Washington D.C., December 2, 2003—
The International Finance Corporation, the private sector arm of the World Bank Group, will provide a $1,195,000 partial credit guarantee to Merec Industries Lda to expand its wheat mill processing activities in Mozambique.
Merec Industries will add a new wheat mill, including grain storage silos, in Beira, northeast of the Mozambican capital of Maputo. The partial guarantee will enable Merec to raise a seven-year long-term loan from a local financial institution, thereby also stimulating the local financial sector. The project will be supported by a linkages program through IFC’s Small and Medium Enterprises Department and the Africa Project Development Facility to sustain 50 small bakeries in the region.
The owners of Merec came to Mozambique in 1994 following the civil war in Rwanda, where they held investments in an oil extraction, soap, and paint factory. They established Africom Lda, a company that has successfully traded in and distributed basic commodities, such as sugar, rice, oil, soap, biscuits, maize, and wheat flour, sourced locally and abroad. Founded in 1998, Merec began producing maize meal and copra oil in 1999 at its new factory in the Maputo suburb of Machava.
To complement the financial package, IFC and Merec will develop a linkages program for local Mozambican bakeries. The program will bring in specialized technical assistance to help bakeries improve quality and production techniques, boost efficiency, and increase sales. The beneficiaries of the technical assistance program will be current buyers as well as potential new buyers. In the first year, IFC and Merec will reach about 50 bakeries, building their capacity to offer the program for many years to come. The program, an important value-added investment component, will allow Merec to expand sales and strengthen relationships with buyers. The initial diagnostic work, which began in October 2003, is being financed by APDF.
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.