Rise in grain and oil prices expected to put Mozambique under pressure

24 February 2011

Maputo, Mozambique, 24 Feb – The Bank of Mozambique has admitted that a rise in grain and oil prices on the international market will put pressure on the balance of payments and other variable of the country’s economy, the bank’s governor said Wednesday in Maputo.

As a measure to minimise the effects of the prices on the international market, Ernesto Gove, who was speaking during the presentation of a study on the performance of the banking sector in 2009, said that the whole of society should involve itself in increasing production and domestic productivity for the country to replace its imports and expand its export revenues.

“During this year, banks need to continue carrying out their role of leveraging economic development , aligning its commercial strategies with the government’s objectives of combating poverty and reducing external dependence,” Gove said.

The number of Mozambican and foreign-owned banks and financial institutions that the central bank has licensed, from the governor’s point of view, is growing every year.

“The entry of new operators to our financial sector will also make it possible to spread the risk associated to the concentration of overall assets and the credit portfolio. In effect, the current situation is characterised by a significant concentration, where the four major banks hold almost 90 percent of the system’s assets,” he noted.

The concentration in the area of credit, according to Gove, is also notable, as the four main banks continue to attract credit for large companies, which has significantly contributed to increasing their portfolios and, consequently, their respective market shares. (macauhub)