The Board of Directors of the African Development Fund (ADF), the concessional lending window of the African Development Bank Group, has approved a grant of 19.98 million dollars to finance the implementation of Mozambique's Economic Acceleration and Governance Support Program.

This funding is the first of two successive general budget support operations for fiscal years 2023 and 2024, each worth around 20 million dollars.

The program will support reforms in two main areas: improving the enabling environment for the private sector for economic recovery and green growth, and strengthening the efficiency, accountability and transparency of public spending. It will allow Mozambique to streamline the regulatory framework and investment facilitation processes that promote private sector development and attract investment in climate-smart agriculture. It is expected to help stimulate the development of agribusiness and micro, small and medium-sized enterprises, as well as finance efforts to integrate gender and climate action initiatives into economic development. It will also strengthen public finance management, in particular internal controls, public procurement and debt management functions.

The program supports numerous reform measures, including the government's approval of the Agricultural Development Strategy (2030) and the Investment Plan (2022-2026); the approval by the council of ministers of a new cashew law aimed at strengthening the legislative regime for the cashew nut value chain, adapting it to the current requirements of national and international markets; the approval by the council of ministers of a new law to strengthen support for micro, small and medium-sized enterprises, including tax incentives; and the revision of a draft law on investments, which introduces provisions to promote responsible investment practices, simplify investment processes and provide protections against expropriation.

"The program has a strong focus on private sector development, with particular emphasis on increasing the participation of this sector in key areas, particularly agro-industry, and a strong potential for job creation, including for women and youth, and is therefore expected to have a positive impact on socio-economic development in Mozambique," said Leila Mokaddem, Director General of the Bank's Southern Africa Regional Development and Business Execution Office.

At the end of July 2023, the African Development Bank Group's active portfolio in Mozambique stood at 1.19 billion dollars. The 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 %). (BAD)