11 Jul Interview with George Mandawa, Executive Board Member, Banco Comercial e de Investimentos (BCI), Mozambique
Could you provide us with an overview of the current state of Mozambique’s economy and the prospects for the banking sector in the coming years?
I’d like to begin by noting, as is widely recognized, that recent global phenomena have somewhat disrupted prospects for both stability and economic growth. Let’s remind ourselves that no one anticipated the military conflict in Europe would still be ongoing today. The conflict in the Middle East, which is already well known, was also unexpected, among other factors. These events shape a global macroeconomic context that I would describe as diverse. The Mozambican economy, which is heavily dependent on foreign markets, is somewhat affected by these external factors, as well as by its own internal challenges.
Firstly, there is the instability in the north, particularly in Cabo Delgado, where we have high hopes for gas exploration. The insurgents in that region have caused delays in the projects and we know that these gas projects are poised to be transformational due to the scale of the planned investments. The two main blocks are valued at over $50 billion, an unprecedented figure for our economy, creating significant expectations. Additionally, climatic factors have also impacted Mozambique, particularly in the region where we are located.
Any cyclone that hits the country has the potential to cause significant damage to both the economy and society. However, I would describe Mozambique’s economy as highly resilient, especially considering the years it spent without the support of donors and international cooperation partners following the impact of undeclared debts. Despite these challenges, the country has managed to survive and it has done so quite well. The signs are very positive, with agreements signed with the IMF and strong indications of renewed support, which are providing a boost to the economy.
The extractive industry has started to make a significant contribution and is largely responsible for the economic growth we are currently experiencing. Agriculture is another major focus for the country, for obvious reasons. Beyond this, I could also highlight the stability of inflation, which I believe is a considerable achievement for Mozambique. Inflation is well-controlled, remaining in the single digits, below 5%, with excellent prospects for continued stability.
The Bank of Mozambique has indicated that it expects inflation to remain under control for the next two years. As a result, it is taking steps to reduce benchmark interest rates, which is encouraging economic activity. We will be able to start lending again to companies and increase the number of loans. There is also exchange rate stability, which is crucial for an importing country. The state has been effectively managing this.
The World Bank and internal data may vary but the overall indication is that the economic growth figures are around the 5.5% mark. The prospects for economic growth over the medium term appear very promising. While much of this optimism is tied to the gas sector, which has significant potential, there is also hope that the benefits will extend down the economic pyramid and positively impact other sectors. We believe this will indeed happen.
The government has demonstrated clear commitment in this regard. With a solid, well-capitalized banking sector, such as the one we have in Mozambique, we at BCI, and I in particular, believe that better times are ahead. We are confident that the future will bring significant improvements compared to the present situation.
According to a recent KPMG report, Banco de Comércio e Indústria (BCI) holds a leading position in Mozambican finance. Could you provide an overview of the past year that contributed to this result for BCI?
I’d like to emphasize the strength of the financial system as a whole before focusing specifically on BCI. We have a consolidated, stable and robust financial system which is well-capitalized and features banks with excellent levels of liquidity. The level of competitiveness is very healthy and there is a significant focus on innovation, customer service and serving the country. The efforts made by the regulator are also clearly visible. Regulations in place, which are both present and demanding, ensure that Mozambican banking operates in line with major international standards. It may not be on the same scale but it adheres to good practices comparable to any part of the world. We have experienced this firsthand and see it as a very positive factor. As a bank, we are an intermediary, so we are heavily influenced by market dynamics and economic conditions.
In 2023, we experienced growth, which was positive, though it could have been even better. Looking to 2024, the extractive industry continues to be the primary driver of this growth and we are actively aligning with it. BCI has developed a strategy that reflects both Mozambican characteristics and the ambition of a universal bank. By universal, we mean striving to excel across all fronts. The recognition we have received from major international interviews serves as evidence of this ambition.
We are a strong bank in corporate finance and investment, having won awards in these areas. We are particularly recognized as the bank for major projects, especially the gas projects in the north and in the extractive industry, as well as for agriculture and agribusiness. Additionally, we serve private individuals and the retail sector. Among all these sectors, our main strength is our retail banking. We have the largest branch network in the country and are the largest bank in terms of assets. We hold the largest share of deposits in the financial system, with around a quarter of all deposits in Mozambique held by us, reflecting a high level of trust. Additionally, BCI alone provides about a quarter of the financing for the economy, giving us a market share of approximately 25%. Our main competitors have been reducing their share of credit to the market but we are experiencing growth. We have managed to compensate for the low corporate credit, which has been impacted by high interest rates and limited economic activity, by increasing our financing to families. This has been a key strategy for us, resulting in unprecedented growth rates over the past two or three years. The Bank of Mozambique has classified us as the largest bank of systemic importance.
This classification naturally brings a great deal of responsibility. The results are positive but we prefer not to focus solely on net results, as they primarily concern shareholders. Instead, we believe that our impact on the economy and the value we add to the market through our solutions is more significant. In our strategy, we ensure that families, small and medium-sized businesses and international corporate entities, both local and international, receive significant attention from BCI. We offer tailored packages, products, services and exceptional service in Mozambique. Overall, we are quite satisfied with the recent achievements we have made.
BCI has the most branches nationwide, providing the greatest support to Mozambican families and citizens. Given the government’s ongoing efforts to enhance financial inclusion, how is BCI contributing to this goal?
Mozambique has a vast geography, which includes 1,800 miles of coastline and some districts without bank branches. Though these districts are few, the latest indicators from the Bank of Mozambique’s study are encouraging. They show that the banking sector has been actively working on financial inclusion. At BCI, we aim to lead in this area. We have established numerous partnerships with non-governmental organizations and have also launched our own initiatives. We have specialized teams within our marketing department focused solely on financial inclusion, dedicated to addressing this important issue.
We have been developing a range of initiatives and products to reach more Mozambicans in innovative ways. For instance, although we are a bank, we are the only one offering a mobile wallet, which we refer to as a mobile account. It competes with other mobile financial services like M-PESA, Vodacom or M-Cel. However, our mobile account is agnostic to mobile telephony, meaning any Mozambican citizen with a cell phone, whether it’s a smartphone or not and regardless of the network, can access financial services without needing a traditional bank account. We have integrated payments for services such as water, electricity, top-ups and bank transfers into our mobile wallet. This means that all conventional services are accessible through this mobile account nationwide. This is just one example of our technological advancements and market offerings.
Additionally, we conduct numerous programs in the districts, transforming the traditional concept of a bank branch that serves only the local community and waits for customers to request services. We have extended our coverage area significantly. Branches have daily penetration targets in their designated regions, often exceeding these. As a result, we have established a well-penetrated network across the country. We focus on ensuring that these branches effectively serve the population. Take for instance, the Chemba district, which is home to one of the largest organic sugarcane plantations and is a beautiful place. We have a counter there that serves the entire region and its neighboring areas. Our teams are trained to raise awareness among the local population and, wherever possible, we employ staff who can communicate in local languages throughout the country. In Cabo Delgado, we have faced the challenge of working with individuals who did not speak Portuguese or English. We needed to employ staff fluent in Kimuane, Kiswahili and other local languages. We also used educational plays to explain concepts like bank accounts, savings and credit. These projects have a significant social impact and we are committed to continuing our investment in them.
Could you explain the bank’s role in financial inclusion in Mozambique and what initiatives are being implemented to support SMEs?
We are indeed the leading bank for SMEs in Mozambique. This is reflected not just in the awards we have received but also in our development of a risk assessment matrix tailored specifically to the Mozambican context.
To navigate this balance, we strive to meet both Mozambican and European regulatory requirements. Our shareholders include Caixa Geral de Depósitos, the largest bank in Portugal, and BPI, which is part of La Caixa, one of the largest financial groups in Europe, from Spain. While we adhere to both national and international regulations, we aim to balance these requirements with the realities of the Mozambican market.
The reality in Mozambique is that many small and medium-sized businesses are still in the early stages of development. Most Mozambican entrepreneurs are taking their first steps and face challenges related to business structure and professional management. They often struggle with distinguishing between personal and business finances, understanding investment concepts and engaging in medium-and long-term planning. Additionally, these businesses are typically undercapitalized and may not be well-prepared to approach banks for financing. Bank visits can be demanding, particularly in a market with high interest rates, which makes the situation even more challenging. However, we strive to find solutions. One example is our product called Saldo Positivo. More important than the name is the concept: it is designed to link to cash flows that are processed at point-of-sale terminals.
With the transactional volume that companies such as stores and restaurants generate, we use a matrix supported by artificial intelligence to assess basic requirements and recommend quick financing approvals. This process typically results in approvals within 24 to 48 hours. This approach has been highly successful, as it allows us to finance many companies that would otherwise struggle to meet traditional requirements, such as detailed financial reports and projections.
Another approach is leveraging our universal banking capabilities to work with multinationals across various sectors, including gas, industry and local energy. These companies represent good risks due to their mature and solid operations and we have provided them with excellent ratings. We have been defining packages and implementing supply chain finance to support these established businesses.
In their supply chain, we handle activities such as invoice discounting for larger companies. At the same time, due to our controlled risk, we can offer competitive interest rates to small and medium-sized enterprises. Given the current high interest rates of 27-28%, it is indeed challenging for these businesses to thrive. We have worked to reduce our margin, benefiting from good risk profiles, while also focusing on the difficult but essential task of preparing and supporting entrepreneurs.
Through our partnerships with local entities, both governmental and non-governmental, we support initiatives such as the National Association of Young Entrepreneurs. We also collaborate with sponsor programs, including an SME initiative with the International Finance Corporation. These efforts focus on preparing entrepreneurs in areas like management, planning and control. Financing small and medium-sized enterprises is a core passion for BCI.
BCI participated in the Banking, Financial Services and Insurance (BFSI) Conference in June 2024 which was held for the second time in Maputo. Could you please share the outcome and your experience of this conference?
This was the second time we participated in the conference and on this occasion, I represented the bank. We discussed topics such as innovation, digitalization, challenges and opportunities for the financial sector. The event was very interesting as it allowed us to showcase our investments in innovation. At BCI, we view ourselves as a Mozambican brand, but we also aim for this brand to be closely associated with biotechnology.
We are currently undertaking a complete renovation of our ATM network across the country, installing state-of-the-art equipment — the best ATMs available globally. This upgrade enhances our self-service solutions, alleviates customer congestion at bank branches and improves the availability of services such as withdrawals, deposits and various transactions. We have recently introduced contactless technology, aligning with international best practices. Additionally, I presented our development of biometric technologies for our platforms, which received considerable interest and positive feedback from the audience.
Today, security is a fundamental issue in the international context. We believe that data security and biometrics represent the future, as traditional password systems are becoming increasingly obsolete. Unique biometric data, such as retina scans, face IDs and fingerprints, is increasingly being applied worldwide and is already implemented in our app. For example, our internet banking can now be accessed through these biometric methods on smartphones. This solution has gained significant visibility. However, we must also recognize that the country may not yet have widespread access to smartphones. Therefore, while advancing technological development, we must ensure that we remain aligned with the needs and access levels of the broader population.
What final message would you like to share with the millions of USA TODAY readers?
There is a strong relationship between Mozambique and the United States. For example, ExxonMobil, a prominent American investor, is heavily involved in the gas sector in Mozambique. This is just one notable instance among many. Recently, I participated in an event with the newly established Chamber of Commerce in Mozambique, which highlighted numerous interests from the US in supplying services and products to Mozambique.
We believe that the United States plays an indisputable role on the international stage. As such, we aim to be a bank that supports the bridge between American investment and Mozambique. Notably, BCI is the only bank with a presence within the U.S. Embassy, which is a historic milestone. We have recently relocated to the new Embassy premises.
A few years ago, we won a tender to serve all United Nations organizations, many of which are associated with the US. This reinforces our position as a key bank for supporting American investors. Given that Mozambican legislation can be complex and the market is not as open as the American market, with specific requirements for investment and repatriation of funds, we have established internal desks to assist with these processes.
One of our most relevant initiatives is the international desk, which facilitates the relationship between international investors and the domestic market, as well as between domestic investors and international markets. We provide guidance on the Mozambican legal framework, capital importation, interactions with the Bank of Mozambique, necessary permits and other related matters. This approach has proven to be very successful.
The message to American investors is that BCI, a Mozambican-branded bank, is well-positioned to facilitate investments in Mozambique. We, at BCI, understand the country thoroughly and recognize the significant potential American investors bring to Mozambique’s future. We are committed to connecting international investment with the opportunities available in Mozambique.