Policy Memo: Advocating for appropriate financial solutions for saving groups to cope with emergencies

By Esselina Macome

Policy Advisor, FSDMoç (Financial Sector Deepening Moçambique)

Professor, Eduardo Mondlane University

Executive Summary

Mozambique has made a significant progress toward developing and strengthening the financial sector through the implementation of a comprehensive Financial Sector reform program. However, the majority of the population and businesses still do not have access to financial services – especially in rural areas where the majority of the population resides (BM, 2015).

The main objective of the Mozambique Financial Sector Development Strategy 2013 – 2022 is to improve the lives of all Mozambicans. More precisely to enable the poor to build financial security, manage financial shocks and invest in opportunities to generate income through the access to secure savings facilities and other financial services (GM[1], 2012). In line with this goal, we have identified a need to address ways to improve the provision, access, and usage of affordable diversified financial products for the low-income households in Mozambique.


  • Mozambique country profileMozambique is located in Southeast Africa. It has a total area of 801,590km2 and about 2,470km of its coastline along the entire Eastern frontier, borders the Indian Ocean. Mozambique has about of 25, 727 million people with more than 68% are the living in rural areas and about 14 million people represent the adult population[2] (INE[3], 2016). 


    1. In the last decade, the economy of the country grew on average 7.40% and it has experienced a remarkable improvement in the stability of prices and increase in the annual variation of the GPD (BNI[4], 2016). Mozambique is rich in a wide range of mineral resources such as coal, hydrocarbons, precious stones and heavy minerals (BNI, 2016). Mozambique is facing the consequence of climate change and natural disasters. In 2015-2016, more than 20,000 people lost their property due to flooding and around 50 people died (GM, 2016). In addition, the country’s southern provinces experienced droughts, resulting in crop failures and cattle death.
  • Financial Inclusion Landscape


Mozambique is one of the least financially inclusive economies in Southern Africa with 60% of the population not using any formal or informal financial services (FinMark Trust, 2014).  This survey revealed key areas where there is market potential for financial inclusion (FI) of underserved market segments in Mozambique, and these lie among low-income households, small-scale farmers, women, youth, microenterprises, and expanding SME[5] market.

Based on the analysis of this Finscope survey, the biggest increase by financial products include the growth of those using current accounts, savings accounts, debit cards, the use of a bank for remittances. The largest impact of increasing financial access between 2009 and 2014 was the greater adherence to the Xitique[6], with an estimated 15% using it (FSDMOç, 2016).

The analysis shows almost a double increase savings from 15% to 30% from 2009 to 2014. However, removing the highly informal sources of saving[7], the trend noticeable but smaller, from 7% in 2009 to 16% in 2014.  The same study shows a significant increase in informal savings from 2009 (11.2%) to 2014 (22.5%) while savings through banking only increased from 5.35% to 6.9%. It seems that most Mozambicans are not interested in adhering to saving´s products offered by banks (FSDMOç, 2016)

The share of the population using insurance products is still low, having increased from 2.9% to 4.2% from 2009 to 2014. This change was driven by obligated third party motor insurance (Finmark Trust, 2014; WB[8], 2015).

The growth in FI[9] will need to come from more formal and established FSPs[10] as well as from informal groups.

The Mozambique`s FI picture is not good and there is a need to change it positively. The government of Mozambique is aware of this need and it has recently approved the national financial inclusion strategy, which was launched on 6th July (BM, 2016).


The majority of the low and middle-income Mozambican householders have limited financial resources to deal with emergencies.

The data on FI show us that the level of FI in Mozambique still very low. Only about 20% of Mozambicans have access to formal financial services (Finmark Trust, 2014).  Additionally, the findings from the SGs [11] interactions demonstrated that members of these SGs have scarce financial resources to deal with emergencies.

From the 2014 Finscope data, informal saving strand in rural areas represent 28%. The majority of rural householders are reliant upon informal saving mechanisms to help their members cope with the consequences of shocks, such as droughts and floods.  Most women rely on other for income and perceive their biggest risk as death of the main income earner and poor harvest.  For example, 1 in 4 women would not know how to cope with severe shocks (Finmark Trust, 2014). SG´s are good for some things but not for all financial problems, therefore FSPs are required to provide new range of products to SGs in particularly.

We found several causes and reasons behind this problem, such as lack of appropriate products for emergencies, limited financial education and awareness on insurance products or services by the householders, SG´s members have limited skills and ability to define expenditures priorities the FSPs do not provide range of services oriented to the SGs needs.

Money saved through SGs (Xitique) can respond to short-term emergencies, but it is less helpful in dealing financially with the consequences of long-term and severe emergencies. If the consequences of shocks are not well managed, they can contribute to making the low-income householders become poorer, because these householders do not have enough resource, and assets.

 Proposed Solution

This policy memo will focus on the FSDMOç role in proposing a solution for this problem. Multiple potential solutions can be addressed with the goal of developing solutions for low-income householders to deal with shocks.  These solutions include defining a strategic vision on how SG members representing the low- income population can access and use financial products or service within emergency. The vision is that FSPs design sustainable, affordable, diversified and people-centric products and provide these to the low-income Mozambicans and SG´s members.

There is also a need ensure that the final beneficiaries, including the SG members, are using the new products for better dealing with emergencies. The process of design, delivery and use of new financial products requires a collaborative approach with all the key stakeholders.

With the purpose to reach this vision, we have identified the following three major phases:

Awareness Phase

In this phase, the FSDMoç will play an important role to design a business case and convene individual workshops for the key stakeholders: This phase will increase awareness of this vision among three key stakeholders:

Regulators: The Central Bank, Insurance and Telecommunication Regulators.    The workshop with each of the regulators has the objective to help them  understand the need to  develop these types of products for SG members, and to help them to  see how they can  support  the provision of affordable products and  identify  possible incentives for the FSPs.

FSPs: It aims to show a business case for them a need to design more diversified and affordable products, which respond to the needs of the SG members when   dealing with emergencies.

The SGs:   It is to get their understanding in relation to their need for planning and prioritizing household expenses.  In addition to motivate them to express exactly their needs and contribute to change their behavior on the ways for the planning of the future and to deal with risks.

FSDMoç has already commissioned a study on SGs with the objective to get their characterization countrywide and to understand the main goals of this saving mechanism.

After deep interaction with each key stakeholder, we are planning to organize a national debate about SGs. At this debate, the results of the study on SGs will be presented to all stakeholders along with the key points agreed in the meetings with each key stakeholders.

Designing of the Financial Products Phase

There is a need to provide the FSPs with knowledge and skills to be able to design people oriented products or services. FSDMoç can provide the resources and technical assistance in this area. This phase will also need the involvement of the SG members to state their needs.

Financial Education and Consumer Protection Phase

The FSPs should develop financial educational programmes in order to create an environment to permit the SG members to use financial products in an efficient manner.


For the implementation of the policy initiative, we recommend an adaptive and collaborative approach solution.  This policy awareness is the key solution, as it will build the foundation for provision of diversified and affordable financial products for the low-income householders to deal with emergencies.  We believe that after a buy in from the key stakeholders, it is possible to move to other phases of the solution´s implementation.

Additionally  our view is that in the whole process we can involve academia, with the objective of conducting trainings on people oriented approach, research about SGs, and to prepare financial education materials.


  • BM (2015), Financial Inclusion in Mozambique: Experiences and Challenges. Paper presented at the GPF/2015 in Maputo Mozambique;
  • BM (2016) Estratégia Nacional de Inclusão Financeira, Maputo, Mozambique.
  • BNI (2016) Economic Overview of Mozambique, Maputo, Mozambique-
  • FSDMOç (2016) Finscope gender Analysis, Maputo, Mozambique.
  • GM, (2012) Mozambique Financial Sector Development Strategy 2013 – 2022, Maputo, Mozambique.
  • GM (2016), Relatório sobre a situação de Cheias, Maputo, Mozambique.


  • INE, (2016) www.ine.co.mz, retrieved on 10th June, 2016;
  • WB (2015) Análise de Diagnóstico da Protecção do Consumidor e literacia Financeira: Seguros, Pensões Privadas, Valores Mobiliários; Principais Constatações e Recomendações, Maputo, Moçambique.

[1]  Governo de Moçambique

[2]  In Mozambique, adult population is 15 years and above

[3] Instituto Nacional de Estatística

[4] Banco Nacional de Investimento

[5]  Small Medium Enterprise

[6]  Local name of saving group in Mozambique – Informal saving mechanism

[7]  Informal savings include  cash at home or in secret place, money left with someone for safekeeping and livestock

[8] World Bank

[9] Financial Inclusion

[10] Financial Service provider include institutions such  as banks, mobile Money institutions, insurance providers, payment operators

[11] Saving Group