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AfDB approves US$47.09mn grant for special agro-industrial processing zone in Mozambique

The board of directors of the African Development Bank Group has approved a US$47.09mn grant for the first phase of Mozambique’s Pemba-Lichinga Integrated Development Corridor, a special agro-industrial processing zone (SAPZ)

The grant, from the African Development Fund, will help improve agricultural productivity and agribusiness development in the Niassa province by making progress on institutional capacity, skills, and entrepreneurship to spur agricultural value chain growth.

The project will guide improved policy and development synchronisation between the Niassa province and national departments, especially with the Ministry of Industry and Commerce and the Ministry of Agriculture and Rural Development.

SAPZs are integrated development initiatives designed to concentrate agro-processing activities within areas of high agricultural potential to improve productivity, integrate production, processing, and marketing of selected commodities. These zones will enable agricultural producers, processors, aggregators, and distributors to operate in the same vicinity to reduce transaction costs and share business development services for increased productivity and competitiveness. Along with bringing adequate infrastructure (energy, water, roads, ICT, etc.) to rural areas of high agricultural potential, SAPZs will draw investments from private agro-industrialists/entrepreneurs to contribute to the economic and social development of rural areas.

The initiative is in line with the Mozambique National Development Strategy 2015-2035, which seeks to improve the living conditions of the population through structural transformation of the economy and expansion and diversification of the production base. It is consistent with the intensive efforts of the international community to support Mozambique to promote inclusive economic growth and peace building in the north.

The project also aligns with the African Development Bank's Country Strategy Paper 2018-2022 for Mozambique, with a focus on the Northern provinces, and the bank’s Feed Africa Strategy for agriculture transformation.

Commenting on the Board's approval, Mozambique’s minister of Industry and Trade, Carlos Mesquita, described the project as a ‘game-changer’ that would transform the economy, promote social inclusion and foster peace by tackling important industry enabling factors such as infrastructure for development.

African Development Bank country manager for Mozambique, Cesar Augusto Mba Abogo, highlighted the importance of the SAPZs as a shared facility to enable agricultural producers, processors, aggregators and distributors to operate in the same neighbourhood to reduce transaction costs, share business development services and increase productivity and competitiveness. 

“SAPZs can promote the participation of small producers in value chains and value addition, thus offering an inclusive development model,” he said.

The project will build on a long list of bank interventions in northern Mozambique to provide infrastructure and unlock the agricultural potential of the host corridor. The most recent of these bank-supported projects are the N13 Cuamba-Muíta and the N14 Montepuez-Ruaca roads linking the provinces of Cabo Delgado and Niassa.