The Transparent Pricing Initiative in Mozambique has published standardized pricing data from 10 microfinance providers, representing the vast majority of Mozambique’s microloan borrowers. Launched in 2011 the Initiative is delivered in partnership with Planet Rating and the Association of Mozambique Microfinance Institutions (AMOMIF), and is funded by the MasterCard Foundation.Microfinance in Mozambique
Microfinance in Mozambique originated in the late 1980s through projects initiated by international relief organizations. Later the sector expanded to attract key private sector and governmental players, resulting in an increased outreach and improvement in financial performance. The sector is considered highly concentrated with a few microfinance institutions dominating the market. Providers of microfinance include downscaling commercial banks, NGO microfinance institutions, credit cooperatives and other licensed operators. Currently, the sector offers limited outreach in terms of the number of active borrowers served (81,000) and the gross loan portfolio disbursed. Anecdotal evidence suggests that there is a high unmet demand for microfinance and a large potential for expansion.
The regulatory and supervisory environment in Mozambique has taken its shape through the microfinance regulation decree of 57/2004. This decree mandated the Bank of Mozambique to regulate deposit-taking microfinance institutions and perform oversight and monitoring on non-deposit taking institutions. Although basic reporting requirements are imposed on most microfinance institutions, there is no specific legislation imposing a standardized national interest rate formula or clear guideline on price disclosure and consumer protection practices.
The price graph presented below shows the prices of all the microloan products in the Mozambique dataset. Each data-point represents a real loan given to a real borrower, calculated using original loan documentation from the institution. The color of the data-point correlates with the Transparency Index of the sample. The interactive legend beneath the graph can be used to change the graph axis and labels. Try the custom feature to see price correlations with attributes such as loan purpose, institution type, loan term and percent of gross national income.
Data from the Transparent Pricing Initiative shows that the products designed for business purposes are the most common type of product in the Mozambique microfinance market. The most commonly used lending methodology employed by the participating institutions were solidarity group lending, followed by individual lending. The most common services linked to loan products were credit education and business training.
Interest rate variations within loan products were found in more than half of the products analysed. The most frequently cited reasons for these differences were due to the purpose of the loan, the branch office location and the size of the loan. An encouraging trend observed in the Mozambique microfinance market is the increasing use of the declining balance interest rate calculation method, 68% of the products analysed employed this method to calculate the price of the loan.
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