Smaller businesses comprise the bulk of Mozambique’s economy and supporting them is a central part of IFC’s strategy. IFC integrates investments and advisory services across several programs and initiatives in Mozambique to promote small and medium enterprises, helping boost economic growth and reducing poverty.
"Creating opportunities for small businesses is crucial to improving the lives of people in Mozambique," said IFC Executive Vice President and CEO Lars Thunell on a recent trip to the country. "In Mozambique, IFC is finding a number of innovative ways to reach more of these clients. We are using our capacity to offer advisory services and investments to meet the needs of smaller companies and help them expand."
Limited access to finance is a key constraint to private sector growth in Mozambique, especially for smaller firms that have minimal influence on policy reform. The commercial debt offered by banks is very expensive, while private equity and other types of risk capital are not readily available. This means that while microenterprises and large companies can access funds, small and medium enterprises have relatively few options for cash.
The Mozambique SME Initiative is a $12 million IFC pilot program that seeks to address some of these constraints. The program provides financing and advisory services to small and medium companies in Mozambique with the aim of creating a more viable private sector and attracting investors to the country’s small business sector. It is supported by the Swiss, Finnish and Dutch governments.
MSI was approved by IFC’s Board in 2004 and has already provided advisory services to 16 companies in such diverse areas as implementing financial and accounting systems, auditing, creating business plans, marketing, environmental and social issues. It has also invested in 3 companies and is in the final stages of approving another three.
IFC has also expanded its relationships with large, multinational clients to reach more local businesses. While in Mozambique, Mr. Thunell launched a manual, Developing SMEs through Business Linkages, in which the aluminum smelter Mozal and IFC present a framework tested by the large aluminum smelter and step-by-step practical guidance on how to create competitive small and medium enterprises that can be integrated into the supply chains of large companies.
The manual is based on the MozLink program, under which IFC worked with local small businesses win and deliver contracts to the company. The aluminum smelter raised its monthly procurement from Mozambican companies from US$ 5 million to US$ 17 million over a 5 year period from 2002 to 2007, largely as a result of the project. During the same time, the number of Mozambican companies selling goods and services to Mozal increased from 40 to 250.
IFC has recently expanded the MozLink program to include other large companies such such as Coca-Cola, Sasol, and the Mozambican Brewery. IFC will work with these companies so that they are better able to use smaller businesses in their supply chain and bring more direct economic benefit to the local communities in which they operate.
The SME Entrepreneurship Development Initiative is another integrated IFC program in Mozambique that supports smaller businesses by improving the business environment, building the capacity business management organizations, and directly supporting companies.
The SME EDI program has recorded several key achievements in Mozambique over the last 18 months. These include studies to raise the status of businesswomen, implement land reforms, and other initiatives to improve the business environment for SMEs. It has also supported eight business management organizations in such areas as strategy and marketing and directly with more than 300 SMEs, training about 500 staff members and facilitated $3 million in financing.
"In a market like Mozambique, we need to try new programs to reach the clients who need us most,” said Country Manager Babatunde Onitiri. “We have to innovate to expand our reach and impact in Africa."
For more information contact:
Houtan Bassiri
Communications Officer
Johannesburg, South Africa
Tel: +27-11-731-3179
Email: hbassiri@ifc.org
