Government announces local economic development fund

Maputo, 19 Feb (AIM) – The Mozambican government on Tuesday announced the creation of a Local Economic Development Fund (FDEL).

Speaking to reporters after the weekly meeting of the Council of Ministers (Cabinet), the government spokesperson, the Minister of State Administration, Inocencio Impissa, said the new fund is an instrument which seeks to stimulate the entrepreneurial spirit and local economic development in production, income generation and job creation.

The FDEL will have a dedicated bank account integrated into the public treasury, and is intended to be used mainly by young Mozambicans in both urban and rural areas, to finance their projects.

But all the details of the Fund have yet to be announced – such as how much money will be available and the requirements necessary for those applying for support from the fund. Impissa suggested that the money will be distributed by quotas per province, district and municipality.

The scheme is reminiscent of the District Development Fund (FDD) set up over two decades ago by the then president, Armando Guebuza. This Fund quickly became known as “the seven million”, because it took the form of distributing seven million meticais from the state budget to each of the country’s districts. (Seven million meticais is equivalent to about 109,000 US dollars at the current exchange rates, but was worth a lot more a quarter of a century ago).

In each district, people with projects to raise food production, generate income and create jobs were invited to apply for loans from the FDD. The money was not a grant, but was to be repaid.

In reality, few recipients of the FDD ever repaid their loans, and there is little sign of any lasting effect from the Fund. In theory, FDD debtors could have been chased through the courts, but in practice none were.

There was no public audit of the FDD, and so the Mozambican public never found out how much of their money was lent and never repaid.

To avoid a repeat of this disaster, the FDEL requires mechanisms for a realistic assessment of the projects submitted, and an assurance that debtors will be forced to repay.
(AIM)
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