Mozambique
Aid to Mozambique under scrutiny

afrol News, 29 June - The Office of the Auditor General of Norway is now to launch a general study of the Norwegian aid to Mozambique after the uncovering of widespread corruption in that country. US$ 250 million had "disappeared" during the privatisation of two banks, the same amount as Norwegian aid to Mozambique.

While international aid usually doesn't meet much interest in Norwegian media, Norway's assistance to Mozambique has made great headlines during the last days. Especially the practice of so-called "balance of payments support" - grants from one state to another, with little control of its usage - is now being widely criticised. Oslo's leading daily 'Aftenposten' in an editorial calls it "development aid without development".

Mozambique's corruption scandal, following the "disappearance" of US$ 250 million when the country's two leading banks were privatised in 1996/97, has already cost two lives in the country. Journalist Carlos Cardoso was shot in November 2000 and Antonio Siba-Siba Macuacua, leader of the governmental bank inspection was killed in August 2001. Both were investigating the "disappearance" of these public funds. Investigations into their deaths are ongoing. 

Mozambique meanwhile keeps being one of the world's favourites among international donors for its rapid economic growth and development potential; so also for the Norwegian development agency NORAD. NORAD has invested more than US$ 250 million in Mozambique since 1994 and US$ 35 million of these has been "balance of payments support". This part of aid is even increasing, now reaching 26 percent of total transfers.

The balance of payments support is however the part of international aid that is less monitored. It is based on the principle of "recipient responsibility", meaning that Mozambique is "responsible for planning, implementation and follow-up of projects and programmes." The principle is mainly based on trust and on the belief that the "development partner" is in a better position to know what he needs than the far-away donor. 

Given the ever-growing Mozambican privatisation scandal however had alarmed the Norwegian Auditor General. A full-scale investigation into Norwegian aid to Mozambique is now launched - the first of its kind. The Auditor General expects the results to be ready within one year, but questions "how far one can be able to follow the money" given as balance of payments support. 

Per A. Engeseth of the Auditor General's office however at an earlier occasion has stated that the question of controlling all aspects balance of payments support should not be over-emphasised. One should focus more on "the improvement of the existing systems and quality of public administration" in recipient countries than "developing our own, Norwegian systems" of reporting how funds are used. 

- Both NORAD and we at the Auditor General's have observed that reporting over expenditure by recipients has been delayed, defective or even totally absent because the capacity or maybe the competence to produce the reports agreed upon did not exist," Engeseth said. 

While Norwegian press reports hail the reporting routines imposed by other donor countries (the Germans "use a special system of accounts"), Engeseth doubted the value of this. "A country with many donors often has to relate to very many different demands on how to implement reporting. This is very costly and is not useful for a country's development," he said, calling for more international coordination. 

Also Norwegian Development Aid Minister Hilde Frafjord Johnson does not want to over-emphasise on increased reporting. Asked whether Norwegian funds could have been lost in Mozambican corruption, she told 'Aftenposten', "We have absolute no guarantees. Still we are pretty sure Norwegian funds have not been mismanaged."

The Norwegian Minister is confident the control routines are sufficient. She however welcomes the Auditor General's inspection. The risks of corruption were however greatest in "traditional project aid," she holds, while balance of payments support was safer, also due to the budget monitoring by the International Monetary Fund (IMF).

Sources: Based on Norwegian govt and press and afrol archives

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