AFD Group activity in Mozambique

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Agence Française de Développement Group Activity in MOZAMBIQUE

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1. Background

The Agence Française de Développement (AFD) has been operating in Mozambique since 1981. The Maputo office opened in November 1985. Until recently AFD focused its interventions on basic infrastructure rehabilitation (telecommunications, energy, water) and rural sector support for local traditional sectors (livestock farming) or export (cotton, cashew nuts, copra).

 

2. Agence Française de Développement instruments

  • AFD Group interventions in Mozambique can generally take several forms:
  • AFD grants to finance development programs or technical assistance,
  • Fonds Français pour l’Environnement Mondial (FFEM) grants,
  • concessional loans to the State (AFD),
  • medium or long-term concessional loans without a State guarantee to public enterprises (AFD) or private enterprises (AFD or Proparco, AFD’s private sector financing arm which has been operating in Mozambique since 1993),
  • loan guarantees in local currency from AFD or Proparco (ARIZ mechanism),
  • equity or quasi-equity investments by Proparco,
  • training actions by AFD’s training center, the CEFEB (Center for Financial, Economic and Banking Studies).
 

Moreover, AFD manages the Debt Reduction and Development Contract (C2D) on behalf of the French State within the framework of France’s additional effort in terms of debt treatment for Heavily Indebted Poor Countries (HIPC Initiative). C2D grants correspond to a refinancing of Official Development Assistance (ODA) debts through grants.

 

3) AFD Group commitments in Mozambique since 2001

 
Instrument/year
(in M€)
2001
2002
2003
2004
2005
2006
2007
 
2008
total
grants
    AFD
    C2D
    FFEM
 
4,40
3,00
 
 
 
18,20
 
 
3,50
22,60
 
 
0,75
13,00
0,70
 
7,00
 
 
 
11,00
6,00
 
 
13,24
1,50
 
 
0,5
 
1,0
 
40,39
64,30
1,70
   Sub-total grants
7,40
18,20
26,10
14,45
7,00
17,00
14,74
1,5
106,39
loans
    AFD
    Proparco
 
6,00
15,00(1)
 
 
 
 
32,50
18,00
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,03 (2)
 
38,50
42,03
    Sub-total loans
21,00
 
50,50
 
 
 
 
9,03
80,53
Total
 
28,40
18,20
76,60
14,45
7,00
17,00
14,74
10,53
186,92
(1)     $ 15M committed, converted at the rate of $1 = €1
(2)     $ 9M loan and $ 3,2M in equity investment (with 1 € eq 1,35 $)

 

Between 2001 and 2008, the annual average volume of AFD Group commitments in Mozambique stood at around € 23.4M comprising € 13.3M in grants (including C2D) and € 10.1M in loans. The sectoral breakdown for this volume of commitments is as follows: 

 

(1) Infrastructure: including 71 % energy, 12 % water, 10 % telecoms and 7 % roads

* Download the table of AFD's ongoing financings in Mozambique as of 01/05/2009

* Download the presentation of AFD Group's commitments in Mozambique allocated by provinces

 

4. Ongoing projects as of April 30ht, 2009

 

Ongoing financings comprise:
-          one PROPARCO's financing (loan and equity investment) for rehabilitating the Polana Hotel (€9.03M)
-          ten grants under AFD own resources:
o        development of Quirimbas National Park, € 3.5M,
o        development of Limpopo National Park, € 11M,
o        technical assistance to the Ministry of Tourism for wild fauna management, € 0.8M,
o        support to the sectoral health program for the period 2008-2010, € 9M,
o        health technical assistance in the country’s Northern provinces, € 1.4M,
o        development of the Hospital of Maputo’s gastroenterology department, € 0.5M,
o        support to the NGO Sant'Egidio for the DREAM program (AIDS/malnutrition), € 1M,
o        drinking water supply project in Maputo City, € 7M,
o        project by the NGO Interaide water/sanitation, Nampula province, € 0.54M,
-          three grants financed by the Debt Reduction and Development Contract (C2D):
o        contribution to the multi-donor general budget support program in support of PARPA II (Government poverty reduction strategy), € 6M for 2007-2009,
o        intersectoral health program in Cabo Delgado province, € 14.5M,
o        microfinance project in Cabo Delgado and Maputo, € 3.1M,
-          two FFEM grants
o        for the development of Quirimbas National Park, € 0.7M,
o        for the development of Gile national reserve and its periphery, € 1M,
-          € 54M of outstanding AFD loans and € 25M of outstanding Proparco loans allocated in energy, industry, telecommunications and fishery sectors.

 

5) Strategy and perspectives

 AFD’s current activities fall within a dual framework:

  • government strategy defined in the Action Plan for the Reduction of Absolute Poverty 2006-2009 (PARPA II),
  • France’s strategy in Mozambique (also based on PARPA II) defined in the Framework Partnership Document (DCP) signed between France and Mozambique in July 2006. This document defines the orientations for French cooperation for five years (2006 – 2010) and sets health and environment as sectors of concentration.  

AFD’s strategic objectives for interventions in the coming years are as follows:

  • health sector: continuing support, giving priority to sector support in collaboration with other donors,
  • environment sector: further supporting activities in favor of protected area conservation and biodiversity,
  • public or private sector enterprises: offering loans, in particular in infrastructure (energy, telecommunications, transports, water etc), giving priority to projects which strengthen Mozambique’s regional integration.