The Mozambique credit guarantee scheme took on renewed prominence today at the 20th Annual Private Sector Conference (CASP 2025), where Mrs. Beatriz Freitas, CEO of the Sociedade de Garantia de Moçambique (SGM) – Mozambique Guarantee Company, presented a clear roadmap for how the mechanism intends to transform financing conditions for the country’s micro, small and medium enterprises. Her intervention outlined a modern institutional model built to correct long-standing market failures in credit access.
Mozambique’s private sector is dominated by smaller firms, yet many still struggle to access credit due to stringent collateral requirements and elevated risk perceptions in the banking system. Although the country has long acknowledged these constraints, previous reforms were not able to address them comprehensively. Therefore, the launch of the Mozambique credit guarantee scheme represents a structural shift in how financial institutions manage SME risk and allocate capital.
A guarantee mechanism built on global best practice
During her CASP address, Mrs. Freitas explained that the scheme works by offering partial guarantees on bank loans, sharing credit risk between lenders and the Fund. Although the market remains cautious, guarantees reduce the exposure of banks and encourage them to lend to viable SMEs that would otherwise remain excluded.
The design follows tested international models in Europe, Latin America and Asia. Guarantees cover a negotiated portion of the loan—rather than the full amount—ensuring that both banks and borrowers retain responsibility and discipline. Consequently, the Mozambique credit guarantee scheme promotes balanced incentives and avoids the moral hazard often associated with fully insured lending.
Moreover, SGM has been structured with professional risk management at its core. Governance includes independent oversight, transparent eligibility rules and quality-management systems aligned with international standards. Because credibility is essential for sustained bank participation, these features provide the institutional certainty that lenders require.
Strengthening the financial system through risk-sharing
SME credit in Mozambique remains constrained by collateral shortages, short maturities and costly pricing. The guarantee mechanism aims to ease these pressures by absorbing part of the lender’s risk and lowering barriers to credit origination. As Mrs. Freitas noted, predictable access to finance is fundamental for sectors such as agriculture, agro-industry, renewable energy, transport, construction and tourism.
Additionally, the Mozambique credit guarantee scheme is intended to stimulate competition in the banking sector. When lenders face reduced exposure, they can extend credit more confidently and diversify their portfolios. In turn, SMEs gain access to working capital, investment loans and longer-tenor financing that supports business expansion.
This dynamic can help reshape industrial value chains. Although the country has made progress in mining and energy, many domestic suppliers and service providers remain small and under-capitalised. With new forms of secured lending, these firms can gradually scale their operations, generate employment and contribute to broader economic diversification.
Financial transformation in alignment with national strategy
Mozambique’s economic ambitions hinge on strengthening productive sectors and creating more resilient local markets. Because access to finance is one of the most cited constraints in the national business environment, the credit guarantee structure represents a targeted policy intervention. Mrs. Freitas highlighted that SGM’s mandate complements wider financial-sector digitalisation and regulatory modernisation.
As digital credit-scoring tools expand and banks adopt new risk-evaluation models, the Mozambique credit guarantee scheme provides a mechanism that supports prudent growth. Furthermore, guarantees can enable a more inclusive distribution of credit—bridging gaps between urban and rural markets, and supporting women-led enterprises as well as youth-owned businesses.
Importantly, SGM’s design also reflects the government’s objective of strengthening transparency and accountability. The Fund will report regularly on performance metrics, portfolio composition and claims management. These elements contribute to investor confidence and ensure that public and private resources are deployed effectively.
Scale, sustainability and long-term impact
Guarantee schemes succeed when they balance scale with discipline. Although Mozambique’s system is now operational, building a sizeable portfolio will require coordinated engagement from banks, SMEs and SGM. International experience shows that well-governed schemes can mobilise multiple times their capital base in new lending.
Even so, maintaining rigorous risk management is essential. Because guarantees represent contingent liabilities, continuous monitoring and portfolio adjustments will be necessary. Mrs. Freitas stressed that every recommendation emerging from early implementation will inform improvements and support responsible growth.
The Mozambique credit guarantee scheme therefore marks a significant evolution in the country’s financial architecture. With careful execution, it has the potential to become a cornerstone of SME development and a catalyst for private-sector expansion. If sustained with the same institutional discipline presented at CASP 2025, the initiative could support a more dynamic economy and reinforce the country’s long-term competitiveness.
