Africa-Press – Mozambique. Mozambican President Daniel Chapo on Thursday launched the Local Economic Development Fund (FDEL), which is intended to finance projects in districts and municipalities to create jobs, boost income, increase production and develop the local economy.
Speaking in the southern municipality of Vilanculo, Chapo said that the FDEL would finance people who are unable to obtain loans from the commercial banks, but who have some idea about how to run a business. It would promote an entrepreneurial spirit among young people, and 60 per cent of the FDEL will go to young applicants.
The projects financed by the FDEL must be economically viable. Chapo stressed that the money takes the form of a loan, not a grant, and must be repaid at an interest rate of five per cent.
Applicants must be at least 18 years old, must have a tax identification number, and must reside in the district or municipality where they intend to implement their projects.
Nobody who owes money to other public funds may apply to the FDEL. This means that beneficiaries of the District Development Fund (FDD) set up under one of Chapo’s predecessors, Armando Guebuza, who never repaid their loans, will not be entitled to receive anything from the FDEL.
The FDD took the form of a fund of seven million meticais (about 110,000 US dollars at the present exchange rate, but worth much more two decades ago). This money was supposed to be repaid – but most beneficiaries of the FDD did not repay. Thus, year after year, the FDD paid out hundreds of millions of meticais from the state budget and very little of it ever came back. In theory, debtors could be taken to court, but in practice none were.
No audit was ever undertaken of the FDD, and so it is not clear if there was any lasting benefit from the projects it financed.
Chapo wants to avoid a similar fiasco overtaking the FDEL. In each district, a Project Selection Commission will receive the project proposals, and will select viable ones for financing. Chapo warned that the commission members “must not choose projects submitted by relatives, friends, acquaintances, neighbours or anyone who offers a bribe.
FDEL beneficiaries must sign a contract, which will include a plan for reimbursing the loan. The money must be reimbursed, Chapo said, so that the FDEL can become a revolving fund which can benefit other Mozambicans.
“The State does not have much money, but it has decided to provide this money to the people, so that they can have means of working, producing income, creating jobs and developing the local economy”, the President said.
But if the loans were not repaid, he warned, “the government will not be able to benefit other Mozambican citizens who want to set up businesses”. Those who did not repay will be punished, and will never receive any more funds from the State.
The limits to FDEL funding will be a minimum of 20,000 and a maximum of 200,000 meticais for individuals. For cooperatives and associations those limits are between 75,000 and 350,000 meticais, while for micro and small enterprises they are between 100,000 and 500,000 meticais. The loan repayment period will be between 12 and 24 months.
The first projects will be financed as from September – but Chapo did not say how much money will be available per district or municipality.
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