In recent years, the Mozambican financial sector has seen a substantial transformation, driven by the computerisation of access to traditional banking services, the rise of fintechs and, above all, electronic money institutions (EMIs). Since 2015, the number of EMI accounts has risen from 28.6 per cent to 94.5 per cent of the adult population.
But the results of this expansion have not translated into socio-economic development. Why is this?
The concern to expand financial services to rural areas gained new impetus with the launch of the state project ‘One District, One Bank’ nine years ago. With a budget of over 480 million meticals, the project helped build 51 bank branches from 2016 to 2021.
The same period saw the consolidation of fintechs and electronic money institutions (EMIs). In Mozambique there are three and they are known as ‘mobile wallets’, one for each telecoms operator: M-Pesa (Vodacom), e-Mola (Movitel) and mKesh (Tmcel). These advances, in parallel with the computerisation of traditional banking (accelerated by the lockdowns imposed during the covid-19 pandemic), have ended up expanding financial services.
Times of change
In January, the Bank of Mozambique reported a reduction in ATMs across the country, a fall of 12% since 2020. A decline that doesn’t surprise João Gaspar, president of Fintechmz – the Mozambican Fintech Association. ‘All the big banks have mobile accounts and there is no longer much expansion of physical banking networks.
On the contrary, there is a concentration, which ends up helping to rationalise the costs of setting up branches, which are very high. Having a bank in a village where you have to invest in security, staff, travelling, etc. may not be profitable for the business potential that exists there. So the best thing is to have coverage through digital means – whether it’s a digital bank or a mobile wallet.’
Going beyond traditional operations
Despite the sharp acceleration in the expansion of financial services, there have been no major improvements in the quality of transactions. This perception is common among the different representatives of financial institutions heard by E&M.
There are plenty of deposits, withdrawals and money transfers, but there is still little in the way of transactions that generate added value for the economy, such as savings, loans and investments (insurance, for example).
‘Today, almost the entire Mozambican population over the age of 15 has a digital account (mobile, bank or both). What’s needed is to move from access to use. If there is a change in mentality towards using mobile money to make digital payments and this chain is extended, there would be no need for physical spaces, ATMs or e-money agents. That’s what needs to be done and it already exists in other countries. Africa is moving in that direction,’ said João Gaspar.
He believes that the speed with which this process of change will take place will be greater in markets that are evolving, such as Mozambique, than in those that are more stable.
“Nowadays, all the big banks have mobile accounts and there is no longer much expansion of physical banking networks.On the contrary, there is a concentration of networks and branches, which ends up helping to rationalise costs”
The dilemma of transaction costs
Transferring money from a mobile wallet to a bank or vice versa costs at least 30 meticals. Transferring from one mobile wallet to another also has costs (although relatively lower), and paying for different types of service via digital platforms is also taxed, but in an inappropriate way, according to FSD Mozambique, an organisation that promotes financial inclusion. Carlos Mondle, FSD Mozambique’s digital financial services manager, warns: a high cost environment works against computerisation because it can lead society to opt for cash. João Gaspar follows the same line. ‘It’s worrying. In Tanzania, there has been a decline in the use of mobile wallets and cash has returned, because taxes on electronic transactions have increased,’ he said.
What if costs continue to rise?
The president of Fintechmz regrets that the Mozambican National Communications Institute (INCM) – the telecoms regulator – intends to introduce new taxes on the use of digital financial services. ‘Every time someone uses their mobile phone to access a bank, make a transfer or payment, the operators (of electronic money, banks or fintechs) will have to validate whether the phone number is on the INCM’s blacklist database and each query will cost money. This cost will end up being passed on to the consumer,’ he lamented.
He also referred to a levy applied by the National Institute of Information and Communication Technologies (INTIC) – the ICT regulatory body – of 1 per cent on the turnover of digital platforms. In other words, all operators will pay 1% to INTIC. The Tax Authority is also preparing to introduce taxes on electronic transactions. ‘Adding up these taxes, we could have up to 4 per cent more in terms of costs that have to be passed on to the customer, which could lead them to use cash, which has no transaction costs,’ he predicts. João Gaspar issues a warning. ‘You can’t increase the costs of digital financial services in such a way as to discourage their use, because then we won’t grow, nor will we be able to reach the level where the digital economy is predominant and allows us to lower costs.’
Availability asymmetries
Regional asymmetries in access to financial services reflect the socio-economic disparities between provinces. The greatest concentration of infrastructure is in Maputo and the surrounding area. The centre and north remain under-served.
The development of financial services in Mozambique is linked to economic growth, population density and infrastructure. Maputo, Matola and Beira stand out as the most dynamic economic centres, with a higher concentration of banks, microfinance, credit cooperatives and electronic payment systems. On the other hand, in the more rural provinces, namely Niassa, Cabo Delgado and Zambézia, population density is low and road and telecommunications infrastructure is lacking.
Banking infrastructure is also scarce in rural areas. Financial institutions prefer to invest in urban regions, which are safer and more economically viable. In this chapter, the computerisation of services is seen as an opportunity to level out asymmetries.
Women at a disadvantage
There are also significant gender disparities in access to financial services. Data from the Central Bank points to barriers that limit women’s financial inclusion: less access to school, prevented from owning property or having formal documentation (such as an identity card or property registration), which are fundamental for opening bank accounts or obtaining credit.
The rural environment, where most of the population lives, exacerbates these disparities. Women in rural areas, often responsible for small agricultural activities or informal trade, have less access to banks and financial cooperatives. In addition, the lack of infrastructure, such as bank branches, and dependence on informal forms of savings and credit, reinforce the cycle of exclusion.
On the other hand, the expansion of mobile payment services has emerged as an opportunity to mitigate these inequalities. Platforms such as e-Mola, mKesh and M-Pesa have allowed more women to access financial services without the need to interact directly with traditional banks. However, despite these advances, the challenge of financial inclusion remains, especially with regard to access to credit for the development of small businesses led by women. Here, sector operators, regulators and the government have a lot to do.
Text: Celso Chambisso – Photo: iStock Photo & D.R.
