"As long as our economy is made up of 98% of informal units; as long as we are unable to create even 5% of the formal jobs that 500,000 young people are looking for every year, there will be no social tranquillity, no political and economic environment for large companies and mega-projects to be efficient and sustainable," said economist António Souto, representing Gapi-Sociedade de Investimentos, on a panel at the Mozambique-European Union (EU) Investment Forum held on November 24 in Maputo.

The economist and founder of Gapi proposed the creation of three financing and technical assistance instruments structured in an interconnected way and focused on i) promoting youth and empowering women; ii) developing and using communication technologies and iii) fostering small and medium-sized manufacturing industries.

"Developing and implementing instruments of this nature is a specialty of development finance institutions, which must be guided by good governance and values that ensure transparency, efficiency and impact in the management of resources," said Souto.

The same panel included representatives from Standard Bank, Mozabanco, the Zambezi Valley Development Agency (ADZ), the Business Angels Association and the Pertence Platform.

All the participants presented what their institutions are doing to promote SMEs and start-ups.

ADZ, which benefits from resources made available by the World Bank, as well as Mozabanco, which is the agent of a government fund for rural businesses, revealed that they are developing joint activities with Gapi.

Given the complexity of the challenges facing the improvement of an ecosystem that facilitates the emergence and success of start-ups and SMEs, the Gapi representative noted that the countries with the greatest success in the SME sector and in social, economic and financial inclusion have in common the attention and support they give to their development finance institutions.

"Some resources made available by the international community, including the EU, are being wasted or misused. Some are allocated to NGOs in the funding countries and managed by people or consultants without a minimum of experience of the Mozambican reality, with a large portion of these resources remaining at the headquarters of these organizations or being consumed by the high salaries of their consultants.

Other resources are channeled through parastatal institutions whose inefficiency and poor transparency in accountability is well known. So we can't say that there is already a lot of support for start-ups and SMEs." - said António Souto.

"Projects and programs to promote start-ups and SMEs involve risks and skills that are not the domain of banks, but of development finance institutions.

Banks have to manage and look after the public's deposits. DFIs must have the skills in resource management to implement these projects and ensure impact on development goals and objectives. Sustainability is indispensable, but profit is not the priority," said the Gapi representative.