MICROCAPITAL BRIEF: World Bank Group (WBG) Loans $12m, Donates $12m to Government of Mozambique for Financial Sector Reform, Including to Boost Financial Inclusion

The World Bank Group (WBG), a US-based multilateral financial institution recently approved a USD 25 million financing package consisting of a loan of USD 12.5 million and a grant of USD 12.5 million to support the “First Programmatic Financial Sector Development Policy Operation (DPO)”[1] of the government of Mozambique. The funding will be disbursed through the International Development Association (IDA), the member of WBG that offers interest-free credits and grants to the world’s 82 poorest countries. It is expected to be the first element of an unspecified “series [of financing measures] aimed at promoting financial sector development”[1] in Mozambique.

The financing arrangement is expected to help the government of Mozambique: (1) fund improvements in risk management and credit reporting practices for local financial institutions; (2) develop branchless and mobile banking products, consumer protection practices and payment systems; and (3) improve debt and capital markets in the country.

In a statement, Mark R. Lundell, WBG’s Director for Mozambique, said that the financing package “will help enhance banking regulation and supervision, strengthen the banking safety net and crisis management framework, broaden financial inclusion, and improve government securities markets”[1]. Mazen Bouri, the World Bank Task Team Leader for the project added that “these reforms will help increase access to financial services for both households and businesses, focusing on small and medium enterprises and rural outreach”[1].

The DPO aims to advance the country strategy of WBG for Mozambique, complementing the goals of “eradicating absolute poverty and improve shared prosperity”[1] in the country. WBG had commitments of USD 52.6 billion in loans, grants, equity investments and guarantees as of December 2013.

By Alíz Crowley, Research Associate

About The World Bank Group (WBG)

Headquartered in the US, the World Bank Group (WBG) is a multilateral development organization whose mission is to improve living standards for people in developing countries. As of 2014, WBG encompasses the International Bank for Reconstruction and Development (IBRD), which is owned by 188 member nations; the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). WBG has 10,000 employees and operations in approximately 120 countries as of 2014. WBG had commitments of USD 52.6 billion in loans, grants, equity investments and guarantees as of December 2013.

Sources and Additional Resources

[1] World Bank Group Press Release, World Bank supports financial sector reforms to increase access to high quality and lower cost financial services for individuals, households, and businesses in Mozambique

MicroCapital, June 20, 2014, World Bank Group’s Global Consumption Database Suggests 4.5b Low-income People Spend $5t Per Year in Developing World

MicroCapital, May 8, 2014, African Development Bank (AfDB) Announces $9m Line of Credit for Moza Banco of Mozambique for SMEs

MicroCapital, August 28, 2013, World Bank Group, National Housing Bank, Government of India Sign $100m Agreement for Low-Income Housing Finance Project

MicroCapital Universe Profile: The World Bank Group (WBG)

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