MAPUTO– Mozambican President Filipe Nyusi has warned that people who fail to repay loans from the District Development Fund (FDD) will be punished.

The FDD is an initiative set up in 2006 by Nyusi’s predecessor, Armando Guebuza, and initially it took the form of an allocation of seven million meticais (about 108,000 US dollars, at current exchange rates) to each district. The money was to be lent to people with viable projects which could boost food security, create jobs or raise incomes.

The methodology has changed over the years, with the amount of money allocated now depending on such factors as the size and population of the district, but the FDD is still known colloquially as the seven million.

The idea was that this would be a revolving fund: the beneficiaries would repay the loans, and the money would then be lent out again. It has not worked out this way, because the vast majority of borrowers, even with interest rates so low as to be symbolic, have not repaid anything at all, thus treating the FDD as a source of grants, not loans. Repeatedly, the Mozambican media has reported on districts where the rate of repayment is ten per cent or less.

Speaking in the district of Boane, some 30 kilometres west of Maputo, over the weekend, Nyusi expressed anger at the failure to repay and accused the district consultative councils, which are in charge of the loans, of mismanagement.

The consultative councils are not collecting the seven million, he said. They are bad managers. They hand over money and then don’t collect it. This is irresponsible, he said.