MAIN Seminar Theme No. 2: Resources for What Demands - Local Savings

This is a case study presented at the MAIN workshop, The levers for financial sustainability.

The study describes the following:

• Rural financial system in Mozambique in the past:
  • The main practitioners of the rural community consisted of local authorities, agricultural companies, rural shop keepers and canteens.
• The present state of the system:
  • The financial system is characterized by an almost non existence or a weak rendering of services;
  • Banking sector is not motivated to help poor groups due to high risk in terms of their credit reimbursing capacity;
  • Small producers are good payers;
  • Credit delivery lacks a clear and coherent policy.

Further, the study cites some of the ill-favored factors leading to the current state of rural financial system:

• High rate of inflation;
• Weak development of:
  • Rural infrastructures with more emphasis on those related to agricultural commercialization (markets, canteens, warehouses, transport);
  • Supporting services to agricultural activity and livestock;
  • A formal banking sector in rural zones.
• Non existence of financial intermediates at grassroots level such as Saving and Solidarity Credit Associations, Saving and Mutual Credit Associations and Rural Banks.

The study emphasizes that the installation of rural financial system will serve the following purposes:

• Structuring services directed to rural and urban women involved in micro, small and medium enterprises;
• Developing strategies for consolidating and strengthening support to the enterprise sector at micro, small and medium scale for a women;
• Adopting policies that support business organization, grassroots and NGOs.

Finally, the study recommends that rural financial system must be reformulated in order to provide more support to socio-economic activities and to the family sector in the rural areas of Mozambique.