Original press release here.
Africa, January 30 – The financial sector in Mozambique is still fairly young, especially the Micro-Finance sector. The lack of access to financial services has often been identified as the major impediment for the economic development of the country, mainly in its rural areas. The financial sector has been often challenged to ensure that each district of the 11 Mozambican provinces would have a bank. Up to date, it has been very difficult for Financial Service Providers to expand to rural areas because of the limited infrastructure, high transport costs, low population density and limited specialised human capacity.
In 2007 the United Nations Capital Development Fund (UNCDF) developed together with the United Nations Development Programme (UNDP) in Mozambique the project “Building Inclusive Financial Sector in Mozambique” (BIFSMO). The project includes three components. The first one aims at supporting the elaboration and implementation of a results based action plan for the National Strategy for Inclusive (rural) Finance. The second component seeks to build the capacity of different training providers to provide high-quality training on Micro-Finance (management, credit analysis, and product development). Finally, the last component relates to the development of Innovative financial products and approaches (mainly for rural areas) by the Financial Service Providers (FSPs).
In the framework of this last component, the UNCDF/UNDP project has supported the Government counterpart “National Directorate for Promotion of Rural Development” (DNPDR) in the establishment of an Innovation Fund. Different calls for proposals for innovative products have been launched throughout 2008 to collect investment proposals of Financial Service Providers. All the received proposals have then been analysed by an Investment Committee, chaired by the Ministry of Planning and Development (MPD) and attended by the Ministry of Finance, the Central Bank and the Financial Service Providers association, AMOMIF. Other development partners are invited to join the Investment Committee mechanism for a harmonized approach in support to the financial sector.
The first investment amounting to USD 188,000 was approved in 2008 and attributed to “Banco Opportunidade de Moçambique (BOM)” to start up a mobile bank for the Province of Zambezie. The Bank was launched in the district of Nicoadala in the province of Zambezie on January 27, 2009. The launch was honoured with the presence of the Governor of the Province, the Administrator of the District, a representative of the Central Bank, representatives of the banking industry and many other high-level officials.
The mobile bank is an armoured vehicle, which is equipped to take financial services to the poor rural population. It will serve thousands of rural people who have been excluded from traditional financial services until now. Households that haven’t been able to secure their savings before, can now keep it in safe, interest-bearing accounts and access it when they need it. Because the bank comes to them, clients don’t have to leave their work to make the long and costly trek to the cities. Farmers and poor households who run micro businesses in the Zambezie provinces will be able to take out and repay micro loans and deposit small amounts of savings during the bank’s weekly visits to their communities. The Mobile Bank of BOM aims at providing financial services to 9,000 persons and loans to at least 3,000 persons.
All of the capabilities of BOM’s integrated IT system are installed in the mobile bank, including digital fingerprint identification, web cameras and updated account information. The mobile bank will not transport large amounts of cash in its safe, and employs the most effective and sophisticated security measures to mitigate risks. It is linked to BOM’s IT system via cellular technology. Data transfers are made between the mobile bank and the branch periodically throughout the day.
The mobile bank offers an ideal solution to this as it can reach many communities without needing to invest in infrastructure. Its high-tech equipment ensures optimal security and offers products adapted to the rural area, as solidarity loans. These innovative approaches are often the only sustainable answer to the need of professional financial services of many unbanked communities in Mozambique.
With the implementation of the BIFSMO project, UNCDF is working to promote more of this kind of innovative solutions by investing in different sustainable new products and approaches brought forward by Financial Service Providers. This will help to ensure that Microfinance, as a recognised poverty alleviation tool, can be accessed by even the rural communities.