The crisis in Mozambique’s electronic banking systems entered its fourth day on Monday, with no end in sight.

The entire network operated by SIMO (Mozambique Interbanking Company) is still down, not because of any technical fault, but because the Portuguese company that owns the software application, BizFirst, has cut Mozambique off.

Most Mozambican banks are partners in SIMO, at the insistence of the Bank of Mozambique, which holds a 51 per cent stake in SIMO. The largest commercial bank, however, the Millennium-BIM (International Bank of Mozambique), is outside of SIMO – not as a sensible precaution, but merely because it was too large to be easily incorporated.

The Mozambican branch of the Nigeria-based United Bank for Africa (UBA) has also not yet joined SIMO, but it has very few clients.

The collapse of SIMO’s network means that most bank cards and ATM’s are not working. Shops and other establishments are declining SIMO cards, and this creates a desperate situation for Mozambicans outside the country, who find that they are unable to pay for hotel bills or medical care.

Prior to this collapse, the SIMO network was handling 465,000 transactions a day inside Mozambique, and 14,000 international transactions.

With the ATMs not releasing cash, clients have little option but to queue up at bank branches – a return to the days when people had to take time off from work to queue up at the bank. On Saturday, at the urging of the central bank, many of the SIMO banks, opened and allowed clients to withdraw cash without paying the usual commission. With SIMO POS (Point of Sale) card readers not working, customers are forced to pay for purchases in cash, and to walk around the streets with their pockets full of banknotes.

The banks are offering no advice for their clients. Not a single bank placed any announcement on Monday in the Mozambican press offering its clients advice. The only advert, placed in both daily papers, “Noticias” and “O Pais”, was from Standard Bank, boasting that it is “the best investment bank in Mozambique” – which is not likely to bring much comfort to clients unable to withdraw money from Standard Bank ATMs.

SIMO’s reaction to the crisis has been a public relations disaster. Only many hours after BizFirst cut off the SIMO network, did SIMO react with a terse release saying that the system was down “for reasons beyond our control”. Then SIMO fell silent until its chairperson, Gertrudes Tovela, gave a press conference on Sunday morning, at which she accused the software provider of “blackmailing” SIMO by demanding unsustainable conditions.

But Tovela refused to name the provider (though journalists had no difficulty in finding it was BizFirst), or to give any substantial detail on the conditions demanded. Tovela was woefully unprepared, and did not even provide the reporters with a summary of the contractual arrangements between SIMO and BizFirst.

She did, however, insist that SIMO owes nothing to the provider, and has paid the licence for the software in advance, up to August 2019.

But BizFirst struck back in a lengthy statement a few hours later, denying that SIMO had paid anything at all, and indignantly rejecting the accusations of blackmail.

The BizFirst claim is that its original relationship was not with SIMO at all, but with Interbancos, a company which had most of the Mozambican banks as its shareholders. From 2004 onwards, it provided Interbancos shareholders with the Ponto24 computer application, and the associated facilities for issuing bank cards.

But SIMO acquired Interbancos in its entirety in 2017. SIMO seemed to believe that it just inherited the Interbancos relation with BizFirst, but that was not BizFirst’s interpretation. BizFirst wanted to sign new contracts with SIMO, and says that SIMO agreed to this in a Memorandum of Understanding signed in March 2016.

New contracts, says BizFirst, were necessary to licence SIMO to use the software, but SIMO never signed such contracts, despite concessions BizFirst says it made, including lowering the price. “For more than two years, SIMO/Interbancos illicitly used the BizFirst software to process the new SIMO bank network”. BizFirst accused.

Neither SIMO nor Interbancos had paid for licensing the use of the software. The payment made in August this year, BizFirst claimed, was not by SIMO at all, but by Interbancos (although by then this company was being swallowed up by SIMO), and it only covered the annual renewal of the provision of technical support services.

That payment, said BizFirst, “does not give SIMO or Interbancos any right to use the BizFirst software” – although SIMO clearly had quite a different interpretation of the payment, and believed it was buying a licence.

Old contracts between BizFirst and Interbancos ended in October, when the Interbancos shareholders voted to dissolve the company.

BizFirst says it repeatedly warned SIMO, that unless the situation was legalised, the software licence would expire, endangering the entire SIMO network – which happened on Friday.

BizFirst added that it has already put the matter in the hands of its lawyers who will seek compensation from SIMO for the unauthorised use of the software, and the violation of BizFirst’s intellectual property rights.

Following Tovela’s press conference, BizFirst also intends to sue SIMO for defamation, and demand further compensation for the damage done to its reputation.

Despite the BizFirst threats, SIMO has once again fallen silent. 24 hours after the BizFirst statement, neither SIMO nor the Bank of Mozambique have said anything publicly.