Mozambique: Germany grants over seven million USD for business recovery

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Mozambique: Germany grants over seven million USD for business recovery

8:09 CAT | 30 Mar 2021

Photo: O País

The German development bank KFW (Kreditanstalt für Wiederaufbau) will disburse a six million Euro (more than seven million US dollars) non-refundable emergency grant, to assist Mozambique’s micro, small and medium companies (MPME) faced with severe cash flow problems, as a result of the Covid-19 pandemic.

On Monday, five Mozambican commercial banks (Millennium BIM, BCI, Société Générale, MyBucks and Microbanco Confiança), operating on the credit market, signed in Maputo with KFW deals to implement the emergency grants, intended to enable the companies to make a gradual return to normal.

The Governor of the Bank of Mozambique, Rogerio Zandamela, said the financial resources will alleviate the pressure on the business class, after the restrictions imposed by Covid-19 and prevent many more Mozambicans from losing their sources of income.

“We would like to entreat the financial institutions that will administer the grants to speed up the availability of the resources, but without prejudice to compliance with the eligibility criteria,” Zandamela said.

The German Ambassador, Lothar Freischlader, said the benefiting MPMEs can use the funds to pay wages, rent, installments in amortisition of bank loans, supplier’s pending invoices, and electricity and water bills, for the next three months.

Freischlader also announced that German Financial Cooperation will open a nine million Euro credit line to MPMEs intended to provide credit in local currency, on favorable terms, where it is not yet available.

“The funds will aid micro, small and medium companies to finance the needed investments, after the pandemic, to ensure reconstruction and growth of business activity,” the diplomat said, pointing out that a 2.5 million Euro fund for technical assistance is in the pipeline, for the financial institutions participating.

The goal, he said, is to support the financial institutions in developing products adapted to the needs of the micro, small and medium companies.

Since 2011, German Financial Cooperation, through KFW, has disbursed about 65 million Euros to several projects in the financial sector. A substantial part of the contribution has been in the form of credit lines, which, from the Ambassador’s point of view, have been successfully implemented over the last few years.

Freischlader hoped that rather than simply assisting the micro, small and medium sized companies in Mozambique to survive the Covid-19 pandemic, they will contribute to further investments focused on the rural areas and on agriculture, thus increasing productivity, job creation and, above all, the sustainable reduction of poverty across the country.

Source: AIM