The African Development Fund Board injects USD 21 million to finance Mozambique’s economic governance and inclusive growth program Phase II

18/12/2015
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The Board of Directors of the African Development Fund (ADF) on 15th December 2015 approved a grant worth USD 21 million to finance Mozambique’s Economic Governance and Inclusive Growth Program Phase II (EGIGP).

The program is part of a three year programmatic series, covering the fiscal years 2014, 2015 and 2016. It builds on the first phase of the operation, which was approved in 2014 and has since been disbursed. 

The EGIGP is part of the Bank’s continued support to the economic governance reforms being implemented by the Government of Mozambique.  It builds on the successful implementation of the five previous general budget support operations and most notably, the Growth and Public Sector Efficiency Program (2011-2013) that was successfully implemented from 2011 to 2013. 

The objective of the operation is to support the Government’s effort in promoting inclusive and sustainable growth through (i) consolidating transparent and accountable public financial management and natural resource management frameworks; and (ii) improving the enabling environment for private sector development.

Consistent with this objective, the first phase of the program helped to consolidate and deepen reforms in the areas of (a) public investment management, (b) fiscal risk management, (c) procurement, (d) natural resource management, and (e) business enabling and regulatory reforms to foster private sector development, with emphasis on medium and small enterprises.

The reforms supported by this operation will contribute to inclusive growth and support Mozambique in improving the quality of life and well-being of its citizens. Reforms to simplify business regulations and start up procedures to obtain a license will lead to higher investment, increase productivity of the private sector and increase job creation, particularly for the youth and women. The development of the extractive industry also brings significant opportunities to the country. Most importantly, the program will create additional fiscal space, which is needed to finance infrastructure and service delivery to improve livelihoods and enhance productivity.

The country has been experiencing high rates of economic growth for over two decades, but this has not yielded the desired impact in terms of job creation and inclusiveness. In this regard, the African Development Bank, in collaboration with other development partners, will continue to support the Government’s efforts to effectively implement the new five year program (2015-2019), whose major emphasis is on employment creation, poverty reduction and greater competitiveness through higher productivity. Implementation of the economic governance and inclusive growth program is hence a major step in that direction.