• Reference: P-MZ-HZ0-001
• Approval date: 04/10/2005
• Start date: 08/02/2006
• Appraisal Date: 15/04/2005
• Status: OngoingOnGo
• Implementing Agency: MINISTRY OF FINANCE
• Location: Mozambique

The project is assisting the Government of Mozambique (GoM) to strengthen the financial sector through 9 components, as detailed below:

1.Strengthening the Banking Sector, including the Bank of Mozambique; 2.Improving financial accountability and transparency; 3.Strengthening public debt management; 4.Improving money and debt markets and financial infrastructure; 5.Strengthening the insurance and supplementary pension system; 6.Strengthening the social security system; 7.Improving the legal and judicial environment for financial transactions; 8.Support for Anti-Money Laundering efforts; and 9.Access to Finance (Support for Micro-finance).

Components 1 to 4 are being financed by the World Bank, while components 5 to 8 are being financed by the ADB. GTZ/KfW are financing component 9. A 10th component, jointly financed by the World Bank and the ADB, is providing support for project implementation.

The overall objective of the project is to improve the soundness and efficiency, reach and depth of the Mozambican financial system so as to enhance its contribution to economic growth and poverty reduction. The project will develop the institutional capacity of the financial sector by financing activities that will (a) strengthen the regulatory and supervisory frameworks for banks and non-bank financial institutions, including the insurance and pensions sector; (b) develop a more robust payments system; (c) improve the legal and judicial environment for lending operations; (d) introduce sound debt management; and (e) expand financial services particularly in the rural areas by improving the operations of microfinance institutions.

It is now widely acknowledged that financial sector stability and depth are key for efficient mobilization and allocation of domestic financial resources for development and poverty reduction. The proposed project is to assist the development and efficient operation of the financial system in Mozambique. The cost of financial systems failures can be catastrophic, particularly for the small savers. Thus, by improving the viability and efficiency of the financial system, including i ssues of access to financial services, the proposed institutional support project will be making a very valuable indirect contribution to poverty alleviation in the country.

The benefits of the institutional support project will include:

1. A safer and more efficient financial sector, particularly the banking sector, in Mozambique.

2. The development of policies and programs that will lead to improved access to financial services, particularly among the rural dw ellers, in Mozambique.

3. Given the strong linkage between the stability and efficiency of the financial system, and economic development, the proposed project will also assist economic development in the country.

DAVA Emilio Aniceto Fernando - OSGE2

Finance source	Amount
ADF	UAC 6,800,000
Government	UAC 769,800
Co-financier	UAC 10,336,720
Delta	UAC 200
Total	UAC 17,906,720