Financial Crime World

Mozambique’s Financial Sector: A Look into the Numbers and Regulations

Overview

The financial sector in Mozambique has shown steady growth, with notable improvements in key indicators such as non-performing loans (NPLs) and return on equity (ROE). According to recent data, NPLs have decreased from 5.3% to 2.3%, while ROE has increased from 19.6% to 21%.

Supervisory Framework

The country’s banking system is governed by the Basel II framework, with three main laws regulating the sector:

  • Central Bank Law: regulates the Central Bank and its functions.
  • Law of Credit Institutions and Financial Companies - Banking Law: sets out the rules for credit institutions and financial companies.
  • Law on Anti-Money Laundering and Combating the Financing of Terrorism: ensures compliance with international standards.

The Central Bank is responsible for supervising the banking system, while the Insurance Supervisory Authority regulates insurance companies and pension funds. A set of notices and circulars covers all areas of supervision, including Basel II framework.

Strengths and Weaknesses

Strengths

  • Basel II framework
  • Onsite and offsite supervision
  • Financial stability framework

Weaknesses

  • Lack of qualified supervisors/bank examiners due to inadequate training and academic qualifications

Challenges and Obstacles

Challenges

  • Compliance with best international practices, aiming for full compliance with 25 core principles.
  • Implementation of Basel II framework, particularly for local banks without parent banks abroad.
  • Cross-border supervision, especially in the context of coordination between African and non-African transnational banks.

Obstacles

  • Shortage of skilled human resources
  • Rapid economic growth has attracted foreign investment, requiring constant training for bank staff to assess new services and products.

Islamic Banking

There is currently no specific regulatory framework for Islamic banks in Mozambique. The regulatory framework is aligned with Basel Committee for Banking Supervision principles.

The Central Bank of Mozambique is committed to promoting financial inclusion and the value of the metical, as evident on its website: www.bancomoc.mz