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Mozambique and Germany sign grant agreements

The Government of the Republic of Mozambique, represented by the Ministry of Economy and Finance (MEF), and German Financial Cooperation, through the Development Bank – KfW, signed contracts for the following projects in Maputo today.

1) COVID-19 emergency grant mechanism for MSMEs;

2) Credit Line for MSMEs and Agricultural Finance; and

3) Fund to Support the Education Sector (FASE).

The COVID-19 emergency grant mechanism has a volume of €6 million and will be channelled as a non-refundable grant contribution in local currency to the Micro, Small and Medium Enterprises (MSMEs) affected by COVID-19 in order to mitigate the impact of the pandemic on MSMEs in Mozambique. The funds will be channelled via the Bank of Mozambique and participating partner financial institutions. The funds were designed to help MSMEs to meet cash flow needs during the COVID pandemic, including, but not limited to, wage payments and other fixed costs.

In addition, German Financial Cooperation will provide €10 million as a credit line for MSMEs and agricultural finance and will thus build on existing successful credit lines with the Bank of Mozambique. The credit line will provide long-term financing in local currency on economically sustainable terms. The funds will help MSMEs to finance the necessary investments after the pandemic to allow the reconstruction and growth of business activity.

The third contract signed is a grant agreement for the benefit of the education sector in Mozambique. German Financial Cooperation will channel €12 million to the Education Sector Support Fund (FASE) in Mozambique. With a total volume of more than €200 million disbursed since 2003, Germany is the largest bilateral contributor to FASE. Support for the fund assists the Mozambican Government in financing and implementing the Government’s Strategic Education Plan, which aims to improve the level of education of the population in order to promote the country’s economic and social development.

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