Priority area Sustainable economic development Promoting micro, small and medium-sized enterprises

Every year 300,000 young people come onto the labour market in Mozambique. Very few of them find work in the formal sector. If the country is to achieve sustainable and inclusive economic growth and create more jobs in the formal sector, it needs to give a boost to micro, small and medium-sized enterprises (MSMEs).

Bicycle workshop in Mozambique

Bicycle workshop in Mozambique

Bicycle workshop in Mozambique

Germany is assisting the Mozambican government in improving the legal, political and institutional environment for MSMEs. One particular aim is to boost the rural economy. Among other things, German experts are advising the responsible department, the Ministry of Industry and Commerce, on formulating a detailed reform strategy and implementing reforms at provincial level. The simplification of licensing procedures, for example, has paved the way for 40,000 new business start-ups.

A tailor works in a slum in the Mozambican city of Beira with his sewing machine on the street.

A tailor works in a slum in the Mozambican city of Beira with his sewing machine on the street.

A tailor works in a slum in the Mozambican city of Beira with his sewing machine on the street.

Cooperation with the private sector

As part of what are known as "development partnerships", Germany's development cooperation institutions are working directly with selected businesses, combining the innovative force of the private sector with the resources, expertise and experience of those institutions. The particular focus is on value chains in the agricultural sector (see also Green Innovation Centre Mozambique). To date, 24 development partnerships have been established, enabling eight million euros of private capital to be mobilised.

Access to loans for micro entrepreneurs

Germany is also supporting efforts to improve the financial system, for instance through the introduction of a deposit insurance fund. Often, MSMEs cannot access financing for the tools and machinery that would enable them to expand their businesses because no suitable products exist.

The aim is to get private banks to offer appropriate loans and financial products in particular for micro and small enterprises in rural areas. Since very few bank branches exist in rural areas, Germany is also promoting innovative ways of selling these financial products. In this area, too, progress has been made. A total of 30,000 MSMEs have now been integrated into the financial system. Over 65 per cent of them are managed by women.