Mozambique: Central bank warns of “relatively high levels” of credit defaults

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Mozambique: Central bank warns of “relatively high levels” of credit defaults

4:03 CAT | 01 Nov 2023

Photo: Domingo

The governor of the Bank of Mozambique, Rogério Lucas Zandamela, said on Wednesday that the national banking sector is “solid and well capitalised”, but warned that non-performing credit remains at high levels.

“The non-performing credit ratio remains at relatively high levels,” he said, now standing at 9.1% of the total last September, against 9.3% in the same month last year.

“The national banking sector remains solid and well capitalised, with the solvency ratio set at 24.0% in September this year, corresponding to 12.0 percentage points above the regulatory minimum,” Zandamela highlighted at the opening of the 48th central bank advisory council in the city of Inhambane today.

In the same intervention, Zandamela highlighted that “one of the important reforms to boost economic transactions” is the ongoing process of transition from the Single National Electronic Payments Network to the new Euronet electronic payment processing platform, “which is at a very advanced stage”.

“At this moment, banks are already fully integrated into the new platform, including electronic money institutions, which contribute, in particular, to boosting economic transactions in remote areas of the country as well as levels of financial inclusion,” he acknowledged.

He added that the new processing platform “has the advantage of offering a diverse range of products and services, both new and old, with emphasis on interoperability between electronic money institutions, banks and other financial service providers”.

“With the new platform we are able to comply with international payment system mandates, which require ‘contactless’ technology for all bank cards and POS terminals, a technology that offers greater security and convenience for users,” he highlighted.

Zandamela also recognized that “another reform which will contribute to improving the business environment is the ongoing process of regulating the Exchange Law”, which “will allow the operationalization of the principle of gradual liberalisation of the capital account provided for in the Exchange Law, approved in the year past”.

“This will facilitate the entry and exit of capital, with an effect on increasing the volume of investments. Additionally, we are engaged, together with other national institutions, in the implementation of the action plan to remove Mozambique from the International Financial Action Group ‘Grey List’ within the scope of preventing and combating money laundering and terrorism financing.”

“It is our conviction that the effective implementation of the action plan will contribute to reinforcing an environment conducive to attracting more foreign direct investment,” Zandamela concluded.

Source: Lusa