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Mozambique ratifies $62.1m IFAD loan for rural poor

The Mozambican government says it has ratified an agreement under which the International Fund for Agricultural
Development (IFAD) will provide a line of credit of $62.1 million.Speaking to journalists in Maputo on Wednesday, Cabinet spokesperson Ana Comoana, said the fund which has no
time limit is earmarked for the financial empowerment of 288,000 Mozambicans involved in farming, fishing and the development of micro, small and medium enterprises in rural areas.

“The government had ratified the loan which was created by the IFAD line of rotating credit and that is when the beneficiaries repay their loans, the money can be lent out again and the idea is that the fund should last for many years” Comoana who is also Deputy Minister of Culture and Tourism explained.

The agreement was signed on 12 June in Rome, where IFAD is headquartered,

Rural entrepreneurs who have already drafted their projects can now submit them to the local administrators.

The project, known as “Rural Enterprise”, is far from the first of its kind.

There have been repeated attempts to kick-start the rural economy through loans, which have largely failed because
beneficiaries are unable or unwilling to repay the money.

The most notorious of such a scheme was the District Development Fund (FDD), set up under then President Armando Guebuza in 2006.

Under this scheme a lump sum of about $233,000 was delivered from the state budget to every district in the country.

It was then supposed to be lent out to people who submitted viable projects which would create jobs and boost food security.

But there was no mechanism to pursue debtors and if necessary haul them before the courts.

The FDD was supposed to be a rotating fund, but since most of the beneficiaries never repaid their loans, the fund could not be replenished.

For about a decade the state budget poured money into the FDD – but rare indeed was the district where even as much as 20 per cent of the money was ever repaid.

“In addition to financing the activities themselves, the government envisages empowering communities with skills so that they can better manage the financing to which they will have access” Comoana said.

She said previous loan schemes failed for technical reason and the inexperience of the borrowers, rather than because the beneficiaries never had any intention of repaying the money.

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