Banco ProCredit Mozambique
In 1992, Mozambique emerged from a civil war which had lasted for almost two decades. Since then, the country has experienced sustained economic growth, with average GDP growth of 7.17% per year from 2006 to 2012 (source: IMF World Economic Outlook Database). Foreign direct investment has been focused on mega projects in the natural resource sector. The government has facilitated economic expansion by privatising state-owned enterprises, liberalising trade and prices, reducing inflation and promoting foreign direct investment. Its structural reform has been supplemented by significant financial support from the international donor community, and Mozambique is highly dependent on foreign aid.
Despite steady economic recovery, Mozambique remains one of the poorest countries in the world, with a per capita GDP of USD 634 (source: IMF World Economic Outlook Database). The country ranks 184th out of 187 countries in the UN Human Development Index (source: Human Development Report 2011, UN Development Programme). Out of a population of 22.5 million in 2012 (source: http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/), half still live below the national poverty line. Improvements have been most pronounced in the more affluent Southern regions and in urban centres, especially the Maputo area.
Mozambique’s economy remains robust, despite a still-fragile world economic environment resulting from the financial crisis. Reflecting the rapid expansion in coal production, as well as in financial services, transport and communications, and agriculture, Mozambique’s real GDP growth is estimated at 7.5% in 2012. In early 2013, floods pushed up food prices, though inflation is projected to remain low at around 5-6% over the medium term.
External transactions continue to be dominated by large private investments in the mining and hydrocarbon sectors, financed mostly by foreign direct investment and some private borrowing abroad (source: http://www.imf.org/external/np/sec/pn/2013/pn1375.htm - July 2013). The country’s current model of economic growth remains dependent on the performance of major projects, especially with the start of coal exploration in Tete, and the discovery of large quantities of natural gas reserves in Cabo Delgado.
This dependence highlights the importance of developing small and medium enterprises (SMEs) in order to expand and diversify the productive base of the economy and to increase job creation and income opportunities for the population as a whole, thereby playing a vital role in social development. However, in an economy dominated by large corporates, the environment is often difficult for SMEs. For example it is difficult for SMEs to gain access to bank credit. The recent strong growth of bank lending to the private sector has been driven by the consumer credit and property segments, and has not been accompanied by easier access to credit for SMEs.
The informal enterprise sector has grown strongly since the end of the civil war, and it now accounts for the bulk of employment in Mozambique. As in most developing and transition economies, the overwhelming majority of these very small enterprises lack access to formal financial services.
The Mozambican banking sector remains small, with total assets of USD 8.7 billion and a total loan portfolio of USD 4.1 billion as of the end of December 2012 (source: Bank of Mozambique). At year-end, there were 20 banks registered in the country and the sector was highly concentrated, with three banks accounting for more than 75.7% of total assets (source: Bank of Mozambique). The market is highly liquid since very little lending is carried out; in 2012, the total loan volume was around 47.5% of total assets, and the ratio of total loans to deposits stood at 69.5% (source: Bank of Mozambique). Larger banks have concentrated on serving the public sector, large firms and wealthy private individuals. Both interest rates and commission fees are high in comparison to the levels in neighbouring countries. Generally, the market is underdeveloped, with only around 20% of the population using banking services (source: Banking Survey 2009 KPMG).
Banco ProCredit (formerly known as NovoBanco) was founded in 2000 to serve very small, small, and medium-sized businesses. In early 2007, the bank significantly expanded its range of services to its target group by including deposit, ATM and domestic and international money transfer services. By offering current accounts with no minimum deposit requirement as well as saving services, the bank attracts people with moderate incomes who have not had much experience in dealing with banks. With the introduction of agricultural loans, Banco ProCredit broadened its market coverage to include the agricultural sector, which is considered by most banks to be unattractive. At the end of 2012, Banco ProCredit had total assets of USD 50.1 million, while the loan portfolio was USD 26.1 million.
The process of market repositioning as a “house bank for very small and small businesses” and as a “savings bank for private clients” has involved administrative and operational reorganisation, since working in the area of very small, small and medium enterprises is complex, requiring a careful analysis of their needs. This therefore demands skilled professionals with a deep understanding not only of such enterprises’ business needs, but also the complicated nature of the environment in which they operate.
This is why the bank’s focus in 2012 was on staff training. Additionally, the Young Bankers Programme (YBP), a six-month training programme, was set up for the recruitment of potential new staff. The YBP includes theoretical training on subjects such as ethics, banking, finance, economic growth and development, the environment, financial mathematics and accounting, in addition to practical training in our branches. In 2012, 54 new staff members completed this initial training.
In 2013, the bank organised the 3rd annual Banco ProCredit Environmental Forum. Through these forums, the bank aims not only to increase awareness regarding the environmental behaviour of institutions and the public in general, but also to involve its clients in discussions regarding their role in protecting the environment.