Back in 2007, the World Bank issued a report on the “blistering pace” of economic growth in the sub-Saharan country. The economy grew by an average rate of 8 per cent per year from 1996 to 2006. From 2006 to 2011, the rate remained robust at 7 per cent per year.
A new middle class is being created, who will require credit to purchase homes and build lives for their families. They will also need real jobs to pay those loans and that is where the consensus lies among financial leaders as to what the strategy must be going forward.
“Global crises have taught us that it is more important to have income than to have credit,” observes Celso Correia, Chairman of Banco Commercial e de Investimentos (BCI).
The World Bank and International Monetary Fund (IMF) project that the country’s economy will continue to expand at around 7.8 per cent.
“This gets Mozambique into the range of middle-income countries by the year 2030,” says the Chairman of Moza Banco, Dr Prakash Ratilal. He expects the population to grow to the point where there will be in excess of 32 million in the country, meaning “400,000 new people looking for jobs every year.”
To make this economic vision for Mozambique a reality, the country’s finance sector is seeking to encourage the growth of entrepreneurial firms, small and medium-sized enterprises (SMEs), that will create new jobs. The aim is for this to happen in a number of economic sectors, such as finance, shipyards, oil and gas, and agriculture in the future Mozambique.
|“It is more important to have income than |
to have credit”
Chairman of (BCI)
“In relation to the Mozambican demographic shift over the past decade, there is a big opportunity for new financial products,” says Mário Machungo, Chairman of Millennium bim, “because of the amount of young people joining the labour market and then demanding access to mortgages to finance their housing.”
Growth there will happen, as companies lower interest rates and seek to attract new customers, he says, adding: ”You cannot have an economy without the financial system, in that it plays the role of the intermediary and mobilises savings.”
Millennium bim is one of the Southeast African country’s largest banks and has massively expanded its market domestically. It has 150 branches in the country with 2,500 employees and 33 per cent of the country’s credits and deposits. This is going to grow as infrastructure is needed to animate the growth of other, new industries there.
Currently, economic growth in Mozambique is powered heavily by foreign investment. But as SMEs emerge – with the full encouragement of the financial sector – domestic savings will increase, and a virtuous circle of investment in developing the homeland will expand.
“This country is not merely about mineral resources,” says Mr Machungo. “It also has agriculture, fishing and tourism. Growth of new companies will not be spontaneous. It is necessary to develop infrastructure further so the country can provide a more holistic way to materialise its development plans.”
Sparking his vision of a “Singapore of the South” is the potential of the country’s Nacala port, which has deep waters that will allow cargo vessels to dock there.
“We can make use of smaller ships to do regional distribution,” says Mr Machungo. “That way, we can create two hubs – one for the South Atlantic and another for the area of the Indian Ocean. This is what was done by Singapore and Panama, both of which turned strategically located cities into worldwide hubs. Mozambique has 2,500km of coastline. We can very well do that.”