Higher education reforms in Mozambique have suffered a severe blow after Sweden suspended financial assistance to Eduardo Mondlane University because of corruption.
There are fears that other key donors in the country's $200 million (£128 million) tertiary education restructuring programme might follow suit.
Also in jeopardy is a $60 million World Bank credit support for expansion of public universities in Mozambique.
The Swedish embassy officials in Maputo said aid would be reinstated only after the university had shown how funds from the Swedish International Development Agency had been used (Sida).
Mondlane's vice-chancellor, Brazao Mazula, was last week summoned to Stockholm to explain cases of financial mismanagement and nepotism.
It is alleged that funds designated for PhD staff development at Mondlane benefited people outside the university system. Although the funds should have been used for PhD work, Sida had not objected to scholarships being awarded to lecturers intending to study for master's degrees. However, most of the money was channelled to people who were not lecturers at the university and did not even have the standard first degree.
Consequently, Sida refuses to sign a new agreement to provide $10 million over three years for scholarships to lecturers to undertake postgraduate studies. Sweden has withdrawn substantial funds for the university's running costs.
Suspension of assistance by Sweden has created a credibility gap at Mozambique's oldest and largest university, which was expected to take the lead in higher education reforms.
Through a ten-year strategic plan, Eduardo Mondlane University was to play a significant role in the increase in the number of university graduates in Mozambique.
Only about 800 students graduate from the country's universities each year.
As a consequence, Mozambique has the biggest shortage of educated manpower in eastern Africa.