Mozambique’s bank account growth doesn’t follow digital wallet

The number of bank accounts in Mozambique rose 5% in the year to May to a record nearly six million, but electronic money institutions (IMEs) now have three times as many, according to central bank data.

According to a statistical report from the Bank of Mozambique consulted by Lusa on Friday, the number of bank accounts in the country has grown from 5,687,975 at the end of 2023 to 5,977,930 in May, but has not kept pace with the growth of EMIs, which increased by almost 7% over the same period, to 17,919,678.

However, over the same period, the number of bank cards even decreased by almost 10% – to 3,146,560, and the number of physical bank branches increased from 653 to 654, covering 131 of the country’s 154 districts.

ATM coverage in Mozambique has fallen from 12.9 per 100,000 inhabitants to 7.8 in five months, and according to the same data, the same thing is happening with POS payment terminals, which have fallen from 190.8 to 184.8 per 100,000 inhabitants.

There are currently three electronic money institutions in Mozambique from three mobile operators that provide financial services via mobile phone, including money transfers between customers or payment for services.

It is a solution that facilitates and expands people’s access to financial services simply by using their mobile phone and IME agents on the street.

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

Mobile wallets broke the transfer record in 2023, with more than 400 million transactions, according to the central bank.

This week, Lusa reported that the International Monetary Fund (IMF) is concerned about delays in social protection payments in Mozambique and says 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, social protection payments suffered significant delays due to liquidity constraints, limiting spending,” the IMF said in its fourth review of the social protection program. The Extended Credit Facility (ECF) program ended this month.

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

“Prioritizing social protection and ensuring regular INAS payments, as well as exploring digitalization options through mobile money transfers, are key to improving the effectiveness of the social protection system,” the IMF describes.

It notes that “the adequacy of social protection spending remains a challenge” in Mozambique, “with benefit levels stagnating since 2018” and “a gap between benefit levels and household size.”

“Annual adjustments are necessary to protect purchasing power in the face of rising costs of living, to maintain income stability for beneficiaries and the effectiveness of social protection efforts. In addition, most PSSB beneficiaries [Programa do Subsídio Social Básico] receives the lowest level of benefits (540 meteks or $8.50), which is intended for single households,” the IMF acknowledges.

The possibility of exploring the possibility of paying this social support through electronic money is raised by the IMF, which acknowledges that Mozambique “continues to make progress on financial inclusion through mobile money.”

Thus, he emphasizes, by the end of 2023, the number of IME accounts “was equivalent to 93.2% of the adult population, up from 67.9 in the first quarter of 2022.”

“Mobile money remained the main driver of financial inclusion, with bank account ownership increasing slightly from 29.8% to 30.9% of the adult population over the same period,” the IMF acknowledges.