Mozambique Launches $40 Million Fund to Support Small Businesses

Mozambique has unveiled a new US$40 million Mutual Guarantee Fund designed to ease access to financing for Micro, Small, and Medium-Sized Enterprises (MSMEs).

The initiative was officially launched by President Daniel Chapo during the opening of the 60th Maputo International Trade Fair (FACIM), the country's largest showcase of goods, services, and investment opportunities.

According to President Chapo, the fund is more than a financial tool; it represents a path to economic recovery and a lifeline for entrepreneurs, particularly young people and women. The expectation is that at least 15,000 MSMEs will benefit from credit guarantees, enabling them to grow their businesses, create jobs, and drive innovation in the national economy.

He explained that one of the biggest challenges faced by Mozambican enterprises is limited access to finance, largely due to high interest rates that many cannot afford. Small and medium-sized businesses, which make up 90% of Mozambique's economic activity, often struggle to secure loans, despite being central to job creation and income generation. The new fund aims to bridge this gap by guaranteeing loans, thereby making credit more accessible and affordable.

Initial financing for the fund comes from the World Bank, and its implementation will be overseen by Banco Comercial de Investimentos (BCI), Standard Bank, and Absa Bank. President Chapo acknowledged the banks already involved and encouraged other financial institutions to join the initiative. He emphasised that the fund's success will depend on transparent and inclusive systems that ensure it benefits the entrepreneurs most in need.

The creation of the Mutual Guarantee Fund was formally approved by the Council of Ministers in June 2024, with an allocation of 4.4 billion meticais (around �64 million).

The government decree highlights its purpose: to facilitate credit for MSMEs by providing guarantees and counter-guarantees to banks and other financial institutions. This mechanism is expected to reduce lending risks for banks, which in turn should lower interest rates for business owners.

The launch coincided with the opening of FACIM�s 60th edition, which runs until August 31. The event has attracted 3,150 exhibitors from Mozambique and abroad, making it the largest platform for business networking and trade promotion in the country. Alongside exhibitions, the fair will feature seminars, business exchanges, and a special business forum focused on strengthening ties with South Africa.

FACIM also includes a display of military and police equipment, which, according to organisers, is intended to highlight opportunities for collaboration between defence and the civic sector.

Each year, FACIM provides a space to showcase Mozambique's economic potential and attract investment, while this year's edition carries added significance with the launch of the Mutual Guarantee Fund. The initiative is seen as a key step in building a stronger, more resilient private sector that can support the country�s long-term economic growth.