The problem
Mozambique was one of the most dynamic economies in Africa with impressive growth until 2014. However, the economy of Mozambique was negatively impacted by three main events, namely the hidden debts, climate change (e.g. the cyclones Idai and Kenneth) and the global pandemic. Additionally, the country has limited capacity to create jobs, especially for the youth, which is a major part of the country´s population. Self-employment has been the solution for youth to generate income. Nevertheless, youth-owned companies face challenges to grow due to a lack of collateral requirements to secure bank loans, coupled with high interests’ rates and aversion of banks to provide loans for this group. Additionally, low human capital, low capitalization, few programs that provide financial services seed capital in the country, and poor financial and management practices, are among the barriers encountered by young entrepreneurs for scaling-up.
As a solution to address the above-mentioned barriers, the Orange Corners Maputo programme is implemented since 2017. The Orange Corners supports youth entrepreneurs from the idealization phase to the creation and operationalization of the business. Despite this intervention, Mozambican young entrepreneurs still are challenged to access capital either to start or scale up the business. Without additional access to finance and capacity building, the likelihood of start-ups sustaining or further developing after the programme is low.
The Solution
The Orange Corners Innovation Fund (OCIF) aims to address this issue of early-phase funding to participants of the Orange Corners programme in Mozambique. The programme supports the entrepreneurs in three phases, namely: i) Incubation, ii) Acceleration and Fund my business. In Incubation Programme, the incubatees receive grants that allow them to develop a minimum viable product/service. The selected entrepreneurs for the acceleration phase receive further training for business growth and credit loans management. In Fund my Business, the entrepreneurs receive the capital, a mix of grants and loans, to scale-up their business. Besides the fund, the selected entrepreneurs will benefit from technical assistance. This approach strengthens the entrepreneur’s skills while supporting the start or growth of the business with capital.
The Impact
Through an integrated approach of capacity building, technical assistance and capital access, the programme empowers the start-ups’ capacity to scale to the level of SMEs. Moreover, the programme improves the youth entrepreneurs’ ability to create decent jobs and generate a sustainable source of income not only for themselves but also their employees, especially for women. Finally, the OCIF programme strengthens the entrepreneurship ecosystem in Mozambique.
