Transcript Innovations in Addressing Rural Finance Challenges in

Innovations in Addressing
Rural Finance in Moçambique
Joana J.David, Msc
Banco de Moçambique
Presentation Outline
Macroeconomic indicators
The Financial Services Environment.
The Legal reform.
Expansion of banking services to rural
areas.
Achievements.
Challenges
Final remarks
Macroeconomic indicators
Population: 20.000.000
GDPper capita: USD 350
Inflation in 2006: 8.1%
Exchange rate: 24.98MT/USD
Urban population: 31%
TSavings/GDP: 10.7%
Credit/GDP: 30%
The Financial Services
Environment (1)
The Banking network is still far below the
needs of our population.
The statistical data shows that in 2006 the
country had:
12 banks with 229 branches to serve 20 million
habitants.
12.1% of the branches in the North
21.3% in the Centre
66.6% in the South
47% in the Capital
1 branch for 82 thousand people
1 branch for 3782 Km2
Branch Geographical Distribution
5
The Financial Services Environment (2)
As shown in the map, branches are highly
concentrated in the capital Maputo.
By the year 2000 the microfinance activity
was still very informal and carried on by
NGOs.
There were some money lenders operating
but also concentrated in the big cities.
The legal framework was not adequate
Measures Taken
The Central Bank launched legal reforms
by reviewing the bank act and issuing
new regulations.
The new bank act introduced small sized
institutions, Micro banks to operate with
a very low minimum capital.
To expedite the licensing process the
Central Bank has been given power to
license all the institutions that supervises
Legal reform(1)
Main innovations
Law 9/2004:
1.
MICROBANCO (microfinance bank)
Caixa Geral de Poupança e Crédito;
Caixa Financeira Rural;
Caixa Económica; and
Caixa de Poupança Postal
2.
Other Institutions
Operador de Microcrédito;
Intermediário de Captaçao de Depositos
Organizaçao de Poupança e Empréstimo;
Legal reform(2)
Decree 57/2004: Microfinace
Regulation.
Governor Notice 4/2005: Setting
minimum capital.
The parliament has recently
approved a law giving Liquidation
Legal reform(3)
Decree 57/2004 and Governor Notice 4/2005: An Outlook:
)
Supervisory Regime (prudential Ratios and limits
Legal form
Scope
Minimum capital
Caixa
Geral
de Savings and loans operations
and other complementary
Poupanca e Credito
authorized by BM
MT 5 million
(US$192.300)
At least 50% of savings and
loans activities should be in
rural areas
Owned by a non-profit or
charitable entity; savings and
loans where deposits cannot
exceed term over 1 year
MT 1.2 million
(US$46.150)
Poupanca Cannot extend credit; savings
MT 1.8 million
(US$69.230)
de Savings and loans operations
MT 0.2 million
(US$7.700)
Caixa Financeira Rural
Caixa Economica
Caixa de
Postal
Cooperativas
credito
shall be allocated to bank
deposits and investments
among its members
MT 2.4 million
(US$92.300)
Legal reform(4)
Decree 57/2004 and Notice 4/2005: An Outlook:
No supervisory scheme
Legal form
Scope
Minimum capital
Member-based savings and
loans, with members not to
Organizações de poupança exceed 200 in number and
MT 0.15 million (US$5.770)
e empréstimo
deposits from each member
not to exceed MT10 million
(US$385.000)
Operadores
microcrédito
de
Only lending, not savings
Deposit- taking on behalf of
Intermediarios de captação
banks and other financial
de poupança
institutions
MT 0.075 million
(US$2.885)
No minimum capital
Encouraging expansion of banking
services to rural areas(1)
At the Government side:
Taxes on income from rural branches were
relaxed.
Import Duties reduction on softwares, equipment
and materials to build branches on rural areas.
The MPD has designed projects in conjuction with
donnor to promote the expansion of financial
services, namely:
Raised funds
Organised training activities
Saving campaign is now taking place
Encouraging expansion of banking
services to rural areas(2)
At the Central Bank Level:
5 new branches were open.
Cash is included on the calculation of reserves
requirements.
Loans are excluded on the calculation of the
liabilities subject to reserve requirement.
Achievements
Financial services have expanded:
In 2007 10 new micro lenders were
licensed.
9 new banks were licensed
27 new branches were also opened
However, there is still big concentration
in Maputo
New geographical branch
distribution
2007
Província
Nº de Agências
Percentagem
Cidade de Maputo
111
43.36%
Província de Maputo
22
8.6%
Gaza
15
5.86%
Inhambane
15
5.86%
Sofala
26
10.16%
Manica
14
5.47%
Tete
10
3.91%
Zambézia
10
3.91%
Nampula
22
8.59%
Cabo-Delgado
7
2.73%
Niassa
4
1.56%
256
100.00%
Total
Challenges(1)
Improvement of basic infrastructures in the
rural areas;
Promote formal business by expediting the
licensing process of the companies.
Promote microfinance activities in the rural
areas.
Introduce savings culture in the
communities.
Challenges(2)
Break the myth that regard agriculture as a
risky activity.
Introduce deposit insurance schemes for
low income depositors.
Create private CRCs.
Final Remarks
Despite the remarkable growth in terms of the
number of financial institutions, we consider
that the expansion of financial services to the
all population still has a long way to go.
Obrigada
Kanimanbo
Thank you