Mozambique Planning To Set Up Venture Capital Fund To Boost Medium-Size Businesses

Mozambique Planning To Set Up Venture Capital Fund To Boost Medium-Size Businesses

Mozambique bank, Banco Nacional de Investimento (BNI) is planning to set up a unit by the end of 2014 that will act as a venture-capital investor. The unit will invest in small startup companies that show the potential of growing into a profitable venture for the domestic economy. The move by BNI comes against the backdrop of Mozambique preparing itself to become a major gas exporter with the recent discovery of offshore gas resources.

BNI is positioning itself to not only provide financial support to startup businesses but provide managerial assistance. After a successful run of those companies BNI has invested in, it will be selling its stake on the Mozambique’s local exchange through Initial Public Offerings (IPOs). Abdul Javine, the BNI’s head of Structured Finance and Advisory, during an interview held October 20^th, said an initial fund worth $10 million is currently under discussion.

The country discovered offshore gas reserves that the International Energy Agency estimates will be able to give the country about $115 billion worth of gas over the next two and half decades. The Mozambique Liberation Front (FRELIMO) which is leading in vote counts in last week’s concluded elections. Promised the Mozambique people in its manifesto, that it will ensure that the country’s gas reserves benefit all of the population.

According to World Bank 2009 stats, more than 50% of the Mozambique population, live in poverty. The discovery of offshore gas resources alongside BNI’s plan to act as a venture capitalist for startup companies looks like all the right efforts are being put in place to ensure the country socio-economic standards improve.

BNI started out as a joint venture between the government of Portuguese and Mozambique back in 2010. Two years later, the Mozambique government bought the rest of the stake owned by Portuguese government. BNI is now headed by former Governor of the Central Bank of Mozambique Adriano Maleiane.

Javine said BNI is targeting “medium-size companies that have a lot of potential in terms of growth prospects”. The criteria for judging which companies qualify will include the number of people employed by the company.

Javine further said, “When we see that the company is stable, it can sustain itself, has good liquidity, then we sell our stake on the stock market.”

BNI will be offering two IPOs per year, this alongside other initiatives, according to Javine will rejuvenate the Mozambican local stock exchange, the Bolsa Valores de Mocambique.

“The stock exchange is not liquid; it’s not active.”

According to the company’s site, only three companies trade on the bourse. For more information on this, follow this link.