Maputo — The sustainable and balanced development of Mozambique depends to a large extent on the country's ability to realise its productive potential, Deputy Agriculture Minister Joao Carrilho said on Friday.
This, he argued, would only be possible "by democratising markets and access to financial resources, particularly those based on domestic savings and oriented towards productive investment".
He was speaking in the city of Matola during a debate on "The role of Micro-Finance in the Promotion of Economic Development", organised by the Bank of Mozambique. Carrilho stressed the government's commitment to drafting the legal framework for developing the micro-finance sector in the country, in order to expand the access of small scale businesses to financial resources. Without access to some form of credit, it would not be possible to make proper use of productive potential, he warned.
He said that in 1998, the government set as a target that the micro-financial market should benefit about 100,000 clients by 2005. "Today, when slightly more than half this period has elapsed, the information we have is that there are about 30 micro-finance initiatives, with about 50,000 clients", he said.
But the money is not going into production. A rapid analysis of the micro-financial market shows that 57 per cent of the operations are to support informal trade. 10 per cent of the credit is for other services, and only 18 per cent is for agriculture, and 15 per cent for manufacturing.
"As you can see, the micro-financial services are oriented towards consumption and not production", said Carrilho. This would have to be reversed if the Mozambican economy was to grow in a sustainable fashion.
The loans are small indeed - normally, the equivalent of 20 to 30 US dollars, with a repayment period of between three and six months. But clients, most of whom are women, can increase their loans to between 300 and 600 dollars.
Despite the small size of the loans, Carrilho insisted that micro-finance should be taken seriously. It was not something marginal, only undertaken by amateurs.
But neither could micro-finance be seen as a panacea, solving all problems of access to credit. "The success of micro- finance will depend on the general macro-economic environment", said Carrilho, "and on the policies for promoting development".
