Mozambique’s central bank is offering commercial lenders a bigger incentive to finance businesses that produce goods locally, replacing imports or developing new export markets. Under the new rules, banks can claim reserve requirement deductions worth up to 110% of the outstanding principal on qualifying investment loans, provided the financing meets the scheme’s conditions.

The programme took effect on Oct. 28, 2026, and will run initially for 18 months. It also requires each credit institution to issue at least 50 new loans every six months and ensure the total value disbursed reaches a prescribed minimum linked to its reserve requirements.

The initiative gives banks a financial reason to back productive businesses while making access to the benefit conditional on measurable lending commitments.

It prioritises projects that use domestic raw materials and production inputs, positioning local sourcing and export diversification as central objectives of Mozambique’s latest effort to direct credit into the real economy.

Banks must meet a minimum lending threshold

Each credit institution must disburse loans worth at least 6% of its average reserve requirements over the previous six periods during every six-month window. It must also issue at least 50 new loans in each period.

These conditions establish both a minimum number of borrowers and a minimum volume of financing. The reserve incentive is therefore tied to banks’ ability to extend qualifying credit, rather than simply holding funds or financing activities outside the programme’s objectives.

For eligible investment loans, banks can deduct an amount equivalent to 110% of the outstanding principal from their reserve requirements in national currency. The equivalent deduction for qualifying working capital loans is 100%.

Investment financing can cover machinery, equipment, infrastructure and projects to acquire, install, modernise or expand production capacity. Working capital loans can fund raw materials and other production inputs.

Financing must support a domestic economic objective

The central bank’s scheme targets legally established companies, sole traders and cooperatives whose projects demonstrate a contribution to replacing imports or diversifying exports.

Eligible activities include the production and processing of goods and tourism. The Bank of Mozambique will identify the specific sectors and activities covered through a circular.

Applicants must be current on their tax obligations, maintain organised accounts or simplified records under the applicable tax regime, and demonstrate technical, financial and management capacity.

They must also provide a project or funding plan explaining how the proposed loan will support the programme’s objectives.

A key condition concerns where businesses obtain their inputs. Projects must prioritise raw materials, production inputs and other factors sourced domestically. Imports of these resources, machinery and equipment are permitted when local supply is unavailable, insufficient or technically unsuitable, among other justified circumstances.

The requirement makes local availability an important consideration in project eligibility. Businesses cannot rely on imported inputs by default when suitable domestic alternatives are available.

Borrowing costs will follow the MIMO rate

The programme establishes different pricing rules for investment and working capital loans. Investment loans will carry an interest rate equal to the MIMO monetary policy rate, while working capital financing will be priced at MIMO plus 150 basis points. Both rates can change when the policy rate changes.

The regime excludes consumer credit, financial asset purchases and purely speculative investments. Loans that fail to meet the prescribed eligibility conditions are also ineligible.

Banks must publish their criteria, application procedures and documentation requirements on their websites and at their branches. Noncompliance can result in the loss of the reserve benefit, repayment of amounts improperly deducted and penalties under applicable legislation.

The incentive extends beyond its initial expiry

The regime will run for 18 months, but loans approved and disbursed while it remains active may retain the prescribed treatment until they are fully repaid. Its expiry will not automatically cancel the benefit attached to those existing loans.

That provision allows qualifying financing to continue under the scheme’s rules beyond the initial application window.

The immediate test, however, is whether banks can meet the lending thresholds and whether businesses can produce viable projects that satisfy the tax, financial, management and domestic sourcing conditions.

By tying reserve relief to defined lending targets and productive uses, Mozambique’s central bank is seeking to turn a banking incentive into financing for businesses that can replace imports and broaden the country’s export base.