Mozambique: Lack of rain and pests destroy more than 125,000 hectares of crops in Tete province
File photo: Notícias
The Mozambican government on Tuesday ratified an agreement under which the International Fund for Agricultural Development (IFAD) will provide a line of credit of 62.1 million US dollars intended for the “financial empowerment” of 288,000 Mozambicans involved in farming, fishing and the development of micro, small and medium enterprises in the rural areas.
Announcing the ratification of the agreement, which was signed on 12 June in Rome, where IFAD is headquartered, the government spokesperson, Deputy Minister of Culture and Tourism Ana Comoana, said this fund has no time limit.
Speaking to reporters at the end of the weekly meeting of the Council of Ministers (Cabinet), she said the fund created by the IFAD line of credit will be rotating – that is, when the beneficiaries repay their loans, the money can be lent out again. The idea, Comoana added, is that the fund should last for many years.
Rural entrepreneurs who have already drafted their projects can now submit them to the local administrators.
The project, known as “Rural Enterprise”, is far from the first of its kind. In fact there have been repeated attempts to kick-start the rural economy through loans, which have largely failed because beneficiaries are unable or unwilling to repay the money.
The most notorious such scheme was the District Development Fund (FDD), set up under President Armando Guebuza in 2006. Under this scheme a lump sum of seven million meticais (about 233,000 US dollars, at the exchange rate of the time) was delivered from the state budget to every district in the country. It was then supposed to be lent to people who submitted viable projects which would create jobs and boost food security.
But there was no mechanism to pursue debtors and if necessary haul them before the courts. The FDD was supposed to be a rotating fund, but since most of the beneficiaries never repaid their loans, the fund could not be replenished.
For about a decade the state budget poured money into the FDD – but rare indeed was the district where even as much as 20 per cent of the money was ever repaid.
The same fate would not befall the IFAD credit, Comoana said, because the government would provide the beneficiaries with technical support, and build up their capacity to manage projects.
“In addition to financing the activities themselves, the government envisages empowering communities with skills so that they can better manage the financing to which they will have access”, explained Comoana.
She thus assumed that previous loan schemes failed for technical reason and the inexperience of the borrowers, rather than because the beneficiaries never had any intention of repaying the money.
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