Mozambique’s Confederation of Business Associations (CTA) on Tuesday called upon government and the World Bank to expedite the establishment of a Credit Guarantee Fund (FGM) by the end of 2023.
CTA thinks that the Fund, which got a short in the arm with the announcement by the World Bank Board of Governors of a $300 million International Development Assistance credit, will help improve the country’s business environment by tackling the greatest challenge to the private sector, namely access to finance and economic opportunities in Mozambique.
The FGM is part of government’s reform initiative, Pacote de Aceleração Económica – Economic Acceleration Package (PAE), launched in August 2022.
Consequently, the Fund will “help mobilise liquidity in the banking system and unlock financing to SMEs, including women-owned firms and those operating in regions or sectors vulnerable to climatic shocks. It will also increase economic opportunities by deepening business environment reforms, expanding market access, and providing training and financing,” according to a World Bank statement.
Speaking on 4 March at a press conference, Agostinho Vuma, the chairperson of CTA, said that “the Credit Guarantee Fund will be an added value in the reduction of the cost of money and interest rates for national businesspeople, mainly by reducing the risk to the local financing bank, which will automatically reduce the prime rate tax and through direct access to loans the rate could stand at 20 per cent, which is lower than what commercial banks offer.”
It is expected that the measure will create 26,000 new jobs over six years.
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