Portugal to support Mozambican MSMEs with €17 million

The Portuguese government will support Mozambique’s micro, small and medium-sized enterprises (MSMEs) with €17 million through the Portuguese Cooperation Business Fund (FECOP), whose agreement was signed in December, it was announced on today. “FECOP is a financial cooperation instrument and currently has a budget of around €17 million. It is a fund exclusively aimed at the Mozambican private sector, specifically micro, small and medium-sized enterprises, as well as producers’ associations and cooperatives,” said Helena Guerreiro, Head of Cooperation at the Portuguese Embassy, during the second Mozambique–European Union Business Forum (Global Gateway), which ends today in Maputo.

According to Guerreiro, the fund — created in 2014 — is an important instrument of cooperation between Portugal and Mozambique, designed to address some of the country’s main challenges, and now includes new facilities to facilitate disbursement. “We carried out an evaluation last year and identified some constraints affecting the use of FECOP, at least in the way we would have liked,” she acknowledged. Helena Guerreiro explained that the improved instrument is organised into different support lines.

The first is aimed at companies, associations and cooperatives. It finances investment projects and can guarantee up to 90% of credit, with a maximum limit of approximately 25.5 million meticais (€345,400), requiring a minimum equity contribution of 20%. The second covers companies located in areas affected by natural disasters, allowing financing for both investment and working capital, with guarantees of up to 85% and a ceiling of approximately 6.5 million meticais (€88,000).

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The third is aimed at microfinance institutions to strengthen their credit portfolios. It can provide guarantees of up to 90% and a financing limit of approximately five million meticais (€67,700), enabling funding to reach more businesses indirectly through these intermediary institutions. “With grants, application procedures have been greatly simplified so that participation can reach the levels we hope for,” Guerreiro noted.

Overall, the instruments provide subsidised interest rates based on the Prime Lending Rate, with significant reductions designed to make credit more accessible to Mozambican businesses. In December, Portugal and Mozambique signed 22 legal cooperation instruments in Porto during their sixth bilateral summit, including an addendum to the 2022–2026 Strategic Cooperation Programme between the two governments.

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