Mozambique: Economic growth does not generate savings, experts warn

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Mozambique: Economic growth does not generate savings, experts warn

3:35 CAT | 04 Nov 2020

File photo: Voa

Just over 36 percent of adult Mozambicans have a bank account.

Mozambique marked World Savings Day on Saturday 31st October with the sombre recognition that the country is not accumulating sufficient wealth for citizens to save in anticipation of future long-term shocks.

Recent official data estimate the share of the adult Mozambican population with a bank account at just over 36 percent, a very low number compared to the regional average.

Mozambicans with little savings capacity

Some analysts criticize a growth strategy reliant on the replacement of domestic savings by foreign investment, arguing that this means that Mozambique is not generating savings.

This point of view is supported by economist António Francisco. “Although in the last decade some positive savings started to occur, they are still very limited, and do not finance even 10 percent of national investment,” he notes.

Other economists see financial inclusion as one of the best ways to increase domestic savings, arguing that an increase in the number of people with access to banking services will result in an increase in the number of savers.

Esselina Macome considers that, in this regard, it is essential to concentrate on women, who contributed most to increasing the number of Mozambicans with access to financial services from 2.8 million in 2014 to three million today.

Economist Celeste Banze agrees, but questions how to do so when sheer lack of commercial viability prevents the penetration of banking to many parts of the country.

According to Banze, about 15 percent of the rural population has access to electricity, while in urban areas the figure is estimated at 30 percent.

The Bank of Mozambique concedes that the distance of financial institutions from the population contributes to the weak banking relationship, but underlines that it is important not only that such institutions get closer to the people, “but that the people also use the financial system”.

Source: VOA Portugues