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Salim Valá: “SMEs in the Agro-Food Sector Are a Challenge for Financing”

Salim Valá: “SMEs in the Agro-Food Sector Are a Challenge for Financing”

The PCA of the Mozambique Stock Exchange (BVM), Salim Valá, defended this Wednesday, November 23, in Maputo, during the fourth Annual Conference of the Business Network for the Expansion of Nutrition”, that companies in the agribusiness and nutrition sector should take advantage of the window of opportunity made available by the capital market and the and by BVM as an alternative financing mechanism to make their projects viable.

Speaking on the panel on “Blended Finance Accelerating the Transformation of Food Systems,” Salim Valá said he is not happy that no agribusiness company is listed on the BVM, nor are any using other instruments available on the stock exchange.

According to the responsible, “the financing has been pointed out as one of the main constraints for the growth and sustainability of the agro-food sector, either due to the high interest rates applied, or due to the lack of innovative and adequate financial mechanisms specifically for the financing of small and medium-sized agribusinesses”.

For the head of BVM, SMEs in the agri-food sector are the main challenge for financing, because the amounts demanded are low, they do not have real guarantees, do not have a significant history of financing, do not have organized accounting and growth prospects are uncertain, carrying a high risk with a relatively low potential return.

“Financing has been pointed out as one of the main constraints to the growth and sustainability of the agro-food sector, both because of the high interest rates applied and because of the lack of innovative and adequate financial mechanisms”

“Low productivity due mainly to low input intensity, poor adoption of modern technologies, slim profit margins, high exposure to extreme weather events, weak physical and institutional support infrastructure, and poor market linkages make the business less appetizing for entrepreneurs and investors,” Salim Valá described.

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But even with these constraints, Salim Valá said that BVM has alternative financing mechanisms available for Mozambican companies. These include those in the agricultural sector, via the company’s own capital, a potential source of funding to disperse business risk and benefit from lower interest rates. In addition, the stock exchange platform would be used to extend the visibility of the company and the business.

“We are working so that in the future we will have companies linked to agribusiness, tourism, the mineral-energy complex, infrastructures, the financial sector, and natural resource exploration projects, listed on the Mozambican stock market,” he concluded.

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