MOZAMBIQUE – The German government is investing €10 million (US$10.99) to finance micro, small and medium-sized enterprises in the agricultural sector in Mozambique.

Bank of Mozambique Governor Rogério Zandamela said he hoped the line of credit would help reduce poverty and increase economic inclusion.

The Bank of Mozambique signed credit agreements with the four national financial institutions that will intermediate the German Development Bank (KFW) funds.

Speaking for the Bank of Mozambique, Jamal Omar said it was agreed that the cost of such financing should be as low as possible, and the interest rate not exceed 15%.

He also noted another important component of the credit line. “This is the technical assistance component, supporting not only the banks benefiting from this financing, but also the companies in the agricultural sector, to better organize themselves to gain access to this financing and to achieve the best possible benefit,” Omar explained.

According to Bank of Mozambique Governor Rogério Zandamela, this financing is of particular importance to boosting the agricultural sector, which supports about 75 to 80% of the Mozambican population and contributes on average about 25% of the country’s gross domestic product.

“Notwithstanding the sector’s considerable weight in GDP, agricultural financing levels over the past five years remain relatively low, at around 3-4% per year,” Zandamela remarked.

Permanent Secretary of the Ministry of Agriculture and Food Security, Víctor Canhemba Júnior, commented that “this is an example on how obtaining credit is not only for producers, but also for those who are interested in agriculture,”

“we are all engaged and paying close attention to the issue of climate change.” He added.

German ambassador Detlev Wolter said he hoped that the credit line would contribute to sustainable poverty reduction in the country, increased food security, productivity and job creation.