The African Development Fund, the African Development Bank Group’s concessional lending window, has approved a $19.98m grant to finance the implementation of Mozambique’s Economic Acceleration and Governance Support Programme.

This funding is the first of two successive geberal budget support operations for fiscal years 2023 and 2024, each worth about $20m.

The programme will support reforms in two broad areas, namely (i) Improving the private sector enabling environment for economic recovery and green growth, and (ii) Strengthening the efficiency, accountability and transparency of public expenditure.

It will enable Mozambique to streamline the regulatory framework and investment facilitation processes – that foster private sector development and attract investment in climate-smart agriculture.

It's expected to help stimulate the development of agribusiness and micro, small and medium-sized enterprises, as well as finance efforts to mainstream gender and climate action initiatives into economic development. It will also strengthen public financial management, particularly internal controls, public procurement, and debt management functions.

Numerous reform measures are supported by the program. These include securing the government’s approval of the Agricultural Development Strategy (2030) and Investment Plan (2022-2026); new cashew law designed to strengthen the legislative regime of the cashew nut value chain by adapting it to the current requirements of national and international markets; new law to strengthen support for micro, small and medium-sized enterprises, including tax incentives; and revised draft investment law which introduces provisions to promote responsible investment practices, streamline investment processes,  provide protection against expropriation.

“The program has a strong private sector development focus, with particular emphasis on enhanced private sector participation in key sectors, particularly agro-industry, and a strong job creation potential, including for women and youth, and is therefore expected to positively impact socioeconomic development in Mozambique,” said Leila Mokaddem, Director General of the Bank’s Southern Africa Regional development and Business Delivery Office. ”

At the end of July 2023, the African Development Bank Group’s active portfolio in Mozambique stood at $1.19bn.

Investments cover the energy (48.8 %), transport (32.6 %), agriculture (16.8 %) and social (1.6 %) sectors, as well as multi-sector operations (0.2 %).