The local small business funder, Business Financial Solutions (Pty) Ltd (BFS), has with two Mozambican entities formed an investment management company set to provide funding to the underserved in the east-coast country.
The two Mozambican entities – Financial Sector Deepening Moçambique (FSDMoç) and the Confederation of Business Associations of Mozambique (CTA) – are involved in Mozambique’s financial sector.
According to an update by the three entities, during mid-June they were awarded authorisation to incorporate BFS Sociedade Gestora de Fundos de Investimentos, SA, the investment management company, by the Bank of Mozambique.
This is the entity that will house their operations, and was formed following an assessment carried out by the three, which affirmed the need for a locally registered and locally managed risk capital fund in Mozambique.
It has been established before in the country that donor-funded credit lines managed by Mozambican commercial banks and targeted to small and medium enterprises (SMEs) were not performing as expected.
“Up until the conclusion of the assessment, there were no locally registered investment management companies, risk capital funds or other structured alternative finance investment vehicles in Mozambique. The few equity transactions made directly into enterprises were largely from non-domicile funds,” said the three in a market update.
In order to sustain and further support financial inclusion gains in Mozambique, the joint work culminated in the development of business plans to pioneer both a locally registered investment management company and a local risk capital fund in the market.
In Namibia, BFS has made several funding rounds and was among the few funders in Namibia to set up an incubation programme for SMEs.
According to the update, the aim of the investment management company is to initiate financial intermediary activities focusing on managing alternative finance for SMEs in the Mozambican market.
“Specifically, the investment management company will seek to meet the need for growth funding by SMEs that is presently constraining economic growth by improving the value offering to the sector,” reads the update.
Although BFS Sociedade Gestora de Fundos de Investimentos, SA, the investment management company, is not yet registered, the three entities said they took pride in being among the first to initiate and create local investment management capacity for alternative risk capital finance in the country.
Parallel to the registration process, BFS Sociedade Gestora de Fundos de Investimentos, SA and its partners, will undertake a capital raising roadshow and engage stakeholders to update them on the details of both the investment management company and the fund, as well as the likely timelines.
BFS Gestora de Fundos, SA will offer holistic financial and non-financial offerings that are geared to improve the environment for small business growth.
The business and financial management solutions offered by BFS Gestora de Fundos, SA are expected to be catalytic in influencing the SME sector policy, as well as guiding companies through different stages of their life cycle.
Recognising the challenges faced by SME businesses to access productive funding, BFS Sociedade Gestora de Fundos de Investimentos, SA’s strategy will be to roll out a variety of financial instruments to mitigate such funding gap. BFS said it is still not set on how much it will invest, as that will be determined by how much capital will be raised.
According to BFS director, Anna Kangombe, as part of BFS’ expansion strategy, the company assessed nine countries in SADC, West Africa, as well as East Africa.
“Thus, once we are fully set up in Mozambique, we will re-assess our strategy for the next target,” she said.
Source: Namibian
