View source for End-User Finance in Mozambique

== Introduction ==
Formal end-user finance is difficult to access for most Mozambicans due to very limited availability, especially in rural areas. Non-bank financial products such as mobile money, however, have seen a major uptake over the last five years. Launched in 2011, mobile money is used by one in every four adults.<ref name=":0">[https://drive.google.com/file/d/1TYp_gAuemR2rUVUNWeYyA2N9hG5U7qUS/view FinScope (2020): Consumer Survey Mozambique 2019.] </ref>

To overcome financial barriers and make energy access technologies available to different customer segments, a couple of different end-user finance approaches can be applied by companies and other stakeholders as presented in this article. However, purchasing power, budget constraints, and willingness to pay of potential customers are key variables that need to be assessed and kept in mind.  

== Access to Consumer Finance ==
According to the latest FinScope report for Mozambique, in 2019, 21% of Mozambicans had access to formal institutions such as banks; 41% had access to other formal non-bank institutes, mainly mobile money but also including micro finance, saving and credit cooperatives, cooperatives, savings and credit operators, and pension funds; 32% had access to informal savings groups called Xitiques, and 46% did not have access to any.<ref name=":0" />  

Out of the 21% of the adult population in Mozambique that had a bank account, 41% lived in urban and 10% in rural areas. 60% of the rural population is excluded from any formal or informal financial products or services compared to one fifth of the urban population.<ref name=":1">[https://drive.google.com/file/d/159HWXz5QCupAy13Zz4K_df55QZG8jPHM/view FinScope (2020): Consumer Survey Highlights. Mozambique 2019.] </ref> 

Most financial services are concentrated in Maputo City and Maputo Province. While in these provinces (Maputo City and Maputo Province) only 11% respective 21% of adults are financially excluded; in provinces such as Tete, Manica, Zambézia, and Niassa more than 50% of adults don’t have access to any financial products and services.<ref name=":0" />


For a provincial distribution of bank branches as of 2019, see the chapter on [[Financing Opportunities for Energy Access Companies in Mozambique|financing opportunities for energy access companies]].

This regional imbalance is also mirrored in the fact that nearly half of the population uses or is aware of the next Automated Teller Machine (ATM), and of those who use or know it need 45 minutes mean time to reach it (mainly by walking). Similarly, almost three quarter of the people use or are aware of the next bank agency, which is at a 45 minutes mean time distance<ref name=":1" />.

[[File:Access_to_consumer_finance_in_Mozambique_.png|alt=]]






The most available and accessible are mobile money agents, which most people use or are aware of their location and only take a short walk to reach them. 

This makes mobile money the most used financial product in Mozambique, with 29% of the population having a mobile money account. This is a huge jump compared to the 3% in 2014. There is almost no difference in terms of gender, with 55% of male have access to mobile phone compared to 54% of women. The most common use of mobile money is for cash withdrawals (91%), cash deposits (81%) and cash transfer (72%). 27% use it for utility payments and 9% for goods payment.<ref name=":1" />  

=== Credit Lines in Place ===
Banco Comercial e de Investimentos (BCI) SUPER credit line is designed for institutions or companies that adopt integrated renewable energy systems by purchasing renewable energy equipment for productive uses in agribusiness, PV systems for the commercial sector, or waste to energy technologies. 

Target end-users are micro, small, medium enterprises, associations, cooperatives and NGOs. 

The credit line will be available until 31 March 2023 or until the amount available for financing (1 million USD) is reached. BCI funds up to 75% of the project or equipment to be acquired under the facility, with a max of MZN 3.5 Million and at a 7.5% interest rate.<ref>https://amer.org.mz/wp-content/uploads/2021/06/LINHA-CREDITO-BCI-SUPER.pdf</ref><ref><nowiki>https://www.bci.co.mz/bci-exclusivo-pme/</nowiki> (accessed in Oct 2021)</ref><ref>https://www.tse4allm.org.mz/index.php/en/credito-super/perguntas-frequentes-credito-super</ref>

=== Savings and Credit ===
More than half of Mozambican adults (55%) do not save money. 25% even don’t know the meaning of the term “saving”. Those who save, do it mostly at home (32%) or with informal saving groups (27%). In general, urban adults rather tend to save compared to adults in rural areas, more men than women are saving.<ref name=":0" />  

According to the 2019 FinScope survey, only 7% of Mozambican adults had borrowed money in the last 12 months. 4% borrowed formally from banks, 2% informally, and 1% within family or from friends.<ref name=":0" />


== End-user Finance Approaches for Off-grid Technologies ==

=== Pay-as-you-go (PAYGO) ===
PAYGO is a financing model, where end users pay for products or services in small instalments or whenever they are financially liquid instead of directly paying the full price in cash upfront. Under PAYGO, the companies not only provide product and services but also the necessary finance to consumers. Customers usually pay 10-20% as upfront cost and the rest as loans over a period of 1-2 years until they own the system. Payments are typically made via mobile money. If the fee is not paid, the system blocks automatically and cannot be used again until credit has been purchased. 

Read more about PAYGO [[Pay-as-you-go Approaches (PAYGO)|here]].

In Mozambique, PAYGO approaches are rather new and not yet well established. The first solar company offering PAYGO schemes started operations in Maputo, in 2016.<ref name=":2">Economic Consulting Associates, GreenLight (2018): [https://www.lightingafrica.org/wp-content/uploads/2019/07/Mozambique_off-grid-assessment.pdf Off-Grid Solar Market Assessment in Mozambique], accessed May 2021.</ref> Even though mobile penetration rate with 50-60% (according to different sources) is quite high<ref>https://datareportal.com/reports/digital-2021-mozambique</ref><ref name=":2" />, only 29% of the adult population has a mobile money account<ref name=":0" />, hampering the proliferation of PAYGO models. 

Another barrier for PAYGO has been the lack of clear leasing regulations for non-financial institutions. To overcome this obstacle, most companies remain the owner of the system and charge customers a fee for using it.<ref name=":2" />

Read more about the companies offering [[Mozambique Solar Hub|Solar Home Systems using PAYGO in Mozambique]].  



== References ==
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