Bank of Mozambique has no instruments to make micro-lenders renegotiate with clients – @Verdade

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Bank of Mozambique has no instruments to make micro-lenders renegotiate with clients – @Verdade

2:14 CAT | 16 May 2019

Photo: @Verdade

The increase in bad loans in Mozambique masks the drama experienced by clients of micro-finance institutions, @Verdade reports. While conventional bank borrowers are able to renegotiate payments and have court cases dragged on, the poorest Mozambicans and the informal sector, mostly women, are losing their meagre assets as a result of the economic and financial crisis. “We do not have an instrument capable of forcing micro-finance institutions renegotiate with their clients,” Bank of Mozambique administrator Felisberto Navalha says.

Questioned during the 2nd Economic Briefing of the Confederation of Economic Associations (CTA) about measures the Bank of Mozambique can take to protect the many clients of micro-finance institutions who are affected by the economic and financial crisis and are unable to repay their loan instalments, having their few durable goods confiscated as result, Navalha said: “Micro-finance – made up of many financial institutions that deal with people who are sometimes very difficult to pin down – our intervention framework for them does not unfortunately, at this time, have any instrument capable of forcing them to renegotiate with their clients.”

“(…) The principle of monetary policy is that, unlike the sectoral and fiscal policies which may allow direct contact with those who are actually the beneficiaries, it is more like a cloud. It looks at the economy – economic agents, customers and markets – as a whole. Fortunately, the (commercial) banks are organised in association, and have succeeded in interventions to help local clients, for example in Sofala,” Navalha said.

Source: A Verdade