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CTA Points to “Incalculable Losses” Due to Problems in Banking Network

CTA Points to “Incalculable Losses” Due to Problems in Banking Network

The Confederation of Economic Associations (CTA) of Mozambique denounced today that the failures of the new single electronic payment network are causing “incalculable losses”, a “setback” in the system and leading to informality in the economy.

“The instability of the transaction payment system is having significant negative impacts on the economy and on the confidence of users of the national financial system. There is a lot of incalculable damage to the economy,” said the president of the CTA’s Information and Communication Technologies and Financial Services department, Paulo Oliveira, at a press conference in Maputo.

At issue are the failures in cash withdrawals from ATM machines and payments for services at POS machines on the new Sociedade Interbancária de Moçambique (SIMO) platform, which began to be implemented in 2023, the single instrument adopted by the Mozambican central bank to operationalise electronic transactions.

Without specifying the amounts, Paulo Oliveira said that these failures are causing “very high losses, of thousands of meticals, and incalculable financial losses” to the economy, affecting sectors such as hotels, tourism and catering, causing a drop in business and leading to “unproductivity” in the economy.

According to the head of the CTA’s financial services department, represented by Miguel Jóia at the same press conference, as well as creating “informality in the economy”, given the need for cash to circulate to make payments – given the recurring failures of the system – the problem undermines “all the progress that the central bank has been making in controlling inflation”.

The private sector believes that a system change “of great magnitude” should be done carefully, to allow for comprehensive testing and subsequent large-scale operation.

“Platforms need testing and this can’t take more than a year. We’ve been having these problems for over a year, but things are becoming more embarrassing now. If this system hasn’t been trialled, it should be withdrawn and we should go back to the previous one while it is perfected,” added CTA’s executive director, Eduardo Sengo.

“Given the seriousness of the situation, we are surprised by the silence of the regulator and other relevant entities in the national financial system (…). It is crucial that the Bank of Mozambique addresses this problem more urgently, identifying the real causes of the problem,” added Paulo Oliveira.

The CTA also said it expects SIMO Rede to clarify the process of reversing amounts subtracted from users’ accounts in the respective payments or withdrawals, in order to guarantee greater transparency and credibility for the system.

“SIMO Rede is obliged to have a service level of less than 30 days to make the refunds. We know that there are requests for more than 90 or 120 days,” said Miguel Joia.

The Bank of Mozambique announced in November that all the country’s commercial banks and e-money institutions had finalised integration into the new single national electronic payments network, provided by Euronet, five years after a ‘blackout’ on the previous platform.

With the new platform, Sociedade Interbancária de Moçambique (Simo) is now “aligned with international payment system standards, which impose ‘contactless’ technology” for all bank cards and POS terminals, which “offers greater security and convenience for users”, the central bank explained at the time.

“The new Simo Rede platform has the advantage of offering a diverse range of products and services, with an emphasis on interoperability (interconnection) between electronic money institutions, banks and other financial service providers,” the central bank also emphasised.

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