Economic Linkages for Diversification

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The project seeks to expand sales, employment and investment of MSMEs in Mozambique through upstream and consumption linkages. Upstream linkages comprises the connection of economic opportunities between suppliers of goods and services and typically large investments. The consumption linkages refer to the demand created from local and international workers as individual consumers as a means of regional development. This will contribute to achieve, simultaneously, higher rates of local content capture by Mozambican firms (with emphasis on SMEs and women-owned firms), and stronger sustainable prosperity across the economy with a view to creating jobs and raising incomes. The project will prioritize the Provinces of Cabo Delgado, Nampula and Tete.The project has three components: (i) developing economic linkages through skills, finance, and quality upgrading; (ii) enabling factors to support economic linkages; and (iii) project implementation. The first component includes capacity building of entrepreneurs in various stages of their development, as well as support in developing quality standards, and in applying to procurement opportunities. It also includes a matching grants program for firms in upstream linkages that graduate from the first phases of skills development, as well as a business plan competition for those in consumption linkages. The second component includes support in developing supplier development and financial services platforms, support for last-mile infrastructure that can drive private investment, assistance in developing a limited number of spatial/strategic plans, and capacity building in various public institutions, including to assist the team reforming the investment law.The project is informed by the Government Five-Year Plan. The government of Mozambique would like to develop a more diversified and competitive economy, intensifying the productive sectors with the potential to increase income generation and create more job opportunities, especially for youth. The project is aligned with Pillar 1 of the Africa Region Strategy which focuses on competitiveness and employment and with the overall WBG’s focus on Maximizing Finance for Development (MFD) and Jobs and Economic Transformation (JET IDA 2019). The project is aligned with the WBG’s Country Partnership Framework (CPF) for Mozambique as revised in the recently concluded Performance and Learning Review (PLR) that includes adjustments to the CPF for COVID-19. The FY17-21 CPF for Mozambique draws on the 2016 Systematic Country Diagnostic (SCD) which identified three main focus areas in support of the twin goals: i.e. (a) promoting diversified growth and enhanced productivity; (b) investing in human capital; and (c) enhancing sustainability and resilience. The project will directly contribute to CPF’s Focus Area 1 “Promoting Diversified Growth and Enhanced Productivity”. The Project will also directly support, under Focus Area 2 “Investing in Human Capital”, the strategic objective of “Enhancing the Skills Base”, by improving both government and private sector capacity. The project is part of an adjusted CPF program to help Mozambique manage and respond to the COVID-19 crisis.