Something for Everyone

How was FSDMoç created?

We are a catalytic fund and provide grant funding to financial sector stakeholders to improve the levels of financial inclusion in Mozambique. The project is funded by the DFID, which is part of the UK government and implemented by DAI. FSDMoç will eventually become a Mozambican entity with a formal legal status. We identify and partner with key market stakeholders offering targeted investments and insights to unleash the potential of the financial sector to improve financial inclusion.

What is the FSDMoç vision?

Our vision is to see a dynamic financial sector offering quality services that enable resilience and economic empowerment for all Mozambicans. We measure our ROI by the number of additional people and SMEs that have access to financial services. Our goal is to have additional 2 million individuals with access to financial services in Mozambique as well as an additional 650 SMEs by 2019. We are attempting to focus on ensuring that the financial sectors provide services to the majority of the population, and that those services actually benefit them and allow them to better manage their livelihoods, cash flow, risks, and insurance use.

What are FSDMoç’s main objectives?

Our goal is to partner with stakeholders in the financial sector. We have five main objectives, one of which is to ensure that there is good uptake of financial services by supporting financial education and literacy, a better understanding of financial services, and strong support for the growth of businesses from a business development perspective. It is a fact that SMEs are risky because they do not have the same financial reports, so we do not know what their profitability is. Poor governance and other issues all represent obstacles to financial inclusion. The difficulty lies in finding a way to support these businesses so that they can grow with the necessary structures in place and use financial services appropriately. We also try to focus on demonstrating good reasons for a financial institution to make an investment in an unbanked company. Our role is really to put comprehensive market information together to demonstrate opportunities in providing financial services. This is something that banks may not have the budget to do, but it is not that they are not interested. We conducted a survey, FinScope, which cost quite a lot of money to do because it is a national representative survey, and this is normally something that the private sector would finance. We are hoping that with better information banks will have a stronger understanding of what the opportunities are. We do a lot of work around presenting that business case in a variety of different ways by completing market segmentation tasks. The third objective is to partner with financial institutions to help them innovate. Agent banking is about entering into an agreement with an agent that is not a bank to provide basic banking services. This could be a supermarket, a petrol station, or a small grocery shop. They act as an agent for the bank and find a way to reduce costs instead of setting up a bank branch with staff and overheads. Essentially, you are just providing a point of sale machine, maybe a mini ATM, but it is in the premises of another agent. We can help and support that kind of innovation. Funding of those kinds of expansions would help expand the penetration of financial services into districts that do not have any branches. Other innovations rely on cell phones to make payments, pay bills, and receive money or salaries. There are platforms that exist to do this, but the challenges relate to ensuring a certain level of uptake. Our fourth objective is raising awareness, stakeholder engagement, participating in conferences, and bringing people with different ideas, research, and sharing methods together from different countries. Finally, the fifth objective is just about ensuring that the policy and regulatory environment is supportive and facilitates greater financial inclusion. We must engage with policymakers and regulators to continue to develop an enabling environment for financial sector development.

How do you envision Mozambique’s midterm future?

Mozambique is experiencing tremendous growth rates and it is important to make this sustainable. It is important to have a diversified growth strategy, which means expanding businesses in agriculture, tourism, hospitality, services, and providing them with access to finance. If Mozambique is able to provide that balance then the future looks positive. If there is too much focus on megaprojects then it runs the risk of not being able to sustain those growth rates. Already we are feeling the impact that commodity prices are having on Mozambique’s investments and GDP. What we need to do is ensure balanced investment because the potential exists in terms of resources, coastline, ports, and agriculture. One must also think about investing in human resources, health, education, and skills enhancement. These are critical to the future of the country. Around 46% of the population is between the ages of 16 and 35, and that is an important market segment, which must be invested in. Working with universities and schools to teach financial topics is important, as is encouraging entrepreneurialism. There is strong opportunity here and I think that we can make a real contribution by trying to find forward thinking partners that want to take the risk to innovate and do things differently.