European Investment Bank: Three billion meticais to boost Mozambican SMEs

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European Investment Bank: Three billion meticais to boost Mozambican SMEs

12:59 CAT | 09 Jun 2016

The European Investment Bank (EIB) announced on Monday a credit line worth EUR45 million (about three billion meticais) to boost the growth of small and medium enterprises (SMEs) in Mozambique

It is estimated that the program, which promotes employment in micro, small and medium enterprises, will generate at least 20,000 jobs in the country over the next three years.

Filipe Marques, representative of the Frankfurt School of Finance and Management, an organization that provides technical assistance to the financial sector in Southern Africa, explained that the EIB was supporting local SMEs’ access to medium and long term financing via credit lines available through Mozambican commercial banks, pointing out that other funds had been channelled directly to large companies.

Marques indicated that the first tranche of EUR30 million was channelled to the Millennium BIM and EUR10 million to Moza bank.

According to Marques, it is up to national banks to determine how finance is accessed.

“The EIB does not set goals for access to finance. It is up to commercial banks to set such criteria. What companies need to do is to go to banks and ask for information on financing conditions,” Marques explained.

Malawi, Zambia, Botswana and Namibia and soon, Zimbabwe, will also benefit from this credit line.

Inocencio Paulino, president of the Small and Medium Enterprises Association, said he hoped that SMEs would have access to this funding in practice.

“The big challenge is that the financial products on the market, including this one, are often not adjusted to the situation of SMEs, which have their own characteristics,” he noted, adding that commercial banks also needed to equip their managers to give appropriate explanations to small-business owners.

“Sometimes the banks use these credit lines improperly, implying that this is their own money and applying interest rates not adjusted to the set goals,” Paulino said.