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A Perspective on Impact Investing: Challenges and Opportunities for Rural Women (II)

A Perspective on Impact Investing: Challenges and Opportunities for Rural Women (II)

  • Tânia Dinis • Head of Long-Term Financing (CIB) at Banco ABSA Mozambique

Mozambique, a land of contrasts, where bustling urban centres coexist with quiet rural expanses, faces a myriad of challenges, from limited access to education and healthcare to restricted financial avenues, especially for disadvantaged women. In this lively and energetic scenario, impact investing has the potential to reshape socio-economic dynamics, enabling rural women to redefine their destinies.

The narrative of post-independence Mozambique in 1975 is full of civil unrest, political upheaval and economic challenges. The peace agreement signed in 1992 paved the way for a stable political and economic environment. This transformation has positioned Mozambique as a promising destination for foreign investment, with Foreign Direct Investment totalling 1.9 billion dollars in 2022 (the equivalent of 11.7% of Gross Domestic Product). According to the World Bank, after a modest recovery in 2021, GDP growth accelerated in 2022, reaching 4.2 per cent, and should accelerate to close to 6.0 per cent in 2023, indicating an economy on the rise.

Approximately 66 % of Mozambique’s 33 million inhabitants live and work in rural areas, facing the harsh realities of poverty, such as a lack of infrastructure and limited access to basic goods and services, despite the fact that the country is endowed with ample resources, including vast arable land, abundant sources of water, energy and mineral resources, as well as natural gas deposits off its coast.

Rural women play an essential role in all this. Often as primary carers and significant contributors in all key sectors. Their emancipation and empowerment translate into broader community development. However, systematic barriers to education, healthcare and financial services have historically limited their potential.

Education: Mozambique has marked gender disparities. World Bank data suggests that women in the country complete an average of only 1.4 years of schooling, two years below the average for men (3.4 years) and 34 per cent of rural women complete secondary school, as opposed to 45 per cent of their male counterparts. As Mozambican women are generally responsible for looking after their children and the home, low schooling perpetuates a weak education and health system for children.

Rural women play a crucial role in contributing to all the key sectors

Agriculture: over 70% of Mozambique’s labour force is agricultural, with a significant proportion of women. However, inadequate access to modern farming techniques, capital and markets inhibits growth. This is where impact investments can catalyse change.

Health: access to health services is unequal. Rural women, for example, face challenges in accessing maternal health care. According to the World Health Organisation, Mozambique has one of the highest maternal mortality rates in the world, with the majority of cases coming from rural areas.

Economic Participation: the wage gap between men and women persists. Although women make up a significant part of the agricultural labour force, their incomes are substantially lower than their counterparts. In addition, their access to credit and business resources is limited.

Impact Investment Momentum:

Over the past decade, Mozambique has attracted significant interest from impact investors. Investments are predominantly centred on sectors such as agriculture, health, education and renewable energies, directly benefiting the rural population, especially women. Projects focused on sustainable agriculture, organic farming and agricultural processing units have increased incomes and also guaranteed better market rates, benefiting women farmers.

Investments in community health centres and schools, especially in remote areas, have made healthcare and education more accessible. Programmes aimed specifically at girls and women, such as vocational training and adult education, have gained attention. With vast rural areas off the electricity grid, renewable energy projects, especially solar, are revolutionising the country. This makes everyday life easier and helps micro-enterprises led by women.

More than 200 impact investment opportunities worth over 1.5 billion dollars are available in Mozambique, according to the International Finance Corporation, and although the dynamics are promising, challenges remain. Inconsistent policies and bureaucratic obstacles can deter investors. The lack of basic infrastructure in many regions can prevent projects from being implemented, and deep-rooted social norms can sometimes hinder women’s emancipation initiatives. To overcome these challenges, a multi-faceted approach is needed. Investing in financial and technological infrastructure, such as mobile banking, can help expand access to financial services in rural areas. In addition, addressing cultural norms and gender biases through education and awareness-raising campaigns is crucial to fostering an environment that enables women’s economic participation.

More than 70% of the country’s labour force is agricultural, with a significant proportion of women

A key area where impact investment plays a significant role is access to finance. Impact investment funds step in to fill a gap with conventional commercial financing. These funds provide patient capital to women-led businesses, enabling them to access crucial financial resources. By focusing on social impact and not just financial returns, these investors recognise the transformative potential of rural women as entrepreneurs and job creators.

Impact investing can also be achieved through collaboration with government initiatives. For example, in 2023, the World Bank approved a credit of 300 million dollars for the “More Opportunities in Mozambique” project, scheduled to run from 2023-2029. This project is aligned with Mozambique’s economic reform initiative (PAE). It introduces, in a pioneering way, a Credit Guarantee Fund to stimulate the banking system and facilitate financing for SMEs, especially those owned by women or those in climate-vulnerable areas. It also aims to increase economic opportunities by improving the business environment, expanding market access and offering training and financing.

Despite the aforementioned challenges, there are several successful initiatives, such as the cashew revitalisation project. In 2020, Mozambique produced 160,000 tonnes of cashew nuts, making it the continent’s fourth largest producer after Nigeria, Ivory Coast and Guinea-Bissau. This sector is currently being revitalised, transforming itself so that it is more sustainable and inclusive. Sustainable agricultural practices have been recognised by various international organisations, such as the World Wildlife Fund (WWF).

Land is abundant in the country, so its production potential remains largely untapped, presenting a significant opportunity to increase production and compete with the main players in various markets worldwide.

The Role of Financial Institutions in Supporting Impact Investment in Mozambique

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While grassroots projects and external impact investors play a crucial role in promoting positive change in Mozambique, national financial institutions cannot be ignored. Their involvement underlines a deep commitment to socio-economic improvement and sustainable development from within the country’s own infrastructure.

Mobilising capital: to match the young and rapidly expanding population, which is expected to reach 50 million by 2040, 500,000 jobs need to be generated annually. This is a huge leap from the current 25,000 formal jobs created every year, requiring a 20-fold increase. However, the private sector, which is largely made up of small and medium-sized enterprises, has difficulty offering adequate job vacancies. A significant reason for this challenge lies in the barriers to securing financial resources, especially credit. However, by channelling local resources, financial institutions and banks in Mozambique have the potential to initiate impactful projects by offering loans, credits and grants, ensuring that these initiatives have the necessary financial support to start and last.

Bridging Knowledge Gaps: although external investors bring capital, they often lack complex local knowledge. Local banks, having an insight into the socio-economic fabric of the country, can guide these investors, ensuring that funds are channelled to genuinely impactful projects. Providing financial products adapted to impact investment: recognising the potential and importance of impact investment, some Mozambican banks have started to develop financial products specifically designed for this niche. These can range from special loans with favourable interest rates for green energy projects to micro-financing schemes aimed at women entrepreneurs.

Risk mitigation: national financial institutions can also boost the confidence of foreign investors. With local banks sharing some financial burdens, foreign investors can feel more secure in directing their funds towards impact projects in Mozambique.

Capacity building and training: financial institutions don’t just offer monetary support. They often include a range of services, such as capacity building, training and financial literacy programmes. These are invaluable for local communities and entrepreneurs, empowering them with the knowledge and skills needed to make the most of the funds invested.

Policy Advocacy: given their influential position in the economic ecosystem, these institutions can also play a key role in policy advocacy. By influencing new regulations and legal frameworks that favour impact investment, they can pave the way for more initiatives of this kind in the future.

Enabling financial inclusion through microfinance: the lack of access to formal financial services is a significant challenge faced by rural women in Mozambique. Impact investment in micro-finance institutions enables rural women to access credit, savings and insurance products tailored to their needs. This allows them to start and develop their own businesses, breaking the cycle of poverty and promoting economic independence.

For Mozambique to truly benefit from impact investment, a sustainable model that prioritises local needs and harnesses rural knowledge is vital. Involving rural women in decision-making processes, developing their skills and providing them with access to the necessary resources can create a ripple effect, benefiting entire communities.

Mozambique, like many African nations, is at a crucial juncture. Impact investing offers a promising path, especially for rural women. By learning from successful models in other developing countries and capitalising on current opportunities, Mozambique can pave the way for a brighter and more inclusive future.


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