Is there something fishy about Mozambique's debt?

One of the loans was for Mozambique's tuna industry

Even though Mozambique has regularly been named one of the fastest-growing African economies in recent years, the donors who still fund about a third of the national budget are an important part of the country's success.

The main contributors are the International Monetary Fund (IMF), World Bank, the African Development Bank, the European Union and the UK.

However things have now taken a bit of a sour turn.

It was recently discovered that between 2013 and 2014, Mozambique took out loans to the tune of nearly $2bn (£1.4bn) in order to fund various projects taken on by state-owned companies.

The country has a $1bn threshold before it is required to consult its partners.

In this controversial case, it seems that more debt was taken on to finance the acquisition of a large tuna factory and the remaining funds are said to have been channelled towards a contract in maritime security and some other deals involving commercial companies in which the state is a leading shareholder.

The Mozambican government stood as guarantor of the loans, meaning the state would repay them if things went wrong.

There have also been allegations of corruption over the deals but no-one has been arrested or charged.

President Filipe Nyusi came to office 18 months ago after the debt had been acquired. He insists that his team knew nothing about this.

President Filipe Nyusi says the scandal will not affect his anti-corruption drive

From his sumptuous office overlooking the Maputo Bay, he told the BBC: "We also have a number of questions as to why this was not tabled to the National Assembly and correct procedures not followed."

The IMF, World Bank and UK governments have now decided to hold back on signing further loans to Mozambique. They first want everything to be straightened out.

But even this part of the story does not make much sense.

After all, Mozambique is a country that has been closely monitored, even coached, by the international community for nearly a decade, following the debt relief the country received a decade ago.

The programme was known as the Highly Indebted Poor Country Initiative (HIPC) through which approximately $3bn of Mozambique's bad debts were written often off by the international community.

How is it possible that foreign creditors missed the red flags?

It is hard to understand how the monitoring system works. Unfortunately we have yet to ask the donor community this simple question directly.

Mozambique in numbers:

Population: 27 million

55% living in poverty

Average annual income per person: $600

Annual economic growth 2010-14: 7.2%

Life expectancy: 55

Source: World Bank

Foreign creditors are demanding greater transparency in 2016.

That may be a challenge for a fairly new president whose loyalties to the governing party, Frelimo, are deep rooted.

If indeed there were shenanigans in the acquisition of new debt, his political comrades may have been involved.

Nonetheless President Nyusi insists that his anti-corruption drive has not been undermined by the latest scandal.

Instead he says that "things are happening already even in my new cycle of government.

"There are administrators from districts, there are mayors from municipalities and there senior officials from administration who have been taken to responsibility due to embezzlement of resources or corruption."

However in this saga, the names of senior officials have been mentioned and going after them would be the real test of President Nyusi's mettle.

His demeanour in our interview suggests that he has little appetite for that.

"There is a presumption of innocence and we cannot judge to say that so and so has done this or that," he said.

It is estimated that these undisclosed loans could push up Mozambique's debt to 20% of the value of its economy. That is a heavy burden for small country to bear, especially in today's volatile markets.

Also it would be too simplistic to assume that the previous government was only acting irrationally or perhaps with criminal intent.

The larger global context should also be considered.

Mozambique has enjoyed rapid economic growth in recent years

Two years ago, before the global markets turned and commodity prices dropped, Mozambique was a very attractive investment destination.

The debt write-off from the HIPC era gave the country a clean slate and a new balance sheet.

In addition there was also the discovery of natural gas offshore, estimated to be 3 trillion cubic feet.

Once tapped, the gas industry could turn Mozambique into the world's fourth largest producer.

So the potential to create a new economy around energy is huge.

'Gas is not edible'

It is probable that at the time, some of these loans were predicated on an expected economic boom in the near future.

A case of a government counting its chickens before they hatched.

President Nyusi is optimistic that Mozambique will rise above this scandal and says the economy is diverse and has a great deal to offer investors.

"There is gas but gas is not edible. So we still put priority in agriculture," he says.

While the emphasis is on how the donors have reacted, and what they may do, they are not the only concerned parties.

Even ordinary Mozambicans have expressed concerns.

Many Mozambicans remain stuck in poverty

Many people are feeling the pinch of rising food prices, a weaker currency and the false hope of jobs that have not materialised in the new energy and gas sectors.

Civic leaders tried to launch public protests a week ago, but it has been reported that they were met by armoured vehicles and military patrols.

The political agitation is not only centred on these latest concerns, there are growing tensions between the government and opposition Renamo party in the north and central regions.

Armed groups loyal to Renamo, a former rebel group, have begun an insurgency.

There are frequent skirmishes and aid agencies say that 4,000 people have fled the country becoming refugees in neighbouring Malawi.

Despite the headlines, the president insists "there is no civil war in Mozambique. The government is not interested in war.

"We are merely defending our people against an armed political party. We are defending our democracy."

But as he defends Mozambique's democracy, he will also need to defend the honour of his administration and Frelimo.

The first thing will be to prove that his government is committed to transparency and accountability.