SIDE KICKS

Mozambique 2014 | FINANCE | B2B: SMES

The demand for SME services is on the rise in Mozambique and adequate financial infrastructure is playing catch up; however, it is making striking progress.

Pieter Van Der Merwe
PIETER VAN DER MERWE
CEO
Banco Oportunidade de Moçambique (BOM)
Dr. Christina Reifschneider
DR. CHRISTINA REIFSCHNEIDER
General Manager
Banco ProCredit

How does your bank position itself to serve SMEs?

PIETER VAN DER MERWE Current players, such as ProCredit, started out big but grew so quickly that they moved out of the microfinance industry, focusing on SMEs and above. Clearly, they have driven bank principles and a focus on profitability and return on investment. When we meet traders, we ask them questions to ascertain the profitability of their business. From that, we build a business case, which then goes to our credit committee. Our focus is to reach out to more clients in rural areas. To develop our agricultural component of the business, we launched agriculture financing in 2011, and it makes up about 5%-6% of the total business volume. We identify extended service providers that help these farmers—we travel with Moz Foods, for instance, which helps the farmer prime their land, and from which we procure seeds. Farmers are then taught productive techniques by our agriculture advisor and harvested crops are sold to an associate distributor, through whom we receive the repayment of our loan. Finally, we pay the profits to farmers. We then open up bank accounts for them, teaching them about banking and saving. Currently, our client base in this business has grown to over 20,000, with five different crops being produced. This is costly and unprofitable, but we realize that by doing this BOM's services enable swifter growth of the community.

CHRISTINA REIFSCHNEIDER Our target is all very small and small businesses. We focus on the production sector in Mozambique, which means processing, transport, and trade, as well as agribusiness. Our agricultural clients represent around 25% of the portfolio, and this line is growing much faster than our urban business. Our experience in different countries has shown that the very small and small segments are key to the economic development of the country, as they are a major source of employment for a huge section of the population. This will always remain important for us. We need to make sure that this segment is served and that it can develop, we also support clients when they want to grow and invest in modern technology and equipment. The small business sector demands full attention.

How do you differentiate yourself from the competition?

PVDM Opportunity International (OI) is very different from any other financial organization. It was started 24 years ago as a Christian organization with religious obligations to feed and serve the poor. It is visible in 22 countries across the world. Of the 17 banks that OI is involved with, nine of them are solely owned by OI, and Mozambique has one of those banks. Our license in Mozambique is a fully commercial one—we can take deposits and offer loans. Tanzania and Kenya still lack deposit-taking licenses. Our business model is quite secure and the fact that we have secured capital held at the central bank, a fully commercial license, and a focus on microfinance, makes us satisfied with our development here. Mozambique is important to the OI group because it is the fourth poorest country in the world. A huge part of the rural community has no access to housing or infrastructure. That is part of our drive, but we need to be as self-sustaining as possible, and not wholly dependent on donor funds. To reach the poor in such a way, it is cost-effective to maintain and support the organization and the 230 staff members currently working with us. That is where BOM fits in.

CR We started in 2000 and have seen significant development in the country. We understand our clients and their businesses—and we are able to provide them with financial services in an efficient manner, without over indebting them. For us, it is not just about selling products, it is about providing our business clients with comprehensive financial services, and this is the main difference between us and other banks. Our clients appreciate our transparency and the dedication of our business client advisers.