Mozambique promotes financial inclusion for sustainable developmentAug 12, 2016
Financial inclusion in Mozambique is extremely low, particularly in rural and remote areas, and among micro and small enterprises and poorer people. Low financial inclusion is a critical constraint to participation in cash - based economic activity. Demand for financial inclusion is affected by poverty, limited general and financial literacy, an absence of suitable inclusion incentives and tools, and consequently limited demand for financial services. This situation contributes to general exclusion and inequality.
Figures released at the fair indicate that a third of the Mozambican population take at least one day to reach a financial institution. Despite growth in the number of the country’s financial institutions, from 12 to 18, district bank coverage is under 50 percent, while formal lending is only available to 3 percent of the adult population. Bank branches are currently only present in 78 of Mozambique’s 150 administrative districts.
It was against this background that a Financial Inclusion Fair was held in City of Maxixe, some 500 km north of the capital Maputo on August 12. This event, the third of its kind, was organized by the Ministry of Land, Environment and Rural Development, with support from the United Nations Development Programme (UNDP) and the German Cooperation Agency (GIZ). The aim of the fair was to bring together economic and financial stakeholders to create an environment for financial education and to encourage people to learn more about the formal financial sector.
The fair is part of UNDP strategy to respond to Mozambique’s development priorities in reducing rural poverty through the creation of financial inclusion opportunities and local economic development promotion.
In this approach, UNDP also supports the promotion of inclusive economic growth with the aim of creating and increasing access to decent employment, which leads to improving the income and livelihood of young people and women, thus contributing strategically to poverty reduction in the country.
The fair aims to contribute to increased financial education level of rural communities and to give opportunity to people to meet the formal financial sector, to learn about the products and services offered as well as the requirements to be able to access them.
At the opening of the fair, Mozambique President Filipe Nyusi said that more than 90 percent of Mozambique’s population does not have a bank account and there is a consequential need to bring financial services closer to citizens.
President Nyusi stressed the particular importance of banking services such as credit for small-scale farmers and for micro, small, and medium-sized businesses. He also pointed to the importance of educating people about finance to enable them to understand the information provided by banks. This would allow people to choose the right products for their individual needs.
President Nyusi recalled that the government plan is that every district will have a bank within four years. But financial services must also be taken to more remote areas, he added. To this end, under the “One District One Bank” project, an agreement was signed on that occasion between the National Rural Development Fund and the banks Millenium bim, BCI, Moza Banco and Nosso Banco, concerning the establishment of bank branches in all districts where they are still lacking.