

The Folha de S. Paulo reports that Angola was close to defaulting with Brazil a month ago. According to the publication, this did not happen because the African country deposited US$150 million (EUR 133.8 million euros) and guaranteed payments until September.

Source: Lusa

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