Line of Credit to Support Small and Medium Enterprises

The present intervention is relative to the Small and Medium-Scale Enterprises Support Project. It should specifically address three main objectives of the Mozambican industrial sector. These are: i) the establishment of appropriate financing mechanisms that facilitate SMSEs’ access to finance; ii) the rehabilitation and modernization of the industrial sector; and iii) the strengthening and restructuring, of the institutions responsible for the promotion and development of local industry in order that they might provide a more integrated and efficient assistance to SMSEs. The proposed project should provide medium to long-term local currency funding to two institutions engaged in the financing of SMSEs in Mozambique, in order to bridge the maturity gap between the demand for long-term loans, and the deposits available in the financial system to provide such loans. These institutions are: GAPI (Small Investments Promotion Company Limited) and FFPI (Small Industries Development Fund). The project has three components: a Technical Learning in Firms Component, which focuses on building the technical capabilities of majority Mozambican-owned firms in manufacturing and services supporting manufacturing and exports (including tourism); a Finance (Line of Credit) Component, which seeks to provide SMSEs with medium to long-term finance through a number of selected financial institutions; and an Institutional Capacity Building Component, designed to provide assistance to selected Government and private sector institutions which interact most intensively with private firms.