BALANCING ACT
Local banks are not only riding the success of booming sectors of the economy such as real estate, construction, and SMEs, but also their services are ensuring that these trends play out in the long-term.
We have two products specifically directed at the construction and real estate sector. One is aimed at construction activities where risk is characteristically high. When firms decide to build in Mozambique using the bank's money, the cost of the apartments or the building itself rises, making it difficult to compete in the market. They are more cost efficient when they utilizing their own money, so we try to assist them in the short term by supporting their financial base and, at the same time, making them more efficient. The other product we offer relates to mortgages. Our operations are also linked to the national growth of SMEs. We signed an agreement with the African Guarantee Fund, the African Development Bank, USAID and IFC, and are sharing our clients' risk with these multilateral entities. In doing so, we reduce our lending rates offered to clients, the ultimate beneficiaries of these credit lines.
The construction and real estate sector is among the many sectors we support. We have a full package designed with property developers, whom we support right from the construction phase up until sale to the end-buyer. The country is vast, and you cannot compare the real estate market in Maputo with that in the north of the country or the midlands. I would say there are three basic markets in terms of real estate in Mozambique. You have Maputo, which is the main city and also a mature market. Then you have what I call the second segment, comprising emerging cities including Beira, Nacala, Nampula, Tete, and Pemba. Those five cities are today under pressure to grow, which presents a huge opportunity for investors. Then there is the third segment, namely the remaining cities, which is not yet a particularly exciting prospect. As a result, diverse packages need to be designed to support activity in these segments. At the retail banking level, we forecast GDP growth of around 8% over the coming years, which promise much opportunity for the financial system. Less than 18% of the population is banked, so we have to find ways to bring that population into the system, and to service them. We also need to devise means of assisting domestic SMEs to grow, and to make sure that the populated rural areas are covered.
Mozambique is not only seeing investment in residential property, but also commercial and infrastructure as a whole to include roads, bridges, schools, and hospitals. This is positive, and banks have a role to play in terms of financing the construction itself, or else in the purchase of residential properties. BancABC is quite active in this, and in dealing with numerous construction companies in mortgage financing. We recently launched a mortgage product for retail customers, which was innovative in that it could potentially provide more people access to housing. Competition among the banks is forcing us to innovate new products to find fresh avenues for income and customer service. We definitely need new players, and a diversification of the financial sector, with insurance and pension funds being a good example.
BALANCING ACT
TABLE OF CONTENTS
Interview
His Excellency Filipe Jacinto Nyusi, President, Republic of Mozambique
TBY talks to His Excellency Filipe Jacinto Nyusi, President of the Republic of Mozambique, on building a government, the recent historic gas discoveries, and supporting the traditional sectors of the economy.
read articleInterview
Lourenço Sambo, Director General, Investment Promotion Centre (CPI)
TBY talks to Lourenço Sambo, Director General of the Investment Promotion Centre (CPI), on creating services for foreign companies, key projects under development across the nation, and the ever-improving business environment.
read articleFocus: SMEs
All for SME?
The International Growth Center (ICG) in 2012 concluded that the domestic construction sector, which predominantly consists of SMEs, had been unable to break into the formal market dominated by foreign players. Nevertheless, the overall situation has improved in recent years.
read articleFocus: ROVUMA LNG PROJECT
Offshore, Onstream
The discovery of vast amounts of fuel reserves in Mozambique is a potential game changer for the country's current itinerary. There is no doubt that the government of Filipe Nyusi has a unique opportunity to transform Mozambique into one of the most significant African economies.
read articleReview: Media
More Messengers
A pan-African initiative has taken root to encourage the development of an indigenous media industry that presents constituent nations as they are, and in their own voice. Its far-reaching objectives champion journalistic integrity and freely expressed opinion.
read articleInterview
Aníbal Leite, President, Mota-Engil África Moçambique
TBY talks to Aníbal Leite, President of Mota-Engil África Moçambique, and Mozambique Country Manager of Mota-Engil Engenharia e Construção África, on the company's projects across the country and nurturing competitive advantages.
read articleReview: Agriculture
A Fertile Plan
Mozambique has only cultivated 10% of its total arable land, whereby many now see the potential of finding a solution to food security issues in southern Africa. The country's geographical location makes it ideal as an agricultural hub for the region and beyond.
read articleInterview
João Leopoldo da Costa, Rector, Instituto Superior de Ciências e Tecnologia de Moçambique (ISCTEM)
TBY talks to João Leopoldo da Costa, Rector of the Instituto Superior de Ciências e Tecnologia de Moçambique (ISCTEM), on creating links for work experience, the socioeconomic development of the country, and the development of new courses.
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