Maputo, Aug. 5, 2025 (Lusa) - The Confederation of Economic Associations of Mozambique (CTA) on Tuesday considered the new Local Economic Development Fund (FDEL), launched last week by the head of state, to be an “innovative” measure that will have an impact on employment.
“It is intended to foster the transformation of ideas into sustainable businesses, especially in the sectors of agriculture, agro-industry, tourism, trade and technology. The CTA considers the FDEL an innovative measure for the effective decentralisation of investment, with a strong impact on job creation, productive inclusion and the reduction of inequalities,” reads a statement from Mozambique’s largest business confederation.
Launched on 31 July in Inhambane, in the south of the country, by Mozambican president Daniel Chapo, the FDEL, recalls the CTA, has an initial allocation of 859 million meticais (€11.1 million), is scheduled to start next September, and aims to "stimulate local economies by financing initiatives led by young people, women and local entrepreneurs in the regions and municipalities".
On Thursday, the Mozambican president warned young future beneficiaries of the FDEL, which aims to finance youth initiatives, that they would face penalties if they did not repay the respective figures.
"If we do not pay back, the government will not be able to benefit more Mozambican citizens who want to do business (...). For those who do not repay and do not justify their failure to do so, penalty mechanisms will be triggered, including cancellation of funding and other measures, and they will never again receive any funds from the State," he warned.
The Head of State said that the first projects will be financed from September, but insisted on the repayment of funds because “the State does not have that much money”, so it must “be used well”.
To implement the initiative, a project selection committee will be set up, including members of the government, civil society, academics and economic agents.
"The project selection committee has a very important task, which is to choose the right projects and not approve projects from friends, acquaintances, neighbours, comrades, family members and people who promise to pay a certain amount to gain access to resources. We want serious, honest, responsible people who are accountable for approving viable projects, not corrupt people," appealed the President, announcing that the fund will apply an interest rate of 5%.
The contract will have a repayment plan, with information on "how much must be repaid, the dates, the monthly amount to be deposited in an account to be indicated until the payment is complete," he explained, adding that the FDEL "does not finance the production and sale of alcoholic beverages" or activities that do not help to promote the local economy and development.
The fund's regulations provide for "sources of financing" other than the state budget and public entities, such as "repayments of loans granted and interest thereon," cooperation partners, "money made available by philanthropic institutions" or "within the scope of social responsibility for large-scale projects and companies," among others.
The document, dated 5 March and approved by the Cabinet, stipulates that each region or local authority in the country "will dedicate at least 60% of FDEL resources to financing individual or associative youth initiatives". The remaining 40% will be allocated to "economic projects led by women".
The Local Economic Development Fund will be managed in conjunction with district governments, local councils, cooperatives and local financial institutions, ensuring that financial support reaches communities quickly and transparently, especially rural and semi-urban areas, giving priority to agriculture and agro-industry, local tourism, food processing, artisanal fishing, renewable energies, digital technologies and local trade.
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