AFD in Mozambique

AFD in Mozambique

The French Development Agency (Agence Française de Développement - AFD) started its activities in Mozambique in 1981, and set up its office in Maputo in November 1985. During these thirty years, AFD first focused its activities on basic infrastructure rehabilitation (telecommunications, energy, water) and rural sector development, supporting traditional (livestock farming) or export industries (cotton, cashew nuts, copra), and then broaden its financing to health and environment sectors.

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Agence Française de Développement instruments

AFD Group’s investments in Mozambique can be channeled through various instruments:
 
  •  AFD grants to finance development programs or technical assistance, including grants from the French Global Environmental Fund (FFEM), within the framework of the Trade Capacity Building Program (PRCC) or in favour of NGOs,
  • Very Concessional Counter-cyclical loans (PTCC) to the State (AFD),
  • Medium or long-term loans to public companies without any guarantee from the State (AFD), as well as medium or long-term loans to private companies (through Proparco, AFD’s subsidiary dedicated to the private sector, and operating in Mozambique since 1993),
  • Loan guarantees in local currency by AFD (ARIZ individual or portfolio risk-sharing mechanisms) or Proparco,
  • Investments in equity or quasi-equity (Proparco),
  • Training activities through AFD’s training center based in Marseille (south of France), the CEFEB (Center for Financial, Economic and Banking Studies): professional master degree courses, short term seminars or specific training sessions and workshops.
  • Implementation of studies and strategic sector reflexions (AFD) 

Besides these financial tools, AFD is also in charge of implementing the Debt Reduction and Development Contract (C2D) on behalf of the

French State , within the framework of France ’s additional effort towards debt reduction for Heavily Indebted Poor Countries (HIPC Initiative). The C2D mechanism proposes to convert into grants debts from Official Development Assistance (ODA) loans.

AFD Group commitments in Mozambique since 2003

   


Tool/year (in M€)
2003
2004
2005
2006
2007
2008
2009
2010
total
grants
    AFD
    C2D
    FFEM
    PRCC
 
3,50
22,60
 
 
0,75
13,00
0,70
 
7,00
 
 
 
11,00
6,00
 
 
13,29
1,50
 
 
0,5
 
1,0
 
1,16
 
 
1,50
 
    0,92
14,00
1, 05
 
38,12
57,10
2,75
1,50
Sub-total grants
26,10
14,45
7,00
17,00
14,79
1,50
2,66
15,97
99,47
loans
    AFD to the State
    AFD Public Cies
    Proparco
 
 
32,50
18,00
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,03 (1)
 
20,00
35,00 (2)
 
 
 
15,30
 
20,00
67,50
42,33
Sub-total loans
50,50
 
 
 
 
9,03
55,00
15,30
129,83
ARIZ guarantees
 
 
 
 
 
 
1,39
 
1,39
Total
 
76,60
14,45
7,00
17,00
14,79
10,53
59,05
31,27
230,69
 (1) $ 9M loan and $ 3,2M in equity investment, with €1 = $1,35 – (2) $ 50M with €1 ~ $1,43

 

Between 2003 and 2009, AFD Group commitments in Mozambique amounted to € 230,69 M with an annual volume average of commitments of € 28,78 M among which € 12,38 M with grants (including C2D) and € 15,93 M with loans and guarantees. Total commitments breakdown by sector is as follows: 

 

 

(1) Infrastructure: including energy 93 % and water 7 % 

Download the table of AFD's ongoing financings in Mozambique as of 31/12/2010

Ongoing projects as of April 1st, 2010

Ongoing financings include:
  • a financing from Proparco (loan and equity investment) for the Polana Hotel rehabilitation (€ 9,03M)
  • a credit facility from Proparco to BCI bank ($20 M ~ €15,3 M),
  • an AFD loan to the State for access to energy in Maputo and Cabo Delgado peri-urban areas (€ 20M)
  • an AFD loan to CMH for the second phase of Pande and Temane gas fields expension ($ 50M ~ € 35M)
  • fourteen grants under AFD own resources (excluding study funds):
o         development of the Limpopo National Park (€ 11M),
o         technical assistance to the Ministry of Tourism for wild fauna management (€ 0,8M)
o         support to the national health program for 2008-2010 (€ 9M),
o         health sector reinforcement program in Cabo Delgado province (€ 1,4M),
o         rehabilitation of Maputo Hospital gastroenterology department (€ 0,5M),
o         NGO Sant'Egidio's DREAM program (AIDS/malnutrition) (€ 1M),
o         drinking water supply project in Maputo (€ 7M),
o         NGO Interaide's project on water and sanitation in Nampula Province (€ 0,54M),
o         NGO Essor's project on vocational training (€ 0,5M),
o         NGO DSF (Douleurs sans frontières)'s project for pain alleviation (€ 0,26M),
o         NGO Essor's project for peri-urban agriculture in Maputo and Matola (€ 0,3M),
o         NGO Essor's project for education improvement for excluded population (€ 0,25M)
o         NGO Essor's project for vocational training and insertion (Brazil/Mozambique) (€ 0,21M)
o         support to Procredit bank for SME financing development (€ 0,46 M)
  • four grants financed under the Debt Reduction and Development Contract (C2D):
o         health intersectoral program in Cabo Delgado province (€ 14,5M),
o         microfinance project in Cabo Delgado and Maputo (€ 3,1M),
o         contribution to the multi-donor general budget support for PARPA, 2010-2014 (€ 10M),
o         consolidation of Quirimbas National Park development (€ 4M),
  • three FFEM grant:
o         development of Gilé National Reserve and its periphery (€ 1M),
o         adaptation to climate change in the Quirimbas National Park ((€ 1M)
o         support to compost production in Beira (€ 50 K)
  • one grant under the Trade Capacity Building Program (PRCC) :
o         support to shrimp farming (€ 1,5 M),
  • one ARIZ portfolio risk-sharing guarantee with BCI bank ($ 2 M ~ € 1,39 M)
  • total of € 53M of outstanding AFD loans and € 38M of outstanding Proparco loans allocated in the infrastructure (energy, telecommunications), industry and aquaculture sectors.

 

Strategy and perspectives

AFD’s ongoing activities fall within:

  • the Mozambican government strategy as defined in the Absolute Poverty Reduction Strategy paper for 2006-2010 (PARPA II),
  • France’s strategy in Mozambique (also based on PARPA II) as defined in the Framework Partnership Document (DCP) signed in July 2006 for 2006–2010.  

AFD’s strategy in Mozambique focus on:

  • environment (especially conservation areas) and infrastruture: (loans to the state) sectors, 
  • loans to public and private sector companies, especially in the infrastructure sector (energy, telecommunications, transports, water etc), with a focus on Mozambique's regional integration.