Rome, November 3: The social and economic impacts of the COVID19 pandemic and the war in Ukraine are creating significant challenges for the most vulnerable people, increasing the risk to livelihoods and food security in developing countries. The United Nations’ International Fund for Agricultural Development (IFAD) is therefore strengthening its commitment to promoting rural financial inclusion and safeguarding the livelihoods of rural communities with a new $2 million loan to Futuro Mcb.
Rising inflation, rising food prices caused by shortage of essential staple crops (wheat, corn, oilseeds), and rising fertilizer and fuel prices have impacted all segments of the food system in Mozambique. This includes food production, post-harvest operations, processing and transportation. Small producers and micro, small and medium enterprises (MSMEs) have been the most affected.
The five-year loan to Futuro mcb, a microfinance bank, will help the institution expand its financial services to 21,000 smallholders and MSMEs in Nampula province, which has the largest number of smallholders and is among the the poorest. in the country. Of the 21,000 beneficiaries, 70% will be women/women-led MSMEs and 30% young people, whose economic activities have been particularly affected by the COVID19 pandemic and the current food security crisis. The support of micro-finance will help them to sustain and develop their activities within the local food system.
“The loan to Futuro mcb shows our confidence in microfinance institutions to contribute to income growth and food security in rural communities, and the value we place on small producers and MSMEs. Futuro mcb is approaching the debt financing market (domestic or international) for the first time, and the entire microfinance sector in Mozambique has not seen significant debt transactions for some time,” said Thouraya Triki, Director of Production, Markets and Sustainable Institutions at IFAD. division. “Beyond the direct economic impact of our lending through IFAD’s Private Sector Financing Programme, we seek to establish a demonstration effect by raising awareness of investment opportunities in high-impact institutions like Futuro mcb “.
Traditional financial institutions often view rural populations as unbankable, leaving up to 80% of them without the essential financing they need to support themselves. Access to rural financial services is essential to help rural people escape poverty. It stimulates investment, boosts productive capacity, increases incomes and builds resilience.
“As the number of microfinance institutions providing rural financial services dwindles in Mozambique, the loan we received from IFAD comes at a good time. This will allow us to increase the value of our loan portfolio, increase working capital for MSMEs to drive growth, increase loan amounts to small producers and provide credit-linked insurance to the population. of the province of Nampula,” said Eduardo Lucchesi, general manager of Futuro mcb.
Financial inclusion of the unbanked through microfinance services has been shown to increase average household income and build household resilience. This is particularly important for women as it creates opportunities for them to save, manage risk and obtain credit to purchase equipment and other agricultural inputs. In addition to offering investment capital, the initiative will also provide targeted information, education and capacity building to vulnerable groups on digital technologies, financial literacy, business management and insurance.
IFAD’s Private Sector Financing Program (PSFP) occupies a unique place in the impact investment space, specifically targeting unearned entities and prioritizing high impact, enabling much-needed resources to reach actors not currently served by other organizations.
Press Release No: IFAD/59/2022
IFAD is an international financial institution and a specialized agency of the United Nations based in Rome – the food and agriculture hub of the United Nations. IFAD invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition and build resilience. Since 1978, we have provided US$23.2 billion in grants and low-interest loans to projects that have reached approximately 518 million people.
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David Florentin Paqui
Regional Communications Officer, Eastern and Southern Africa, West and Central Africa [email protected]
Communications Analyst [email protected]