China Eximbank provides RMB 930 million government concessional loan for National Command Information Network Project

China Eximbank provides RMB 930 million government concessional loan for National Command Information Network Project On December 15, 2014, the Government of Mozambique signed an RMB 930 million (approximately $149,498,959.60) government concessional loan (GCL) agreement with China Eximbank for the National Command Information Network Project.

Its first scheduled principal payment date is March 21, 2022 and its last scheduled principal payment (maturity) date was September 21, 2035. The loan's (principal) amount outstanding was $120,524,627 as of December 31, 2022.

The project involved the installation of 450 CCTV surveillance cameras in Maputo and Matola and the creation of a monitoring center for the Presidential Guard (“Casa Militar”) to intercept mobile telephone, SMS and internet traffic (including encrypted communications). ZTE was the contractor responsible for implementation.

The project reached the implementation stage, but it unclear whether and when it reached completion.

It provoked significant media scrutiny and political controversy because the son of the former President of Mozambique (Mussumbuluku Guebuza) signed a consultancy agreement — through a company called Msumbiji Investment Limited — with ZTE to help the Chinese state-owned company secure support from the Government of Mozambique and China Eximbank for the National Command Information Network Project.

The consultancy contract between Msumbiji Investment Limited and ZTE specifies that Msumbiji Investment Limited will “guarantee the relationship between ZTE and the Government of Mozambique; pressure the Government of Mozambique to accept the project of the information interception command created by ZTE; and still secure the concessional loan taken out by the Mozambican state to pay for the project” (or “garantir a relação entre a ZTE e o Governo de Moçambique; pressionar o Governo de Moçambique a aceitar o projecto do comando de intercepção de informação criado pela ZTE; e ainda assegurar o empréstimo concessional contraído pelo Estado moçambicano para pagar o projecto”).

In exchange for these services, ZTE agreed to pay Msumbiji Investment Limited an 8% commission (worth $11.2 million) on its $140 million contract for the National Command Information Network Project. with the Government of Mozambique.

There are also some indications that the China Eximbank loan for the National Command Information Network Project may have financially underperformed vis-a-vis the original expectations of the lender.

In 2016, several credit rating agencies downgraded the Government of Mozambique to 'selective default' or 'restricted default' status, and the World Bank and the IMF re-classified Mozambique's external debt as 'in distress.' In January 2017, the Government of Mozambique defaulted on a coupon payment for its dollar-denominated Eurobond.

Then, in February 2018, the International Monetary Fund (IMF) announced that the Government of Mozambique had accumulated $710 million in arrears to external creditors and had agreed to reschedule some bilateral debt service payments with the Chinese Government.

Two months later, in April 2018, Stelia Neta, a National Director at the Ministry of Finance of Mozambique revealed that the Government of Mozambique’s outstanding debt obligations to the Chinese Government amounted to $2.02 billion and the Chinese Government had agreed to extend the grace periods (and first principal repayments) on these outstanding debt obligations without changing their final maturity dates or interest rates (as captured via Record ID#66283).