The Banco de Moçambique (BM), represented by the Board Member for Monetary Stability, Jamal Omar, took part yesterday (8 October) in the rollout of the Innovative Financing for Agribusiness Project (FINOVA), at the Polana Hotel in Maputo.

The project, led by the Ministry of Planning and Development (MPD), arises from cooperation between the governments of Germany and Mozambique, implemented through a partnership between the BM and the German Development Bank (KfW), which is providing an agricultural credit line worth EUR 33.5 million.

The BM, in partnership with Absa Bank, Standard Bank, BCI, GAPI, and Microbanco Confiança, will be responsible for operationalizing this financing instrument, which includes a credit line consisting of EUR 20 million for working capital and approximately EUR 13.5 million for investment capital.

Meanwhile, the Zambezi Valley Development Agency will manage a rural financing fund, which will benefit from the allocation of EUR 12 million of the overall FINOVA amount.

Speaking at the event following the signing of contracts with the participating financial institutions, Jamal Omar said that these institutions were selected based on their experience in agricultural financing, prudential and regulatory soundness, responsible credit portfolio management, and compliance with environmental and social standards.

“These financial institutions will play a key role in channelling funds to leading companies in agricultural value chains and small producers, under more favourable conditions, with interest rates ranging between 8.5% and 17.0%, substantially below the market average of 23%, along with suitable maturities and instruments tailored to the specific needs of beneficiaries operating in rural areas,” said the Board Member.

Jamal Omar also underscored the importance of this financing for the agricultural sector and its potential tangible impacts. “This new initiative comes at a crucial time because, despite the importance of the agricultural sector, only about 2% of the total credit granted by the financial system to the private sector is directed to agriculture. This clearly demonstrates the need for innovative and structural solutions to finance agribusiness. FINOVA has the potential to help close this gap, given the amount made available, which is equivalent to 56% of the total stock of credit currently granted to the agricultural sector,” he stated.

The event, chaired by the Minister of Planning and Development, Salim Valá, was attended by the German Ambassador, Ronald Münch; the Director-General of the Zambezi Valley Development Agency, Celso Cunha; representatives of KfW and the participating financial institutions; the project consultant, Frankfurt School of Finance; and representatives of agribusiness companies.