11 Jul Interview with Mr. Bernardo Aparício, CEO of Standard Bank Mozambique
Could you provide an overview of the current state of Mozambique’s economy and the outlook for the banking sector in the coming years?
In recent years, one of the defining features of the Mozambican economy has been its macroeconomic stability. Over the past five to six years, even during the challenges of the COVID-19 pandemic, Mozambique has shown a remarkable level of stability, which is uncommon among African economies, including larger ones like Nigeria, Angola and Ethiopia. One of the key successes has been keeping inflation under control, with rates staying in the single digits for most of this time. This success is largely due to a monetary policy that has prioritized inflation control — even during the global inflationary surge last year, Mozambique’s inflation peaked at around 12%, which is relatively low for an economy of its size, reflecting the Central Bank and government’s strong focus on maintaining macroeconomic stability.
Mozambique was proactive in addressing inflationary pressures. It was one of the first countries to raise interest rates post-pandemic as global supply chain issues emerged. The country also implemented mandatory reserves and other monetary policy measures to prevent inflation from spiraling out of control. As a result, inflation has now returned to around 3%, aligning more closely with the rates seen in Europe and the US, rather than other economies comparable to Mozambique.
In addition to controlling inflation, Mozambique has also achieved exchange rate stability. After a peak in 2016 when the Metical reached 79-80 per dollar, it stabilized at around 60 per dollar. This stability is crucial for foreign investors, as it provides greater certainty regarding their investments and returns. Both consumers and industrial sectors benefit from this exchange rate stability, which is vital for maintaining economic confidence.
However, this focus on stability has come with trade-offs. Economic growth has slowed, with Mozambique now expanding at a rate of 3% to 5% annually — less than the robust growth seen in the early 2010s. Despite ongoing development and a population growing by 3% each year, this slower pace is partly due to delays in major investments, particularly in the gas sector. Mozambique’s ability to achieve higher growth rates, potentially returning to 7-10%, largely depends on progress in this area. The completion of projects like Coral North and the anticipated restart of Total’s operations in the Mozambique liquefied natural gas (LNG) project are expected to be game-changers, potentially lifting the country to middle-income status.
How has the banking sector performed during this time?
The banking sector has also shown considerable stability in recent years. Since 2016-2017, it has remained well-capitalized and free from major crises or consolidations. Although there were interventions in two banks in 2016 and 2017, the sector has since stabilized and begun to consolidate, largely due to regulatory changes. New regulations, such as minimum capital requirements, liquidity ratios and anti-money laundering measures, have been introduced. These measures have helped banks adopt best practices and strengthen their resilience.
The banking sector has also been focusing on increasing financial inclusion. There has been significant investment in integrating payment methods, including mobile wallets and a single payment system for the country. These efforts aim to make transactions more affordable for customers and expand the use of formal payment methods among the population, contributing to the overall stability and growth of the economy.
How has Standard Bank’s role evolved in supporting the country’s economic development over the years and what strategies are you implementing to navigate challenges and capitalize on opportunities?
Standard Bank is the largest pan-African bank, operating in 20 countries. We aim to play a vital role in the economies we operate by boosting trade within Africa and attracting foreign investment. The Standard Bank group has a rich history spanning 162 years. Here in Mozambique, we’re celebrating our 130th anniversary this year. The bank started as “Standard Totta” and has been closely linked with Mozambique’s history. We’ve been here through the country’s transition to independence and have remained a major player in driving investment and connecting Mozambique to the global financial system.
In 2000, we were still known as Standard Totta, but by 2004-2005, we rebranded to Standard Bank. With a long-standing presence in the country, our history is deeply connected to Mozambique’s development. We’ve always been involved in major development projects and have maintained close relationships with companies. We are one of the three largest banks in Mozambique, one of the three systemic banks in the market and the leader in the corporate and large corporate segments. This foundation is central to our strategy of supporting businesses.
As a universal bank, we aim to provide solutions for all our customers, from the largest corporations to the retail customer. We are present throughout the country, with 47 branches in all provinces, offering universal banking services and focusing on formalizing the economy.
Most of the products we launch are designed to attract more people into the formal financial sector. In recent years, we’ve kept pace with the economy and have seen steady growth. In 2022, our growth outpaced 2021, with profits exceeding the rate of economic growth. We reported profits of approximately $115 million. As of June this year, we recorded profits of around $67 million, reflecting a growth of about 3% compared to last year. We remain committed to expanding our client base and we are widely recognized as the people’s transactional bank. Companies choose us for payments, individuals receive their salaries through us and households rely on us for day-to-day transactions. Our strong growth and balance sheet are rooted in transactional banking and our clients trust us to handle their payments efficiently.
Another key focus for us is supporting large-scale projects in Mozambique. Since the first major foreign investment in MOZAL, an aluminum smelter, we’ve been the bank backing these significant ventures. We’ve played a role in projects like the Maputo Port, the Nacala Corridor and the mines in Moatize, Coral South and are the leading bank financing for Mozambique LNG. Our main goal moving forward is to continue supporting the major development projects in Mozambique.
Digital banking is rapidly transforming the financial sector globally. How is Standard Bank Mozambique leveraging digital technology to enhance customer experience and expand financial inclusion?
One of the biggest challenges we face in Mozambique is keeping our digital platforms and technology up to date. It’s one thing to launch a new digital product, but with a bank of our size and the volume of transactions we handle daily and monthly, ensuring our platforms are robust is crucial. That’s why we’re heavily investing in our technological infrastructure and processing capacity to make our transaction processing smoother and our platforms more reliable. As technology evolves, so must we, which means a significant investment in our infrastructure and how our systems are connected.
Sometimes, our existing systems become outdated and we need to update them with the latest best practices. This allows us to integrate new technologies and offer a better experience for our customers. For the past few years, we’ve been focused on strengthening the foundation of our platforms to handle this.
We anticipate that once gas production ramps up in Mozambique, the number of transactions and the need for processing will skyrocket. As the economy grows, so will the demand for processing larger volumes. We’re preparing for this by ensuring our systems can adapt to the needs of all our clients, especially the multinationals we work with. For instance, we offer host-to-host services where our systems directly connect with our clients’ systems, allowing them to monitor their banking activities in Mozambique from anywhere in the world.
On the individual side, we’re focused on interoperability — making sure our customers can move money seamlessly between different platforms, from a mobile wallet to a bank account, between banks, or across different mobile wallets. We’re also working to adopt the Central Bank’s real-time transaction standards more quickly. Investing in payment channels is a big priority because banking is a critical payment platform. We want to make transactions as easy as possible.
Today, banks face competition not just from other banks but from fintech companies, especially those that focus on payments. In Africa, mobile wallets are becoming more popular, facilitating micro-payments and increasing financial inclusion by making payment systems available to people without bank accounts. As Mozambique’s leading transactional bank, creating more efficient and affordable solutions is one of our top priorities.
With the US increasingly focusing its investments on key African countries, what unique opportunities does it offer American investors looking to do business in Mozambique?
Several promising sectors in Mozambique would be of great interest to American investors. The oil and gas sector is already attracting attention, with many American investors involved in various parts of the value chain, either direct investors or contractors. This sector is one to keep supporting.
Beyond that, Mozambique’s growing population — currently around 32 million and increasing by 3% annually — presents a significant opportunity. Over the next 20 years, the country’s GDP per capita is expected to grow by an average of 8%. This creates a huge potential in the consumer sector as the economy evolves.
Southern Mozambique faces the challenge of being close to South Africa, a large and highly industrialized economy. As a result, we haven’t seen as much industrialization in Mozambique compared to places like Kenya or Nigeria. However, I believe Mozambique will follow a path similar to Angola, which has reduced its reliance on imports and developed its industries. This is particularly true for central and northern Mozambique; it is further from South Africa’s influence. The consumer economy in these regions, along with the rising per capita income, offers substantial opportunities in the consumer sector.
Infrastructure is another critical area. Mozambique has a 1,800 mile coastline and several corridors that connect landlocked African countries like Botswana, Zambia, Zimbabwe and the DRC to the sea, enhancing their links to global supply chains. We’re already seeing increased investment in integrating these countries with international logistics, making the infrastructure sector a significant opportunity.
Lastly, considering global trends, food security is going to be an increasingly important issue. Mozambique, with its vast, underexplored agricultural land, rich soil and favorable climate, is well-positioned to become a key player in agriculture. If we can maintain a stable economy and political system, Mozambique could attract substantial investment in commercial agriculture, moving beyond subsistence farming to help feed the world. The United States, with its large agricultural industry, might see Mozambique as an attractive destination for investment in this sector.
What final message would you like to share with USA TODAY readers?
At Standard Bank, we are deeply committed to the growth of the African continent. Our motto, “Africa is our home, we drive her growth,” reflects this commitment. In Mozambique, this mission is just as important. We’ve been in the country for 130 years, consistently promoting its development and we’re dedicated to continuing this work.
We have the people, technology and capital needed to support the growth of Mozambique and the businesses operating here. Our business development efforts are a key part of this, including our business incubator, the largest in Mozambique. Over the past five years, we’ve trained more than 5,000 people in entrepreneurship, business creation and growth.
This incubator has been a great success and we remain committed to supporting Mozambique’s business community, particularly small and medium-sized enterprises. We aim to connect them with larger companies and investors to build strong value chains that boost not just foreign investment, but also the growth of Mozambican businesses and the prosperity of its people. We will continue to invest in Mozambique’s growth and work to help make the dreams of Mozambicans a reality.