Maputo, Oct. 9, 2025 (Lusa) - Germany has made €45.5 million available through the German Development Bank (KFW) to finance agricultural initiatives in Mozambique by micro, small and medium-sized enterprises (MSMEs).
The sustainable rural development financing mechanism, Finova, was launched on Wednesday in Maputo at a ceremony in which Mozambique's Minister of Planning and Development, Salim Valá, highlighted the commitment to this German fund to generate more jobs and income.
Salim Valá said that this type of financing helps to realise the "Government's plans to replace imports and generate more jobs".
According to government data, of the global fund, a credit line of €33.5 million will be operated by the central bank, in partnership with ABSA Bank, Banco Comercial de Investimentos (BCI), Standard Bank, GAPI and Microbanco Confiança.
The remaining €12 million will be allocated to a rural financing mechanism to be operated by the Zambezi Valley Development Agency, which aims to cover "collateral guarantees for credit, climate insurance and technical assistance in the field", with training initiatives to enable access to the fund, the minister said.
"This initiative, which is primarily aimed at the Zambezi Valley provinces, but not restricted to them, will cover the whole country and should be seen in conjunction with the Mutual Guarantee Fund (...). The total amount of €45.5 million is intended to boost leading companies in the value chain and strengthen small rural producers," said the minister of Planning and Development.
According to the information provided, annual interest rates should not exceed 10%, with the minister warning that the fund is for companies that have been operating for at least three years, have commercial relationships with a significant number of small farmers and demonstrate a viable and sustainable business model.
"These companies must promote local socio-economic transformation, comply with environmental and tax regulations, and adhere to income-based climate insurance, ensuring resilience to natural risks," said Salim Valá.
Eligible investments include land preparation, irrigation systems, warehouse construction, processing units, transport equipment acquisition and quality certifications, the purpose of which is to ensure agricultural and rural transformation.
For the Zambezi Valley Development Agency, this agribusiness fund is justified at a time when part of the economically active population lives in rural areas, with agriculture as their main source of income.
According to the director of this agency, Celso Cunha, the agriculture in question is "characterised by poor use of improved inputs, low levels of processing and product certification, little information and weak links with the market, and inadequate transport and storage infrastructure," which limit rural development.
For the Mozambican central bank board member, this financing has the potential to boost agriculture, and he hopes it will achieve the desired "tangible effects."
"Despite the importance of the agricultural sector, only about 2% of the total credit granted by the financial system to the private sector is directed to agriculture, clearly revealing the need for innovative and structural solutions to finance agribusiness," said Jamal Omar.
Mozambique has more than 4.5 million farms, of which the "vast majority" are small-scale, operating on less than two hectares, said the minister of Planning and Development Salim Valá.
"Only 2.5% of the cultivated area has irrigation, and less than 10% of farmers have access to formal credit or structured technical assistance," added the minister.
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