Mozambique: Commercial banks disburse first loans guaranteed by Mutual Guarantee Fund

The Mozambican commercial banks have already disbursed the first loans guaranteed by the Mutual Guarantee Fund (FGM), a body which was launched over the last year with the aim of supporting the country’s Small and Medium-Sized Enterprises (SMEs) managed by young people, “eliminating the requirement for traditional bank collateral.” The fund, which in its initial phase is budgeted at 40 million dollars disbursed by the World Bank, is part of the Economic Acceleration Package (PAE) introduced three years ago. The PAE consists of 20 reform measures aimed at resuming and boosting economic growth, which had stagnated as a result of various factors, including the Covid-19 pandemic and the suspension of support from cooperation partners to the State Budget, following the scandal of the “hidden debts”. According to a statement from the country’s Guarantee Society (SGM), the national banking sector granted the first loans guaranteed by the FGM, “under the portfolio guarantee agreements signed between FGM and partner financial institutions.” “The first loans were granted by Banco Comercial e de Investimentos (BCI), Banco Internacional de Moçambique (BIM), and Standard Bank, within the framework of the guarantee agreement, marking the effective start of the use of the credit guarantee system in the Mozambican market”, reads the SGM note.

The granting of these loans, according to the document, results from a structured process of integrating the banking sector into a new financial instrument in the country. This work, conducted by SGM in close coordination with partner banks, involved technical training, clarification of the guarantee model, and internal dissemination among the credit, risk, legal, and operations teams of financial institutions. The implementation of the guarantee system also required significant operational adjustments by the banks, including the adaptation of internal procedures, credit analysis and approval flows, reporting mechanisms, and contractual framework.

“This entire process was continuously monitored by SGM, ensuring operational coherence, technical alignment, and proper implementation of the portfolio guarantee model”, reads the note. This milestone, according to the document, marks the transition from the institutional preparation phase to the fully operational phase of the FGM, “reinforcing the confidence of economic agents in accessing credit and already resulting in the granting of more than 200 guaranteed loans, impacting economic activity.”