Poruguese crisis cuts funds for new bank

The National Investment Bank (BNI), set up by the Mozambican and Portuguese governments in 2010, will begin to operate this year – but with only three per cent of the capital originally planned.

The chairperson of the bank’s executive commission, Adriano Maleiane (who is a former governor of the Bank of Mozambique), cited by the independent daily “O Pais”, said that the initial capital of the bank will be just 15 million US dollars.

The BNI should have begun operations last year, with capital of 500 million dollars provided by its three shareholders – the Portuguese and Mozambican states with 49.5 per cent each, and the Commercial and Investment Bank (BCI), the second largest commercial bank in Mozambique, with the remaining one per cent.

But since then Portugal has become a victim of the euro zone sovereign debt crisis. The ratings agencies gleefully downgraded Portugal’s debt to junk status, and the country was obliged to ask for a bailout from richer European Union member states.

The Socialist Party government led by Prime Minister Jose Socrates was then forced out of office, and replaced by a right-wing government, which set about implementing drastic austerity measures.

The result is that the Portuguese government no longer has the money available to finance a bank in Mozambique.

Maleiane said the full capital requirement of 500 million dollars will now be mobilized bit by bit. Only 15 million dollars was immediately available – but he was sure this was sufficient for the bank to operate.

He added that the Bank of Mozambique has given the BNI the go-ahead to begin operations, and that premises for its headquarters have been identified in Maputo. The new bank would shortly launch an advertising campaign, Maleiane said.

But a bank with just 15 million dollars will not be able to play the role originally envisaged for the BNI. It was supposed to be financially strong enough to raise more funds on the international markets that would finance major engineering works, such as the projected new bridge across the bay of Maputo, or the new electricity transmission line from the Zambezi Valley to Beira and Maputo.

The government must have seen this coming. Back in November 2010, Finance Minister Manuel Chang revealed that the BNI shareholders had already asked the Bank of Mozambique for authorisation to realize the capital gradually “in accordance with investment needs”.

Post published in: Africa News

Leave a Reply

Your email address will not be published. Required fields are marked *