africa Aid Banking Capital market development Economy Mozambique

World Bank can finance private investment in Mozambique

Approximate reading time: 2 minutes

The World Bank’s Portugal administrator has told Lusa that difficulties financing projects in Mozambique “do not apply to private investment”, and that the International Finance Corporation (IFC) has its greatest presence in the lusophone country.

“Mozambique is in a situation where only in very special circumstances will it have access to public financing, but this limitation does not apply to private investment,” Paulo Pedroso told Lusa. “So the private investment support component is not affected, it is only the loans or guarantees to the public sector,” he added.

Mozambique, he continued, “is no exception, and is in a group of countries whose level of indebtedness is considered unsustainable, which in itself would exclude the country from the list of beneficiaries of multilateral financing”. In addition, Mozambique also faces a ban imposed after it was disclosed that it had guaranteed US$ 1.4 billion in loans not entered into the official accounts or revealed to donors to two public companies.

“This is why [the IFC] has been called in to intervene, and Mozambique is now the lusophone country where the IFC has its greatest presence.”

The IFC is one of the five institutions of the World Bank Group for development aid. The International Bank for Reconstruction and Development is dedicated to helping middle-income countries, and the International Development Association is more focused on the less developed countries.

Then there are two institutions to stimulate the private sector: MIGA, focused on investment guarantees, and the International Finance Corporation, focused on supporting private investment. Finally, in addition to the World Bank itself, there is also the International Court for Investment Disputes.

In the last fiscal year July 2016 to June 2017, the IFC lent nearly US$20 billion worldwide, with its investment portfolio in Africa rising from 10% to 30% of the world total.

In April, the World Bank Group saw its capital stock increased and its mandate for investing in riskier countries reinforced, which means that there is more financial and political willingness to invest in African countries, with resources of 7 to 10 billion US dollars this year.

Source: Club of Mozambique

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