Maputo — The Finnish government and the International Financial Corporation (IFC), the private sector funding arm of the World Bank, signed an agreement in Maputo on Monday whereby they will grant an additional 200,000 Euros (about 240,000 US dollars) to support Mozambican small and medium-sized operators in the forestry sector.
Finnish support to Mozambique totals about 20 million US dollars a year and is mainly meant for direct support to the state budget and for the sectors of health, education, and rural development.
According to a press release received by AIM, the IFC thinks that despite improvements in the business environment in Mozambique, "there are still many difficulties for local companies to attract foreign private investment".
On the other hand, small and medium-sized companies are unable to generate new taxable revenue, to export their products and to come together to create competitive industries.
The IFC believes that the only way to guarantee the creation of jobs for the poor is through effective support programmes for small scale private companies. This institution grants loans of between 100,000 and one million US dollars on a commercial basis for existing businesses that show a good potential for growth.
Currently around 20 Mozambican companies are benefitting from IFC finance totalling nine million dollars.
According to Ronaldo Toledo, manager of the IFC Maputo office, cited in Tuesday's issue of the independent newsheet "Mediafax", the criteria for eligibility to the IFC funding concern the sustainability of the undertaking. A candidate company must have been in existence for at least three years, and must already be making a profit. It must also present a programme for sustainable expansion.