MAPUTO– The Mozambican government has ratified an agreement under which the International Fund for Agricultural Development (IFAD) will provide a line of credit of 62.1 million US dollars for the financial empowerment of 288,000 Mozambicans involved in farming, fishing and the development of micro, small and medium enterprises (SMMEs) in rural areas.
Announcing the ratification of the agreement, which was signed on June 12 in Rome, where IFAD is headquartered, Government Spokesperson and Deputy Minister of Culture and Tourism Ana Comoana, said the fund had no time limit.
Speaking to the media after Tuesday’s weekly meeting of the Council of Ministers (Cabinet), she said the fund created by the IFAD line of credit would be a rotating one where beneficiaries repay their loans and the money can be lent out again. The idea, Comoana added, is that the fund should last for many years.
Rural entrepreneurs who have already drafted their projects can now submit them to the local administrators for funding under the programme known as Rural Enterprise.
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 such scheme was the District Development Fund (FDD), set up under former president Armando Guebuza in 2006 which provided a sum of seven million meticais (about 233,000 US dollars, at the exchange rate of the time) to every district in the country. It was then supposed to be lent to people who submitted viable projects which would create jobs and boost food security.
However, 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.
The same fate would not befall the IFAD credit, Comoana said, because the government would provide the beneficiaries with technical support, and build up their capacity to manage projects.
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,” explained Comoana.
She assumed that 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.
Source: NAM NEWS NETWORK