9 February 2006

Mozambique: Line of Credit for Forestry Operators

Maputo — Mozambican Agriculture Minister Tomas Mandlate on Wednesday launched officially a ten year line of credit to finance activities of small and medium-sized companies in the forestry sector, reports Thursday's issue of the Maputo daily "Noticias".

In the initial stage, this initiative will benefit operators in Cabo Delgado, Zambezia and Sofala provinces, because this is where the major timber operators are to be found.

The programme is supported by the Nordic Development Fund, which is providing 3.3 million Euros (about 3.9 million US dollars), and implementation will be assisted by the Small Scale Investment Promotion Company (GAPI).

Eligible for this credit are operators who have been granted forest concessions, but also those with simple logging licences who prove their intent to work under the more demanding concession regime. Credit can also be granted to businesses who want to start or develop forestry produce processing units and also those who intend to work in reforesting.

The loans are to be used for such purposes as the acquisition of equipment and of vehicles. A maximum of 100,000 Euros may be granted to individuals, to associations of small operators, or to communities. Interest on these loans will be charged at between 2.5 and six per cent.

The repayment periods vary between three months and ten years, depending on what the money is used for. Reforestation projects are allowed the longest repayment period, of up to ten years.

Speaking on Wednesday, during a Consultative Forum on Forestry and Wildlife, held in the central city of Beira, Mandlate said that this government initiative is to help solve a number of problems confronting the sector.

"The government, aware of the difficulties that the operators in question have faced, has been seeking alternatives to reverse the situation, and one of the concrete actions was to mobilize funds from its partners, to support small and medium companies", he said.

He stressed that this initiative aims at improving production and the quality of the processed products.

"We expect this initiative to improve management and sustainable use of forest resources, and to reduce the export of logs by improving the processing of timber, to give it more added value", explained Mandlate.

He noted that the forest sector is one of those that, with small investments, can greatly contribute to relieving poverty in the rural areas. Thus he expected the operators in this sector to seize the opportunity and improve the functioning of their companies and their profitability.

But he warned the beneficiaries to honour their commitments, to ensure that the contributing partners would mobilize more funds to benefit more operators.

The participants at the meeting, who included officials from the central and provincial governments, and representatives of NGOs and of the private sector, stressed that the country's forestry sector has been facing serious difficulties including obsolete equipment, poor capacity to exploit and process forest resources, lack of markets and poor access to credit.

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