China Eximbank provides $156 million loan for Phase 2 of Analog to Digital Migration Project (Linked to Project #57618, #72888)

On February 27, 2017, the Government of Mozambique and China Eximbank signed a $156,000,000 loan agreement for Phase 2 of the Analog to Digital Migration Project. The loan carried the following borrowing terms: a 20 year maturity, a 7 year grace period, and a 2% interest rate. The borrower was expected to use the proceeds of the loan to finance a $133 million commercial contract between the Government of Mozambique and StarTimes Media (Mozambique) Co., Ltd, which was signed in 2014. The purpose of the project was to facilitate Mozambique’s transition from analogue to digital broadcasting systems. The project involved construction of a nationwide digital transmission network, digital transformation of the national TV station, construction of digital TV terminals, and training of Mozambican technicians. StarTimes Media (Mozambique) Co., Ltd — a project company and joint venture of StarTimes and Focus 21 Mozambique — was the contractor responsible for project implementation. On March 19, 2017, a project commencement ceremony took place. The project was originally expected to reach completion by the end of 2021. However, it was officially completed in October 2020. Then, in December 2020, Chinese state media reported that StarTimes had expanded the country’s satellite television transmission network to cover 2.5 million rural residents. A ceremony marking the digital transformation of the national TV station took place in June 2021. Phase 2 was plagued by controversy because the commercial contract was granted to StarTimes Media (Mozambique) Co., Ltd through a (non-competitive) sole-source procurement process and Focus 21 Mozambique is associated with the family members of the President of Mozambique. There are also some indications that the China Eximbank loan for Phase 2 of the Analog to Digital Migration 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 Project ID#66283).

Additional details

1. The Portuguese project title is Projecto de Migração Analógica para Digital or Migração Digital II. The Chinese project title is 莫桑比克全国广播电视数字化整转项目 or 莫桑比克全国广播电视数字化整转项目. 2. In the database of Chinese loan commitments that it released in July 2020, SAIS-CARI does not record the borrowing terms (20 year maturity, 7 year grace period, and 2% interest rate) of this loan. AidData draws the borrowing terms from Mozambique's Ministry of Economy and Finance. 3. Phase 1 of the Analog to Digital Migration Project was funded by China Eximbank through a separate $60 million loan that is captured via Project ID#72888. 4. The project is also related to Project ID#57618, the Ten Thousand African Villages Project with StarTimes.

Number of official sources

10

Number of total sources

28