WASHINGTON, May 11, 2021 —The World Bank approved today a $100 million grant from the International Development Association (IDA) in support of the Government of Mozambique’s Economic Linkages for Diversification Project, which supports Micro, Small, and Medium Enterprises (MSMEs) develop their capacitities to provide goods and services to larger businesses, as well as serve the growing cities in the center and north of Mozambique, thus fostering linkages and economic diversification.
“Mozambique’s growth has been driven by Foreign Direct Investments (FDI) into capital-intensive industries, which has not translated into adequate levels of job creation,” noted Idah Z. Pswarayi-Riddihough, World Bank Country Director for Mozambique, Madagascar, Comoros, Mauritius, and Seychelles. “Supporting MSMEs is a key factor of economic diversification, job creation, inclusive growth, and fragility mitigation, and this is exactly what this project is all about.”
“The project will help develop MSMEs’ abilities to provide goods and services to large investments along their value chains, through skills development, expanding access to finance and markets, and quality upgrading of their processes and products,” noted Francisco Campos, Senior Economist, and the project’s co-team leader. “This effort, combined with developing consumption linkages through skills and finance for microenterprises in major cities, especially women-led enterprises, can generate more and better jobs.”
The project will also support enabling conditions for economic linkages. “This project focuses on the development of digital solutions that will increase firms’ access to markets and financial services and on promoting last-mile infrastructure,” added Eva Clemente Miranda, Private Sector Specialist, and the project’s co-team leader.”
Michelle Gomes Souto, Operations Officer, and the project’s co-team leader noted: “Other interventions will include support to institutional development and regulatory reforms that can drive further sustainable private investments and institutional coordination.”
While the project will impact the wider economy, its priority geographic areas include the provinces of Cabo Delgado, impacted by the conflict, as well as Nampula and Tete, where poverty rates are high and opportunities for economic linkages are significant. The project will also support green industry firms in their capacity to offer climate friendly solutions, as well as support engagement between state agencies and the citzens.
This operation is in line with the country’s priorities outlined in its five-year plan, the Bank’s partnership framework with Mozambique for FY 2017-21, as well as the new conflict-prevention and resilience-building focus of the World Bank activites in Mozambique.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.5 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $18 billion over the last three years, with about 54 percent going to Africa.