The CEO/Chairman of Moza Banco, João Figueiredo, defended the need to create a Mutual Guarantee Fund, financed with resources from the Sovereign Fund, as a way of mitigating the difficulties of access to credit and boosting the Mozambican business sector. The position was expressed this Thursday (20), in Maputo, during a panel debate at the 17th edition of the Economic Briefing, organised by the Confederation of Economic Associations of Mozambique (CTA), under the theme Business Dynamics in the Fourth Quarter of 2024 and Analysis of the Economic Situation.
Figueiredo’s intervention came after the CTA’s presentation, which revealed that the Mozambican business environment recorded the biggest drop ever in the Business Robustness Index, from 30 per cent in the third quarter to 25 per cent in the fourth quarter of 2024 – a drop of five percentage points. The report indicated that this contraction reflects the structural and cyclical difficulties faced by companies, with accumulated losses of more than 32.2 billion meticals (505 million dollars).
After the CTA’s presentation, João Figueiredo warned of the need for urgent and structural measures, emphasising that the Mutual Guarantee Fund would be an essential tool to boost financing for companies. ‘I think it’s fundamental that we move forward and not just limit ourselves to this conversation – which has been going on for three or four months,’ he said, emphasising the need for concrete action to ease the pressure on entrepreneurs.
The CEO of Moza Banco acknowledged that the main issue for the materialisation of the fund lies in its source of financing. ‘Where does the money come from? At the moment, the Sovereign Wealth Fund, the way it is structured and regulated by law, envisages an economy that has nothing to do with ours, that doesn’t correspond to the reality we live in today,’ he said.
Figueiredo therefore suggested that part of the Sovereign Fund’s resources be temporarily allocated to setting up the Mutual Guarantee Fund, allowing small and medium-sized enterprises (SMEs) to have more access to credit under more favourable conditions. ‘Even on a temporary basis, part of the funds from the Sovereign Fund should be channelled to guarantee financing for companies, strengthening the productive capacity of the private sector,’ he stressed.
The Mutual Guarantee Fund (MGF) is an instrument created by governments to facilitate access to finance for Micro, Small and Medium Enterprises (MSMEs).
In addition, the banker emphasised the importance of the BoM’s intervention to improve liquidity in the financial system and alleviate the shortage of foreign currency, one of the main challenges faced by companies. ‘There’s no point in saying that the banks have foreign currency, because the foreign exchange business has to be done by the banks. If they don’t sell the foreign currency, it’s because they don’t have the capacity to do so,’ he explained, adding that the bank should intervene in the purchase of foreign currency for fuel imports, relieving the pressure on commercial banks.
Another point raised by Figueiredo was the policy for converting export earnings, which currently obliges exporters to convert 30 per cent of their earnings into meticals. ‘Considering the foreign currency crisis we are facing, this percentage should be temporarily increased to 50 per cent, thus guaranteeing greater circulation of foreign currency on the domestic market,’ he suggested.
In addition, he argued that companies that re-export fuel to neighbouring countries should be obliged to convert 100 percent of the currency obtained, as a way of guaranteeing a greater inflow of foreign currency into the country.
The debate on the Mutual Guarantee Fund and solutions to the currency crisis is part of a context of economic uncertainty and structural challenges that continue to impact the growth of the business sector in Mozambique. For João Figueiredo, it is essential that the authorities and economic agents adopt immediate measures to stabilise the business environment.
‘The time has come for concrete action. We need effective and sustainable solutions to guarantee economic recovery and create conditions for private sector growth,’ he concluded.
The 17th edition of the Economic Briefing brought together various economic players, political decision-makers and businesspeople to debate the dynamics of the fourth quarter of 2024 and the economic situation, at a time when the Mozambican economy is facing complex challenges, requiring greater coordination between the public and private sectors to implement structural reforms.
Text: Felisberto Ruco
