Low savings rate affects Mozambican economy

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Low savings rate affects Mozambican economy

4:28 CAT | 28 Sep 2016

The Mozambique government says weak domestic saving is affecting the country’s development, especially in rural areas, where more than 80 percent of the population lives. Bank of Mozambique studies indicate that only two percent of the population, estimated at over 25 million, has positive savings.

Mozambican Minister of Land, Environment and Rural Development Celso Correia pointed to the lack of financial services as one of the factors contributing to low savings rates, especially in rural areas without basic financial services.

The Institute of Economic and Social Studies (IESE) says this has dragged on for years, to the detriment of Mozambique’s development.

IESE director Antonio Francisco says that, for 50 years, Mozambique has grown on the basis of foreign capital instead of domestic savings, the exact reverse of the normal scenario.

Other economists believe that economic growth in recent years may not generate development because it does not result from people’s ability to save the 20 or 30 percent necessary to expand their productive capacity.

Mozambican authorities have been urging financial service providers to bring financial services to the community and facilitate savings.

Source: Voa Portugues