Mozambique: Growth in bank accounts falling behind digital wallets

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Mozambique: Growth in bank accounts falling behind digital wallets

3:24 CAT | 27 Jul 2024

FILE - For illustration purposes only. [File photo: TVM]

The number of bank accounts in Mozambique grew by 5% until May to a record of almost six million, but according to data from the central bank, there are already three times as many in electronic money institutions (EMIs).

According to a statistical report from the Bank of Mozambique, consulted today by Lusa, the number of bank accounts in the country grew from 5,687,975 at the end of 2023 to 5,977,930 in May. However, this growth didn’t keep up with the increase in EMIs, which rose by almost 7% in the same period to 17,919,678.

Also in the same period, the number of bank cards even fell, by almost 10%, to 3,146,560, while the number of physical bank branches went from 653 to 654, covering 131 of the country’s 154 districts.

ATM coverage in Mozambique fell from 12.9 per 100,000 inhabitants to 7.8 in five months, according to the same figures, as did POS payment terminals, which fell from 190.8 to 184.8 per 100,000 inhabitants.

Mozambique currently has three Electronic Money Institutions, owned by the three mobile telecoms operators, which provide financial services via mobile phone, including money transfers between customers or payment for services.

This solution makes it easier and more widespread for the population to access financial services, using only mobile phones and IME agents on the street.

The number of agents for these digital wallets in Mozambique, which work through mobile telecoms operators, has grown again this year, by 8% in three months, to more than 242,000, covering the whole country.

In 2023, mobile wallets broke the record for transfers, with more than 400 million transactions, according to data from the central bank.

Lusa reported this week that the International Monetary Fund (IMF) is concerned about the delays in disbursements for social protection in Mozambique and argues that the authorities should explore the possibility of making payments through digital wallets.

“Despite efforts to strengthen social protection, challenges remain due to limited fiscal space. In 2023-24, disbursements for social protection were significantly delayed due to liquidity constraints, resulting in limited expenditure execution,” reads the IMF report on the fourth review of the Extended Credit Facility (ECF) programme, concluded this month.

The situation, it describes, poses “operational obstacles” to the National Institute for Social Action (INAS), “for example by preventing regular payments to beneficiaries, jeopardising their income security”.

“Prioritising social protection and ensuring regular disbursements to INAS, as well as exploring digitalisation options through mobile money transfers, are key to strengthening the effectiveness of the safety net,” the IMF describes.

It pointed out that “the adequacy of social protection spending remains a challenge” in Mozambique, “with benefit levels stagnating since 2018”, and there is also “a mismatch between benefit levels and household size”.

“Annual adjustments are essential to safeguard purchasing power in the face of rising living costs, with the aim of maintaining the income security of beneficiaries and the effectiveness of social protection efforts. In addition, most beneficiaries of the PSSB [Basic Social Subsidy Programme] receive the lowest level of benefits (540 meticais or $8.50), which is aimed at single-person households,” the IMF acknowledges.

The possibility of exploring the payment of these social benefits through electronic money is raised by the IMF when it recognises that Mozambique “has continued to make progress in financial inclusion, based on mobile money”.

At the end of 2023, the number of EMI accounts “was equivalent to 93.2 % of the adult population, up from 67.9% in the first quarter of 2022”.

“Mobile money continued to be the main driver of financial inclusion, with the number of bank accounts showing a slight increase from 29.8% to 30.9% of the adult population during the same period,” the IMF recognises.

Source: Lusa