Mozambique: Central Bank looking at ways to pass bank rate cuts to SMEs

Dec 19, 2013

Commercial banks are failing to follow the lead of the central bank in reducing their interest rates, the Bank of Mozambique (BoM) Governor Ernesto Gove said on Monday (December 16th).

Commercial banks are failing to follow the lead of the central bank in reducing their interest rates, the Bank of Mozambique (BoM) Governor Ernesto Gove said on Monday (December 16th).

He explained - quoted by AIM news agency - that cuts in the interest rates banks charged on loans were not proportional to rate cuts from the BoM, and came after considerable delays. Hence, he added that the mechanisms whereby interest rate changes are transmitted "demand more thorough reflection".

Low inflation and the stability of the Mozambican currency allowed the Bank of Mozambique to continue a policy of reducing interest rates which it had begun in mid-2011, AIM reports. In 2013, the Bank had cut its rate three times, and is now standing at 8.25 per cent.

Ernesto Gove added that in addition to high costs on loans, small and medium-sized companies continue to face other limitations to access credit and that the BoM is working with various partners to promote lines of finance dedicated to this segment.

He said the institution has for instance worked with the Confederation of Mozambican Business Associations "to reduce asymmetries such as the lack of information and weaknesses in the organisation of the accounts of SMEs, which leads the banking system to regard their activities as high risk".ADNFCR-2976-ID-801674297-ADNFCR