Agro-Guarante enables loans to Mozambican SMEs

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Agro-Guarante enables loans to Mozambican SMEs

12:14 CAT | 05 Jul 2017

Courtsey of Gapi

Gapi’s “Agro-Guarantor” credit guarantee facility facilitated bank loans amounting to approximately 150 million meticais to 65 small and medium enterprises involved in agribusiness up to the end of the first half of 2017.

The guarantee fund for bank loans, designed to increase access to credit by SMEs in agro-business value chains and backed by the Danish embassy, has been operating since 2015.

To date, the fund has provided guarantees to loans granted by the BCI, BIM, BTM and FNB commercial banks. In the first half of 2017, and despite the scale-back of agriculture and agribusiness financing in general, loans amounting to about 40 million meticais were granted to 65 companies, employing around 1,700 workers.

The financial service has benefited small and medium enterprises in eight provinces, Zambezia, Tete, Nampula and Gaza most prominent among them, but Agro-Guarantor manager Gapi believes that the impact and scope of this guarantee fund can still be improved.

The Agro-Guarantor concept initially had support from Portugal thanks to technical assistance provided by the Portuguese Mutual Guarantees Society, but the lack of a legal framework to implement a system of mutual guarantees led Gapi to seek support from Denmark.

Agro-Guarantor shares the credit risk with banks as a way to encourage them to increase financing to agribusiness operators. These guarantees allow small and medium-scale farmers to expand their businesses through the acquisition of more inputs for production and improving marketing.

Source: Gapi press release