Reflections on the FSD Moç Annual Lecture on Digital Financial Services and the Launch of Annual Publication
By Barney de Jongh, Head of Communities of Practice Digital Frontiers Institute
I recently had the great privilege to be invited as a guest speaker to the annual publication launch event of FSD Mozambique. During the event, Anne-Marie Chidzero, the outgoing CEO, shared some of the key milestones achieved by FSD Mozambique in the short 3 years since their existence.
The event was also an opportunity to hand out the “Advancing Financial Inclusion for Smallholder Households in Mozambique” publication. This publication is a culmination of a huge amount of work done by CGAP in understanding the financial needs and behaviors of low income smallholder families in Mozambique. This is a must read for anyone who want to get a greater insight into financial inclusion in Mozambique.
I was then given the opportunity to speak about the role of internet access in shaping digital financial services. I have taken the liberty to write a few key insights from this presentation below:
The Role of internet access in shaping Digital Financial Services
A good starting point in a discussion around shaping digital financial services is to see what the landscape looks like in terms of those with access to financial services. Drastic progress has been made in the space of 4 years. In Sub-Saharan Africa, the percentage of adults who had some form of account access at the end of 2014 was 34% (that’s a 10% increase from 2011). If we turn to Mozambique, we can see that the percentage of those with some form of access to financial services have increased from 22% in 2011 to 40% (around 5.5 million adults) in 2014.
In the context of the above, the question now arises of how we can get internet access, as a first step, to those who have experienced financial services, in one shape or another, to make a meaningful impact in their lives and to get a ripple effect going in a country like Mozambique. Although Africa remains the poor cousin when it comes to mobile internet penetration (only 28% vs the world average of 48%), the good news is that the number of people who have access to internet is more than those who have access to financial services.
Let’s see what this means for Mozambique. Today, there are 13.8 m unique mobile subscribers in Mozambique. When we talk mobile and internet the term smart phone immediately comes to mind. Mozambique’s smart phone penetration today is around 30%. That means there are around 4 million people today in Mozambique who have experienced the internet. It is highly likely that a big chunk of the 4 million who have internet access falls into the category of the 5.5 million who are financially included.
We have established what availability of internet means for Mozambique. Let’s now turn to the cost and affordability of internet. Although the cost of 1 GB of data is much cheaper in Mozambique ($2.9) than in many other Sub-Saharan African ($5.3 in Malawi), in real terms the cost of that 1 GB makes up 12% of the average person’s income per month. Although this is below the 18% average for Africa it is still a far cry from what the “Alliance for Affordable Internet” deems as affordable internet – that is getting 1GB of data to represent 2% of the average’s person’s monthly income.
Access to the internet is what will take most resource based economies, which cannot be shared, to knowledge based economies, which can be widely shared with rich spin-off effects like collaboration and innovation. A Deloitte, Value of Connectivity report, mentions that a 10% increase in broadband penetration for Sub-Saharan Africa could be accompanied by a 1.3% increase in GDP and a 21% – 29% increase in per capita income. For Mozambique, in real terms, this would mean an increase of $148 million in its GDP and around $400 – $650 increase in average annual income per person.
One small example of how this can be achieved is by looking at Vivo’s “Fishing with 3G nets” project in Brazil. Here, the internet enables fishermen in Brazil to access information on fish stocks and weather conditions. Brazil has extensively increased 3G penetration over recent years. This has impacted business’ everyday activity. The project supports fishermen in their daily business by providing them with 3G-enabled mobile devices with customized software applications. This enhances safety of navigation through real-time location and weather updates. It also improves fishermen’s marketing capabilities by providing them with constant updates on market prices, demand and allows them to connect directly with consumers and sell the daily catch via a web-based application.
In conclusion, although better affordability and wider availability of the internet in Mozambique are not issues that will be resolved today or tomorrow, it is an important narrative that we continuously need to convey to relevant stakeholders to help us get closer to the goal of larger financial inclusion in shaping deeper, richer and more meaningful use cases for digital financial services.
Graduation Ceremony for Certificate in Digital Money students
A total of 10 students from Mozambique received their Certificates in Digital Money (CIDM) during the graduation ceremony. The Certificate in Digital Money is a 12-week course offered by the Digital Frontiers Institute. It covers all aspects of the digital payments and digital financial services ecosystem and value chain, beyond what one would normally find in a course on money and banking. This course provides a high-level view of the various elements of digital financial services. It also provides practical thoughts and insights into key operational details and helps to map out a complex landscape.
Certificates were handed out to graduates by Anne-Marie Chidzero, Sergio Dista DFID Representative and Barney de Jongh (Head of COP from DFI). A huge word of congratulations to the following graduates from our 3rd Class (30 January – 21 April 2017):
- Esselina Macome – CEO of FSD Mozambique
- Helder Buvana – Market Development Manager, FSD Mozambique
- Ramos da Silva Joaquim – Head of Microfinance Promotion, Gapi Investment Society
- Cheilla Chicate – E-Channel Officer, BancABC
- Gerardio Cader da Basilia Marcos Chiluvane – IT Assistant Manager, BancABC
- Tamara Chilika Kangombe – Country Manager – Distribution Partnerships, BancABC
- Clesio Cadete – Products Officer, BancABC
- Fatima Conceicao – Technician, Sociedade Interbancaria de Mocambique
- Mauro Castelo José Banze – Freelance Software Developer
- Ercília Pedro – Head of Marketing, Banco Unico
- Lourena Machado – Unit Coordinator, BCI
DFI – FSDMoç partnership role in Mozambique
DFI would also like to make use of this opportunity to thanks FSD Mozambique for the tremendous role it has played in building the digital financial service community in Mozambique. FSD Mozambique, primarily through Esselina Macome, has played a large role in facilitating Community of Practice meetings for CIDM students in Maputo. The Community of Practice meetings provides a forum whereby students can meet on a face to face basis to discuss the practical side of the concepts they have learned through the online forum. Esselina has been the COP facilitator since January 2017 (the start of the 3rd Class). Since then she has facilitated a total of 14 meetings for no less than 30 students. These meetings provide unique opportunities for people from very different backgrounds to discuss and share their views on digital financial topics, network and to build a solid digital financial service community in Mozambique.
We, at DFI, are very proud of our partnership with FSD Mozambique and believe that together we can help contribute to the success of digital financial services in the years to come.