Financial inclusion is a top priority in Mozambique, with the government and private sector both working to increase penetration with the old and young.
With the increasing focus on financial inclusion and the government’s National Financial Inclusion Strategy 2016-2022 in mind, TBY organized a digital roundtable titled “Strategizing Financial Inclusion” to assess the progress made so far and the challenges lying ahead. While debating a wide range of solutions, two issues received particular attention: age and technology.
It is essential to properly utilize Africa’s large youth population and better integrate them into the formal economy, as this will be pivotal to opening opportunities and determining the economic future of the continent. In this regard, the head of the central bank, Gertrudes Tovela, mentioned the proposal, currently under approval, to lower the minimum age to open a bank account from 21 to 16, which will open up financial services for millions of new youths. Yet, one of the main challenges is that customers from more disadvantaged backgrounds, especially young people, are often denied permission to open a bank account on the basis of not having the proper ID. This eventually leads to a wider debate about KYC regulation and the inclusivity of the formal economy. As Francisco Souto, the founder of GAPI, expressed, banking conventions are important, but Mozambique needs a more flexible system to attend to the reality of its society. This cannot pass only through traditional channels. First, there needs to be new regulation to make services more accessible, in terms of time, money, and requirements. Julian Casal suggested that digital IDs could be a game-changer to bridge this gap.
Second, there needs to be a wider supply of services, instruments, and avenues available—a holistic approach to improve access to credit. As Esselina Macome, CEO of FSDMoç, reiterated, Mozambique needs to open up the space to new players: “Innovation is key to changing the pace of financial inclusion. […] We are in a moment of partnership. We need to explore any possible solutions.” When debating possible solutions, technology is undoubtedly attracting the lion’s share of attention across the sector, with a growing number of mobile wallets, payment service providers and aggregators, and other technology-powered platforms. “Technology is democratizing the space. Now, anyone can open an account or do transactions,” said Tawanda Munaiwa, CEO of BancABC.
The roundtable provided the opportunity to raise important concerns regarding technology that need to be addressed if technology is truly to play a disruptive role in the financial inclusion space. “For what purpose is mobile money used? How can people afford these services, and to what extent might the cost be preventing people from entering the space through digital means?” asked Macome. More data is needed to make a precise assessment, which is precisely what FSDMoç’s recently launched Finscope 2019 seeks to do. The issue of data raises also concerns about cybersecurity and customers’ data safety, something that was addressed by several panelists. Based on her experiences, Iana Barenboim, Program Manager of MUVA, brought up an interesting anecdote about people often mistrusting technological platforms and worrying about losing their money. While seemingly basic obstacles, this highlights the importance of financial literacy endeavors.
Finally, financial inclusion must focus on other important avenues (such as micro-insurance and micro-finance) that are not receiving the same attention as technology: “The central bank must allow for these new instruments and not only concentrate on technology. Otherwise we keep excluding,” said Souto. Through this roundtable, we were able to witness a wide range of solutions that have been implemented and growing in terms of regulation. This is the beginning of a long process; improvements to existing solutions are required, and new players are welcome to join the scene.