CTA asks for unprecedented financing to leverage productive sector in Mozambique

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CTA asks for unprecedented financing to leverage productive sector in Mozambique

3:20 CAT | 21 Jan 2020

Photo: A Verdade

The Confederation of Economic Associations (CTA) requested on Friday (17) the development of credit lines, with grace periods of at least 18 months and maturity of over five years, with single-figure interest rates, to leverage the productive sector and boost economic growth in Mozambique.

Reacting to the speech given by Filipe Nyusi after his inauguration for a second term as President of the Republic, the CTA “positively appreciated the vision contained in it”, but left a list of specific wishes to leverage the activity of the private sector.

“In the approach to improving access to finance for the productive sector, the CTA agrees with the need to create a Development Finance Institution (DFI) aimed at enabling business in the productive sectors – and not just for financing. Therefore, it will be important to look at and evaluate the role of existing institutions with a similar role, to avoid duplication of efforts and dispersion of resources. With regard to financing, the productive sectors need development financing lines, with grace periods of at least 18 months and maturity over five years, and with interest rates below double digits, something that the market has never had. Any new mechanism or instrument designed to achieve these expectations should respond to these characteristics,” CTA vice president Álvaro Massinga stated.

Massinga explained to journalists what is needed to fight poverty through agriculture.

“Special attention should be paid to the management of the entire logistical process for agricultural inputs, which has greatly affected the sector’s productivity. On the other hand, it is important that investment spending in the sector is gradually decentralised. Here, since agriculture is a constitutional priority, it is worth evaluating the possibility of creating a “one-stop shop” for agriculture only, reducing the negative impact of the complexity of access to land, financing and import authorisations and handling of inputs. It is true that the 10% of the State Budget for agriculture is important, but the development of this basic sector should not be just the Ministry of Agriculture’s responsibility.”

The CTA asked for “incentives for employing companies opening up new job opportunities”, and specifically demanded incentives for “companies which, in pursuing their productive activity, have invested or intend to invest in the expansion of the electricity network.”

“The challenge remains as to reinstating the reduced rate of the IRPC for agriculture, as well as to pass a National Content law. The CTA also advocates greater predictability of the legislative process in Mozambique, and calls for the introduction of specific rules which will regulate the entire process of public consultation in the drafting of laws, making the process predictable and inclusive,” Massinga noted.

By Adérito Caldeira

Source: A Verdade