Mozambique: 'Access Finance Challenge Fund' Launched

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Dec 2008
Maputo, Mozambique , December, 02 2008 - The Bank of Mozambique on Tuesday formally launched in Maputo the "Access Finance Challenge Fund" (AFCF), which is an initiative to co-finance efforts to expand financial services in the rural areas.

The fund results from a contract signed between the Mozambican and German governments in December 2007, under which Germany would provide a million euros (about 1.3 million US dollars) to co-finance this expansion.

Under the AFCF, the German development bank KfW will disburse 850,000 euros. Micro-finance institutions, commercial banks and other Mozambican financial companies may have access to this money to fund rural operations. KfW and the Bank of Mozambique will both sit on an assessment committee that will make decisions on the use of the fund.

According to Joana David, of the Bank of Mozambique's Board of Directors, the purpose of the AFCF is to implement international financial reporting standards (IFRS), to integrate micro-finance institutions into the national payments system, and to introduce innovative financial products (by both micro-finance agencies and the commercial banks) into the Mozambican countryside to serve those sectors of the population currently excluded from the banking system.

"The fundamental goal", said David, "is to support micro-finance, that is, rural finance, since we all know that the remote areas of the country are still not covered by banking services".

The AFCF, she added, "is of particular importance because the micro-finance institutions do not possess the same infrastructure or financial resources as the traditional banks. It is thus important to endow them with financial resources that will allow them to possess those infrastructures and bring them into line with the legal requirements of international financial reporting standards".

The AFCF would help integrate micro-finance into the national financial system by offering to cover 50 per cent of the costs for eligible areas.

Ehlert Christiansen, project consultant for German development cooperation, told the launch ceremony that currently only 10 per cent of Mozambicans have access to the banking system. He thought it key to improve the performance of micro-finance institutions, so that they would work efficiently and in line with international standards.

"The sustainability of the proposed projects is a criterion for access to the fund", he said, "because we don't want to give support without achieving results. Projects should be sustainable so that the beneficiary financial institutions will be independent of external support in the future".

Proposals for use of the fund will be received up until 12 February, and then the assessment committee will decide which of the proposals should be supported.



Source : AllAfrica.com
 

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