Bank of Mozambique governor, Ernesto Gove, has urged retail banks to open subsidiaries in country's rural districts, highlighting the need to increase banking access in the economy.
Bank of Mozambique governor, Ernesto Gove, has urged retail banks to open subsidiaries in country's rural districts. He highlighted the need to increase banking access in the economy by extending the services to countryside, where productive work is taking place.
He criticized few banking organizations, which had refused to offer their banking services to countryside citing problems of low economic activity with those regions. The governor termed the situation as 'vicious cycle', blaming lack of banking system as a reason for low economic activity in those areas.
Governor's urge for more banks in countryside comes after central bank's recent statistics showing a decline in number of banks in last ten years, despite the nation's positive economic growth.
Most Mozambicans living in countryside depend on livestock, forestry & agriculture for a living and highest poverty concentration is found in those regions. The key challenge in transforming Mozambican countryside depends on introduction of new technology into agriculture sector. This can be achieved by having financial organizations in these regions to establish small & micro enterprises offering credit, encouraging people to save & promoting monetarization of national economy.
Banks can now easily move to rural regions following the law passed in 2004 allowing establishment of micro banks. Also, setting up branches in those regions will not require high amounts of initial investments.
"The real reason for poverty in countryside is that farmers can't save due to absence of banks. Lack of savings has led to fragile monetarization levels. Banks are wrong in claiming rural banks as hopeless proposition as success of Mozambican financial organization GAPI is in front of us. It has around a thousand clients & 50 % of its loan services go to agricultural sector," said an analyst at RNCOS.
He added, "Banks must follow GAPI's footsteps & shouldn't restrict themselves to just urban areas. With proper planning & investments, there are also a lot of opportunities in Mozambican countryside."
Related Market Research Reports:
Booming Ukraine Banking Sector
Philippines Banking Sector Analysis
South African Banking Sector Analysis
