Businesses Demand Guarantee Fund after Losses Caused by Post-Election Riots

By Aurélio Muianga

Maputo (MOZTIMES) – Mozambican businesses have warned that the protests and acts of vandalism that occurred after the 9 October general elections have destroyed between 30% and 40% of the country's industrial and commercial fabric, culminating in the closure of hundreds of companies.

To mitigate the impacts and guarantee the recovery of the sector, the Confederation of Mozambican Business Associations (CTA) has demanded that the government set up a mutual guarantee borrowing fund.

The proposal was presented on Tuesday to the Minister of the Economy, Basílio Muhate, during a meeting between the Government and representatives of the private sector. According to the CTA, without immediate financial support, many companies will be unable to recover, worsening still further the economic crisis and unemployment.

The Chairperson of the CTA, Agostinho Vuma, argued that the Guarantee Fund is essential to allow the affected companies access to credit and to resume their activities. He argued that the banks demand guarantees before they will grant loans, and without the guarantee, many companies will not be able to survive.

"The Guarantee Fund can be an instrument for sharing the risk between the banks and the small and medium enterprises (SMEs), in that the banks need guarantees that the loans will be repaid", said Agostinho Vuma.

The CTA is also proposing an emergency fiscal reform, including flexibility in the payment of taxes and a revision of the high costs of energy. Vuma stressed that, currently, electricity costs account for a large part of the operational expenditure in essential services, such as baking and water processing, which makes it urgent to take concrete measures to alleviate this burden. "Energy costs in processing water and bread account for 60%, which means that this aspect must be taken into account in policy implementation", said Vuma.

In response, Basílio Muhate guaranteed that the government is in talks with the commercial banks to facilitate the financing of the affected companies, and that the CTA will be included in this process to guarantee effective solutions, adapted to the reality of the private sector. "Work with the commercial banks is under way, and a representative of the CTA will be invited to participate", promised Muhate.

As for setting up the Guarantee Fund, Muhate said this measure is already at an advanced stage of implementation, and just needs some technical adjustments before it is put into operation

The Minister also guaranteed greater openness in the channels of communication between the Government and the private sector, with the aim of ensuring a more stable and secure business environment.

For its part, the CTA repeated its call for the measures to be implemented urgently, to avoid an even greater collapse of the Mozambican productive sector. (AM)

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