Press Release No.: 05/XXXX
Contact: I E Pretorius
IFC Mozambique SME Initiative Commits First Integrated Investment and Technical Assistance Agreement with Spectrum Graphics Limited
Maputo, Mozambique, November 1, 2005—The International Finance Corporation, the private sector arm of the World Bank Group, signed the first Mozambique SME Initiative (MSI) integrated investment and technical assistance agreement with Spectrum Graphics Limited (SGL), a pre-press design and printing services company. The MSI investment will support the company’s corporate initiatives, including expansion of facilities and printing capacity to service the local market. The financing consists of a $700,000 quasi-equity investment and a $70,000 technical assistance loan for improvement of financial systems and training for marketing staff.
Founded in 1998, SGL is a leading printing company in Mozambique designing and producing high quality stationary, advertising and educational products including HIV AIDS education materials. The Company is owned and operated by two women entrepreneurs, Ms. Nadya Rawjee-Manji and Ms. Nilofer Lakhani and has a work force of approximately 58 employees.
Dimitris Tsitsiragos, IFC Director for Global Manufacturing and Services (GMS), noted “IFC’s support to this investment via MSI reflects IFC’s commitment to leverage investment know-how and donor support to create increased access to finance in Mozambique and other frontier markets.”
Run from IFC’s Maputo office, the Mozambique SME Initiative (MSI) is an IFC pilot program working to build a portfolio of viable client companies, who’s improved operational and financial results over the next five years would in turn stimulate interest from new investors in the country’s SME’s. It is the latest in a long series of SME partnerships between donor agencies and IFC, an organization whose strong implementation capacity derives from more than 600 full-time small business development specialists in the field worldwide and a Washington-based headquarters staff with expertise in business, finance as well as development. IFC, the Swiss and Finnish Governments are contributing resources to the Initiative, with others expected to join in the near future.
The underlying premise of the Initiative is that despite an improving investment climate it remains extremely difficult for local companies in Mozambique to attract capital from private investors. Several effective programs already serve micro-enterprises, the most basic level of the local private sector and the only employment option for many of the poor. But there are enormous unmet needs at the next level, SME’s. These businesses can do many things micro-enterprises can not cater for: generate new tax revenues, export their products, join to form competitive local industries, and more. They can also offer workers more secure and better-paying jobs, as well as opportunities for training, potential for career advancement, health and safety protection in the workplace and pension and insurance benefits. In almost every country that has substantially reduced poverty and created a sound middle class, the local SME sector has played a critical role.
The MSI investments, which range between 100,000 to 1 million USD, are made on a fully commercial basis in existing businesses with strong growth potential in the form of a royalty loan (quasi equity), equity or straight loan. The Technical Assistance (TA) program is an integral part of the investment program and provides customized, hands-on, TA financing to the selected SME’s with the two objectives of preparing them to qualify for direct financing from the Investment Program and developing successful, sustainable business practices post-investment. Once a portfolio of sustainable SME’s has been successfully developed, the longer-term goal is to develop the Initiative into a self-supporting and viable investment vehicle owned by the private sector.
The direct beneficiaries are the Mozambican SME’s which can benefit from an integrated package of financing and technical assistance to expand their business.
In the longer run, additional SME’s will benefit from the project as there will be a new financial institution that is in a position to provide financial services to them and can serve as a model elsewhere. Local providers of consultancy services will also benefit from the Initiative as it aims also at improving local TA resources.
In addition to the successful collaboration of the donor community, the investment also involved collaboration with the World Bank Private Sector Development team and the PODE program technical assistance expertise.
Richard Ranken, IFC Director for Africa noted, “The successful commitment of the first MSI investment demonstrates IFC and World Bank’s combined commitment to finding creative solutions to increase access to finance for SME’s in Africa.”
The International Finance Corporation, the private sector arm of the World Bank Group, promotes sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Its 178 member countries provide its share capital and collectively determine its policies.
From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit www.ifc.org.
Project Team
| Industry Director: | Dimitris Tsitsiragos |
| Regional Director: | Richard Ranken |
| Task Manager: | Richard Rutherford |
| Country Manager: | Babatunde Onitiri |
| Industry Manager (Committee Chair) | Michael Tiller |
| Investment Manager | Ronaldo Toledo |
| Investment Officer | Tracy Lloyd |
| Financial Analyst: | Sergio Couane |
| Investment Analyst: | Sabino Ngundele |
| Environmental Specialist | Justin Pooley |
| Environmental Consultant: | Michaela Cosijn |
| Industry Consultant | Peter Misplon |
| Lawyers: | Jean-Francois Dupuy, Denizart Val de Neto,
Claudio Rechen |
| Local Counsel: | Sam Levy |
| Team Assistants: | Paula Morais, Iracema Bernardes, Zulfa Mulla |
