The Board of Directors of the World Bank on 13 July approved a grant of US$300 million to Mozambique to support Mozambican institutions and the "Economic Transformation Development Policy Financing (DPF) operation".
According to a World Bank release, "This is the first in a series of three programmatic operations and supports a robust set of reforms aimed at strengthening institutions and laying the foundations for a sustained growth and economic transformation".
The World Bank country director, Idah Pswarahi-Riddihough, explained that "this operation supports the country's recovery from COVID-19 and structural reforms to foster sustained growth while providing much-needed financing to alleviate recent fiscal constraints".
She added, "this operation couldn't come at a better moment as Mozambique's economy is still reeling from the compounded effects of COVID-19, the protracted slowdown triggered by the hidden debt crisis, and the devastation caused by the tropical cyclones of 2019".
The DPF financing, the Bank release says, covers "structural reforms to strengthen budgetary institutions and transparency", including "enhancing the regulatory and institutional framework for sound and transparent resource revenue management; and improving public procurement governance and transparency ... together, these measures will address critical transparency and institutional weaknesses that undermine the governance and management of limited public resources".
A further goal is to address "business environment and financial access constraints to support private sector development". This will cover "simplification of the legal and regulatory requirements to open and operate businesses, improving the investment climate and incentivising firm development and job creation; and lifting of legal and regulatory restrictions to promote financial access".
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This pillar of the DPR "includes a review of the 1993 Investment Law and the 2005 Commercial Code, which could result in further simplification and digitalisation of procedures, expected to accelerate approval processes". The reforms, it adds, "are expected to expand access to financial services, particularly for low-risk micro, small and medium enterprises, and for women, while maintaining a clear and sound framework to guard against illicit activity".
The DPF will also "builds on Mozambique's climate change commitments to support a more resilient and greener growth path, addressing utility sector constraints that limit Mozambique's productive potential".
