AFC and GIZ Develop Tools for Financial Sector of Mozambique to Respond to COVID-19 Crisis

The growing COVID-19 crisis threatens to disproportionately hit developing countries, not only as a health crisis in the short term but also as a devastating social and economic crisis over the months and years to come. Given natural disaster prevalence in Mozambique as well as the risk of future pandemics in an ever more globalised world, business continuity measures and resilience are of great importance beyond the current crisis. International development organisations have adopted the focus on business continuity – giving support to partners during and after the crisis.

Mozambique is still one of the poorest countries in the world and one of the most affected by the COVID-19 crisis. In the last two years, the economic growth rate was only 3%, declining from 7% in the period 2012-2016. However, this growth is not inclusive, as the majority of the population did not profit from it, while more than half of the population continues living below the national poverty line.

In Mozambique, where 98.7% of all businesses are micro, small and medium-sized enterprises (MSMEs), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH implements Technical Cooperation measure focused on improved framework conditions for MSMEs, especially in rural areas. The Programme for Sustainable Economic Development in Mozambique – ProEcon, funded by the German Ministry for Economic Cooperation and Development (BMZ) and the European Union (EU), provides advisory and supporting services in three intervention areas (IA): IA 1 “Improvement of the Framework Conditions”, IA 2 “Private Sector Development”, and IA 3 “Financial Systems Development”.

AFC is contracted to provide Technical Assistance in the field of IA3: Financial Systems Development. AFC works closely with the Banco de Moçambique (BdM), the Mozambican Central Bank, with Associação Moçambicana de Bancos (AMB), the Banks Association of Mozambique, as well as with selected partner financial institutions for creating an enabling environment and an inclusive financial sector.

In May 2020, AFC’s expert team carried out an exercise aiming to produce guidelines for financial service providers of Mozambique in response to COVID-19 crisis, adapted to the country market specifics. The Guidelines address policy and regulation adaptation, risk management framework, existing and new partnerships, business models refinement, organization structure, IT Infrastructure and equipment, digitization across all business functions, products and services portfolio, and more.

These Guidelines are intended to provide guidance on how to overcome the current crisis, generally make financial services business more resilient and to sustain/grow in the new reality. Accordingly, the Guidelines are divided into the following three sections:

1. DIAGNOSTIC: How exactly is the crisis hitting us? What are the impacts on us?
2. BUSINESS CONTINUITY: How can we ensure that we survive this crisis? What are the key measures to take ensuring our survival?
3. RECOVER IN NEW NORMAL: What have we learned? How do we position ourselves after the crisis/in the new reality? What are the key opportunities?

The current as well as any potential future crisis affects institutions’ business strategy, operations, customers and ultimately financials and therefore each section is subdivided into these categories.

The Guidelines are complemented by a Toolkit, which comprises the following tools, aimed at supporting financial services providers in implementing the Guidelines:

• Tool 1. Self-diagnostic
• Tool 2. Business Impact Analysis – Emergency Response
• Tool 3. Stakeholder Analysis
• Tool 4. Channel and Transactions Mapping
• Tool 5. Partnership Suitability Assessment
• Tool 6. Key Objectives, Goals, Measures, Activities (KOGMA)
• Tool 7. Customer Research Guide

In order to introduce the Guidelines and the Toolkit to the target audience, AFC and GIZ organised a webinar on June 16^th, 2020, where the representatives of the Central Bank, the Banks Association, large and small financial institutions and other interested parties from Mozambique where invited. The Guidelines and the Toolkit were distributed afterwards for their practical use.

As the next step, more webinars to specific subsectors and/or institutions in are foreseen. In addition, a series of video tutorials on using the Toolkit will be produced and shared to the public.

For further information, please contact Vladislav Nimerenco (Vladislav.Nimerenco [at] afci.de)