Mozambican SMEs want flexibility in credit lines

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Mozambican SMEs want flexibility in credit lines

5:01 CAT | 14 Jun 2016

Notícias (File photo)

Mozambique’s small and medium enterprises (SMEs) are telling bank managers they need more flexible access to the credit lines available in the country.

Speaking last week in Maputo, the President of the Small and Medium and Enterprises Association (APME), Inocencio Paulino, argued that the removal of barriers to access to bank credit can contribute to the expansion of micro and small companies and increase the number of stakeholders in the socio-economic transformation of the country.

“The big challenge is that the financial products on the market are often not adjusted to the situation of SMEs, which have their own characteristics,” Paulino remarked.

Paulino also points out that entrepreneurship is a relatively new concept in Mozambique, so although there are many Mozambicans producing something, most flourish better in the informal sector.

“The result is they often lack the formalities necessary to discuss finance with a bank. Other aspects are the governance practices of the companies, which are still somewhat lacking.” There is very little support in relation to such needs, Paulino says, and most bank managers have little interest in explaining financing options.

“When a small entrepreneur goes to the bank, they often talk about credit lines commercial banks have, and not about other options open. This means that they end up misusing the money made available for SMEs,” Paulino says.

Paulino was speaking at the launch in Maputo of a EUR45 million European Investment Bank (EIB) line of credit worth for small and medium-size businesses in Mozambique.

The idea is to promote employment in micro, small and medium-size enterprises. It is estimated that the program will create 20,000 jobs in the country over its three year span.

Filipe Marques, 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 credit line would be available through Mozambican commercial banks.

Other funds, Marques said, had been channelled towards larger companies.

Marques said that the first EUR30 million tranche was channelled through the Millennium BIM and EUR10 million euros through the Moza bank, adding that it was up to national banks to facilitate access to finance.

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

In addition to Mozambique, Malawi, Zambia, Botswana and Namibia will benefit from the credit line, with Zimbabwe expected to come on board soon.

Source: Notícias