Brazil’s New Mozambique Push: State Bank Money, Shared Ties, Deep Risks
Brazil’s government wants its state development bank, BNDES, to start funding big projects overseas again. President Luiz Inácio Lula da Silva chose Mozambique as the place to send that signal.
During a visit to Maputo, Lula and Mozambican president Daniel Chapo signed cooperation deals in trade, aviation, health, education, food security, climate and diplomatic training. A business forum brought together companies from both countries.
The clear message: Brazil wants its engineering and energy firms back in African ports, roads, power plants and transmission lines, backed by public credit. On today’s numbers, this looks almost like an overreach.
Trade between Brazil and Mozambique is modest. Brazil mostly exports chicken, cosmetics and furniture. Mozambique mainly sends tobacco. Brazilian investment in the country is very small for an economy the size of Brazil’s.
So why Mozambique and not another partner? First, it is culturally close. Both countries speak Portuguese, share legal roots and have decades of exchanges in universities, the military and churches. That lowers frictions and makes contracts and courts easier to handle.
Second, Mozambique is rich under the surface. It holds large coal reserves, giant gas fields in the Rovuma basin, important fishing grounds and minerals such as graphite, heavy sands and rubies.
To turn that wealth into growth, it needs infrastructure. Lula wants Brazilian companies to help build it, with BNDES providing the long-term financing that private banks often avoid in riskier markets.
But Brazilians have seen this movie before. In the 2000s and early 2010s, BNDES poured billions into foreign projects, many linked to a small group of powerful contractors. Later, corruption scandals, opaque pricing and unpaid loans exploded into the open.
Some works were abandoned. Several countries fell behind on payments. Mozambique is one of the states that still owe Brazil money from that era. For Maputo, fresh Brazilian credit is tempting in a time of high debt and limited access to global markets.
For Brazil, the question is whether this push will be strict, transparent and tied to real returns, or whether it risks becoming another expensive overseas adventure that ordinary taxpayers end up paying for long after the ribbon-cutting ceremonies are over.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief