On 30 March, the World Bank Board of Directors approved a $300 million credit for the Mozambique Access to Finance and Economic Opportunities Project or Mais Oportunidades project, spanning six years (2023-2029), financed by the International Development Association, according to a statement from the Bank.
The money is earmarked to support Mozambique to “to address multiple economic shocks and market constraints that prevent micro, small, and medium enterprises (MSMEs) and individuals, including informal workers, from accessing and using financial services and taking advantage of economic opportunities,” said Idah Z. Pswarayi-Riddihough, World Bank Country Director for Mozambique.
Crucially, the statement claims that the credit will support the Mozambican government’s reform initiative, “Pacote de Medidas de Aceleração Económica (PAE), including through the creation of a national Credit Guarantee Fund – the first of its kind in Mozambique – to help mobilize 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 is hoped that it will create over 26,000 new jobs over six years, from 2023 to 2029.
Comment
What the statement does not say is how long it will take the World Bank to come calling to collect the $300 million credit – normally, IDA credit repayments are stretched over 30 to 40 years. Luckily, credits for reform have a zero-interest rate charge attached, meaning that Mozambique will just have to pay the principal.
Although the injection of cash into the financial sector would be greeted with satisfaction, the Confederation of Business Associations (CTA) is likely to decry the lack of clarity with regards to the interests the banks are likely to charge. It does not mean that commercial banks would lower their interests to factor for the zero-interest rate charged by IDA.
Clearly, like everyone else, the World Bank is hoping on the gas windfall from the LNG fields in Cabo Delgado.
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