Maputo, Mozambique, May 15, 2006—The
International Finance Corporation, the private sector arm of the World
Bank Group, signed the second Mozambique SME Initiative (MSI) integrated
investment and technical assistance agreement with Swissta Mozambique,
a local water purification and bottling company. The MSI investment will
support the establishment of a local water bottling factory that provides
water products from 500ml bottles to 5 gallons, 500ml flavored water and
ice to the Maputo and Matola regions. The financing consists of a $300,000
combined quasi-equity investment and technical assistance loan.
Launched in 2006, Swissta is a start-up venture that aims to provide affordable,
high-quality water products to local businesses and communities.
The company is owned and operated by two entrepreneurs, Mr. Michael Strehler,
a Swiss engineer and Mr. Mhamud Charania, CEO of Africom, a Mozambique
distribution company that has been in business for eight years.
As Dimitris Tsitsiragos, IFC director for Global Manufacturing and Services,
noted, “[IFC’s support to Swissta demonstrates IFC’s continued commitment
to providing access to finance to small businesses, in particular, those
serving the local market with quality products.”]”
Managed from IFC’s Maputo office, MSI
is an IFC pilot program aimed at building a portfolio of viable client
companies, whose improved operational and financial results over the next
four years would in turn stimulate interest from new investors in the country’s
small business sector. To date, over 16 companies have received investment
advice and technical assistance; one loan has been disbursed to a woman-run
print company, Spectrum Graphics Limited, and a second commitment to Swissta
was made this month.
MSI is one of the latest in a long series of small business partnerships
between donor agencies and IFC, an organization whose strong implementation
capacity derives from more than 600 full-time small business development
specialists in the field worldwide and a Washington-based headquarters
staff with expertise in business and finance as well as development. IFC
and the Swiss and Finnish governments are contributing resources to the
initiative, with others expected to join in the near future.
Despite an improving investment climate, local companies in Mozambique
find it difficult to attract capital from private investors. Although several
effective programs already serve microenterprises, small and medium businesses
can do many things that microenterprises cannot do, such as generate new
tax revenues, export their products, or form competitive local industries.
They also offer workers more secure and better-paying jobs, as well as
opportunities for training, potential for career advancement, health and
safety protection in the workplace, and pension and insurance benefits.
In almost every country that has substantially reduced poverty and created
a sound middle class, the local small business sector has played a critical
role. But small and medium enterprises face enormous unmet needs.
The MSI investments, which range between $100,000 and $1 million, are made
on a fully commercial basis in existing businesses with strong growth potential.
Technical assistance is an integral part of the investment program
and provides customized, hands-on, financing to selected small businesses
to prepare them to qualify for direct financing from the investment program
and to develop successful, sustainable practices postinvestment. These
businesses also benefit from the environmental and safety review and the
IFC Against AIDs program, which supports the implementation of HIV/AIDs
strategies in the workplace. Once a portfolio of sustainable small
businesses has been successfully developed, the longer-term goal is to
develop the initiative into a self-supporting and viable investment vehicle
owned by the private sector.
The direct beneficiaries are the Mozambican small businesses thatcan benefit
from an integrated package of financing and technical assistance to expand
their firms. In the longer run, additional small businesses will benefit
from the project as there will be a new financial institution that can
provide financial services to them and serve as a model elsewhere. Local
providers of consultancy services will also benefit from the initiative
as it also aims at improving local resources for technical assistance .
For more information, visit www.ifc.org/ifcext/gms.nsf/Content/Mozambique+Initiative.
Richard Ranken, IFC director for Sub-Saharan Africa, noted, “[MSI’s second
investment reflects IFC’s combined commitment to providing financial and
technical assistance services to Africa`s small and medium businesses.”]
The International Finance Corporation, the private sector arm of the World
Bank Group, promotes sustainable private sector investment in developing
and transition countries, helping to reduce poverty and improve people’s
lives. IFC finances private sector investments, mobilizes capital in the
international financial markets, helps clients improve social and environmental
sustainability, and provides technical assistance and advice to governments
and businesses. Its 178 member countries provide its share capital and
collectively determine its policies.
From its founding in 1956 through FY05, IFC has committed more than $49
billion of its own funds and arranged $24 billion in syndications for 3,319
companies in 140 developing countries. IFC’s worldwide committed portfolio
as of FY05 was $19.3 billion for its own account and $5.3 billion held
for participants in loan syndications. For more information, visit www.ifc.org.