Press release number: IFAD 03/04

Rome, 17 February 2004 – The development of micro enterprises is important for reducing poverty and fostering economic growth in Mozambique. However, most formal financial institutions concentrate their activities around the capital Maputo and few financial services are available in rural areas, where most of Mozambique’s people live.

The new rural finance support programme co-financed by the International Fund for Agricultural Development (IFAD) and the African Development Bank will provide a comprehensive planning and policy framework to guide the development of rural financial services that are accessible and useful to poor people.

The USD 34.3 million programme will be partly financed by a USD 9.46 million loan from IFAD to the Republic of Mozambique.

The loan agreement was signed today at IFAD headquarters by IFAD President Lennart Båge and His Excellency Mr Manuel Chang, Deputy Minister of Planning and Finance of the Republic of Mozambique.“When supportive policies are in place, markets are functioning and support for business development are available, rural finance can have a powerful impact on poverty reduction and rural development,” said Mr Båge. “About 75 per cent of IFAD projects and programmes provide financial services to the rural poor.”

The programme is expected to reach about two-thirds of the country’s people, including fishermen, subsistence and cash-crop farmers, boat owners and traders. About 80% of these people are extremely poor.

The programme has four main components. It will:

• Support the government in creating a policy and legislative framework that will enable development of rural financial services
• Improve and facilitate access to financial services for the poor
• Support and strengthen existing community-based financial institutions
• Establish an organization to promote rural finance development in the country

With this programme, IFAD will have financed 8 projects in Mozambique, totalling USD 89.72 million.

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IFAD is a specialized agency of the United Nations dedicated to eradicating rural poverty in developing countries. Since 1978, IFAD has financed 653 projects in 115 countries and territories for a total commitment of approximately USD 8.1 billion. Through these projects, about 250 million rural people have been supported in their efforts to overcome poverty.