The U.S. government and Banco Terra make credit available to Mozambican Small-and Medium-sized Enterprises

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The U.S. government and Banco Terra make credit available to Mozambican Small-and Medium-sized Enterprises

8:31 CAT | 27 Sep 2018

Jennifer Adams, Director of USAID-Mozambique, shakes hands with the President of Banco Terra de Moçambique, António Porto, at the USAID headquarters in Maputo, after signing an agreement that will provide US $ 4.2 million for Mozambican Small-and Medium-sized Agricultural Enterprises.

The U.S. Government’s Development Credit Authority (DCA) and Banco Terra de Moçambique (BTM) today signed a new partnership that will make available up to US$4.2 million in local financing for Small-and Medium-Sized Agricultural Enterprises (SMEs) in Mozambique. The ten-year program seeks to address the current lack of financing to this key borrower group.

The program represents a crucial step toward enabling Mozambique’s private sector to access capital, grow businesses and, ultimately, create more jobs. The agreement will unlock critical resources that will help spur innovation, foster investment and provide critical resources to one of the most under-served segments of Mozambique’s economy. The U.S. – Mozambique agreement has a 50 percent target for lending to new borrowers in the agriculture sector with an average loan size of US$300,000 (18,000,000 MTS) for SMEs.

The signing of this agreement reaffirms the United States’ commitment to Mozambique’s economic development and diversification, and is one component of broader ongoing U.S. support for Mozambique. The guarantee will help mitigate the risks of lending across agricultural value chains and into new regions of Mozambique, helping the bank to extend loans to new beneficiaries while reducing collateral requirements.

The DCA works with investors, local financial institutions, and development organisations to design and deliver investment alternatives to mobilise local financing to advance countries’ development priorities. To date, the DCA in Mozambique mobilised US$45.6 million in financing for agriculture since 2009, through six commercial banks, of which US$17.9 was loaned through BTM.