Development finance institution the African Development Bank (AfDB) has approved a $47.09-million grant for the first phase of Mozambique’s Pemba-Lichinga Integrated Development Corridor, a special agro-industrial processing zone, the bank said on January 5.

The grant, from the African Development Fund, will help improve agricultural productivity and agribusiness development in the Niassa province by advancing institutional capacity, skills and entrepreneurship to spur agricultural value chain growth.

The project will pilot improved policy and development coordination between the Niassa province and national departments, especially with the Mozambique Ministry of Industry and Commerce and the Ministry of Agriculture and Rural Development.

The special agro-industrial processing zone is important as a shared facility to enable agricultural producers, processors, aggregators and distributors to operate in the same neighbourhood to reduce transaction costs, share business development services and increase productivity and competitiveness, said AfDB Mozambique country manager Cesar Augusto Mba Abogo.

“Special agro-industrial processing zones can promote the participation of small producers in value chains and value addition, thus offering an inclusive development model,” he stated.

Special agro-industrial processing zones are integrated development initiatives designed to concentrate agroprocessing activities within areas of high agricultural potential to boost productivity, integrate production, processing, and marketing of selected commodities.

These zones will enable agricultural producers, processors, aggregators and distributors to operate in the same vicinity to reduce transaction costs and share business development services for increased productivity and competitiveness.

Coupled with bringing adequate infrastructure, such as energy, water, roads, and information and communications technology, besides others, to rural areas of high agricultural potential, special agro-industrial processing zones will attract investments from private agro-industrialists or -entrepreneurs to contribute to the economic and social development of rural areas.

The initiative is in line with the Mozambique National Development Strategy 2015-2035, which seeks to improve the living conditions of the population through structural transformation of the economy and expansion and diversification of the production base. It is consistent with the concerted efforts of the international community to support Mozambique to promote inclusive economic growth and peace-building in the north.

The project also aligns with the AfDB's Country Strategy Paper 2018-2022 for Mozambique, with a focus on the northern provinces, as well as the bank’s Feed Africa Strategy for agricultural transformation.

Mozambique Industry and Trade Minister Carlos Mesquita described the project as a “game-changer that would transform the economy, promote social inclusion and foster peace by tackling important industry-enabling factors, such as infrastructure for development”.

"The project will build on a long list of bank interventions in northern Mozambique to provide infrastructure and unlock the agricultural potential of the host corridor. The most recent of these bank-supported projects are the N13 Cuamba-Muíta and the N14 Montepuez-Ruaca roads linking the provinces of Cabo Delgado and Niassa," the AfDB said.