Mozambique: Statutory Business Conduct Requirements Fall Short

Mozambique’s financial sector is plagued by a lack of effective enforcement of statutory business conduct requirements, leaving consumers vulnerable to exploitation.

Lack of Enforcement

Consumer associations in Mozambique are entitled to operate on a national or local scale, with mandates to protect consumer rights. However, despite this legal framework, many obligations of the State and Local Municipalities remain unfulfilled.

• The State is required to take measures to approve norms and regulations, prepare effective technical standards, ensure consumers have access to justice, create consumer education centers or services, and develop initiatives for consumer training and education.
• Local municipalities are obligated to provide support to consumer organizations and establish municipal consumer councils.

Challenges Facing Consumer Associations

Despite these requirements, Mozambique’s consumer protection landscape remains plagued by a lack of resources and capacity. Consumer associations struggle to operate effectively due to limited funding and personnel.

“It is critical that the Bank of Mozambique (BdM) takes concrete steps to strengthen its capacity to monitor and enforce business conduct standards,” said an industry expert. “Establishing a new financial consumer protection unit within the BdM would be a major step forward.”

Recommendations for Improvement

To address these challenges, we recommend:

• Strengthening the roles of the Banking Supervision Department (BSD) and the Governance and Institutional Development Program (GPI) to address issues related to misleading advertisements, fees, and charges.
• Establishing a designated team within BSD responsible for financial consumer protection to provide much-needed support.
• Providing training and increased resources for staff involved in consumer protection and financial literacy to help them fulfill their roles more effectively.

Conclusion

Mozambique’s statutory business conduct requirements are crucial for protecting consumers, but their enforcement is severely lacking. Strengthening the capacity of the BdM to monitor and enforce these standards is essential to promoting a fair and transparent financial sector.