Maputo, 14 Feb (AIM) – The Mozambican anti-corruption NGO, the Centre for Public Integrity (CIP), claims that the government’s decision to sell 91 per cent of the shares of the publicly-owned Mozambique Airlines (LAM) to three other publicly-owned companies may amplify an operational and financial crisis initially restricted to the airline, turning it into a problem for the buying companies.
The companies that the government authorized to buy LAM’s shares are Hidroelectrica de Cahora Bassa (HCB), the company that operates the Cahora Bassa dam on the Zambezi River, in the western Mozambican province of Tete; the country’s Ports and Rail Company (CFM) and EMOSE, the country’s largest insurance company. These are the only three publicly owned companies that consistently run at a profit.
According to the CIP analysis, the government’s measure transfers the financial burden of LAM, which is a bankrupt company, to other state entities and this may increase the fiscal risk for the state itself.
“LAM is a technically insolvent company and is highly dependent on financial support from the state. According to the financial statements from 2018 to 2021, the company systematically recorded losses throughout the period, reaching a net loss of over 20,731.9 million meticais (about 324 million US dollars) in 2021. In addition, it had a negative equity of 18,268.1 million meticais and an adjusted net debt of 17,488.3 million meticais”, reads the document.
The organization points out that the Fiscal Risks Report 2025 classifies LAM as having a high fiscal risk, because of its dependence on state intervention “and the risk of the state being called upon to redeem any guarantee issued in its favor.”
According to the company, the public debt report for the third quarter of 2024 indicates that LAM is facing difficulties in honoring its financial commitments to creditors and, by the third quarter of 2024, LAM’s debt amounted to over 7,113.01 million meticais.
The organization points out that over the last year, when LAM was under the management of the South African company Fly Modern Ark (FMA), which was hired by the government to bring the company into profitability and rescue it from bankruptcy, its debt amounted to about 300 million dollars.
“At the time of its departure, in September 2024, FMA stated that LAM urgently needed a financial injection of over ten million dollars to guarantee the continuity of operations, showing that the company’s financial situation was still alarming”, the document says.
Therefore, CIP believes that rather than a simple capital injection, LAM needs in-depth administrative restructuring, accompanied by improvements in the transparency and accountability of its managers.
“It is essential to adopt measures that reduce political and government interference in the management of the company. There is a need to strengthen the public-private partnership, with the entry of a strong strategic investor, as a measure to mitigate the risks associated with political and government influence and promote more efficient and sustainable management”, reads the analysis.
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