Microbanco Confiança is a Mozambican financial institution that provides financial services mostly in rural areas. The delegation is here to learn from FINCORP and get technical expertise regarding sugar-cane financing. FINCORP boasts 26 years’ experience in sugar-cane financing, and 45% of their current loan portfolio comprises sugar-cane loans.

By Inside Biz

Eswatini Development Finance Corporation (FINCORP) hosted a high-profile six-member delegation from Microbanco Confiança in Mozambique. They were in the country for a learning expedition about agricultural finance and associated risk from FINCORP.   

Microbanco Confiança is a Mozambican financial institution whose purpose is to provide financial services mostly in rural areas. It is headquartered in Maputo City, under the Maputo Province, and has 12 branches across Mozambique.   

FINCORP’s Brand Development and Communications Officer Manqoba Makhubu in a press release notes that the delegation was led by Non-Executive Chairman Lazaro Moiane. The delegation had sought technical assistance from FINCORP after they were engaged by Tongaat Hulett in Mozambique to consider financing sugarcane farmers.

“Since this was a new area we haven’t explored yet as it was outside our operational scope, we came here to learn from FINCORP because we understand that they are experts with over 26 years in sugarcane financing. We want to appreciate the whole sector to that we can be in the best position to roll out sugarcane farming loans,” notes the non–executive chairman.   

The delegation was welcomed by FINCORP Group Managing Director Dumisani Msibi and his Top Management at FINCORP’s Head Office, Intfutfuko Building, in Mbabane last week Thursday.    

Msibi assured the delegation that they had come to the right place as at some point, FINCORP’s portfolio was 80% sugarcane loans. He said this was because it was a low-risk sector and a ready industry when FINCORP started operating 26 years ago.

“Even though our portfolio is now fairly diversified, about 45% of our loan portfolio are sugarcane loans. Interestingly, this activity has contributed to the establishment of a robust transport and haulage industry which amounts to about 25% of our loan portfolio. Transportation in sugarcane production was reserved for large companies but that has shifted over the years and it is now in the hands of farmers,” said Msibi.  

Even though Msibi disclosed that sugarcane farming is no longer profitable as it used to be, he assured the delegation that there is assistance for rural-based farmers in the form of subsidies from major markets such as the European Union (EU) that safeguards farmers’ profitability.  

“Otherwise sugarcane financing remains a low-risk sector for us and we finance everything from land preparation to harvesting,” he said.

However, Msibi also disclosed that just like any other sector, sugarcane farming has its own challenges. For instance, he said one of the key risks that affected the sector was the El Nino-induced drought conditions between October 2014 to February 2016.  In addition, he said the sector has also been hit hard by the escalating electricity costs and low yields among a couple of challenges.  

The delegation from Mozambique visited all FINCORP’s branches; Mbabane, Siphofaneni, and Tshaneni. They also visited project sites in Mliba, Tshaneni, and Siphofaneni, where they were able to interact in-depth with FINCORP clients on their day-to-day operations.    

The leader of the delegation disclosed that they might send officials to be attached at FINCORP for at least 2-3 weeks to master the processes involved in financing sugarcane farming.

Share With Friends