The board of governors of the African Development Bank (AfDB), through its private-sector window, has approved a $9-million line of credit (LOC) equivalent in Mozambique metica to Moza Banco, one of Mozambique’s fastest-growing financial institutions with strong focus on small and medium-sized enterprises (SMEs).
The LOC would support 70 well-diversified SME subprojects in various sectors, including manufacturing, commerce and trade, services, tourism, construction, agriculture and transport.
The bank said in a statement on Thursday that the facility would enable the beneficiary SMEs to add 400 new employees and would induce transfer of technology, the development of local entrepreneurship and the enhancement of technical skills.
The subprojects would also contribute to government revenues in the form of value-added, income and corporation taxes.
The approval of the LOC to Moza Banco formed part the AfDB’s Africa SME Programme to develop and expand its SME financing activities and provide medium- to long-term financing options to local SMEs in Mozambique.
Approved by the AfDB’s board of directors in July last year, the programme was a four-year, $125-million funding initiative which was also supported by a $3.98-million technical assistance package from the Fund for African Private Sector Assistance – an organisation aimed at supporting, small, medium- and micro sized enterprises in Africa.
The Africa SME Programme would provide the necessary longer-term finance and a technical assistance package to address a number of constraints faced by around 25 targeted financial institutions and their SME clients across Africa.
The programme had already approved the first two of 25 financial institutions that would benefit from its funding and technical assistance in Tanzania and Zambia.
These institutions were the DCB Commercial Bank, a community bank in Tanzania that would benefit from a $5-million LOC to uplift the standard of living of low-income people by providing loans to disadvantaged Tanzanians, and the Christian Enterprise Trust of Zambia (CETZAM), a registered deposit-taking micro-financing institution, which would receive a $1.5-million LOC to increase its loans to Zambia’s micro and small entrepreneurs.
The CETZAM would also benefit from the Fund for African Private Sector Assistance’s technical assistance, supported by the governments of Japan and Austria.
Throughout its ongoing selection process, the Africa SME Programme would avail further longer-term resources to thousands of SMEs, including women and youth, thus, contributing to job creation, poverty reduction and inclusive growth on the continent.