A plan to bring Mozambique’s small businesses the support they need
Socremo brings financial services to the underserved in Mozambique
Mozambique is one of Africa’s fastest-growing economies. However, it’s in the bottom 10 globally in the Human Development Index (HDI), which ranks countries by life expectancy, education, and standard of living. Only a small minority of Mozambicans, typically in urban areas, have felt the benefits of economic growth, leaving most of the rural population in poverty. Just as economic growth has passed them by, financial services have also remained out of reach for 6 out of 10 Mozambicans. This vast financially excluded population extends to micro, small, and medium businesses throughout the country, and particularly those in rural areas. We’re excited to partner with Socremo in their efforts to expand financial services so that entrepreneurs in every corner of the country have the tools they need to run their businesses and support their families.
Even in the face of currency devaluation and political instability in recent years, Socremo has remained resilient. Today the Company has 14 branches and more than 43,000 customers, making it the largest bank in the country focused on the small business sector. The Bank is already well-known in the market, and it’s positioning itself to be the leading microfinance institution in the country. It is differentiated by its robust credit underwriting process, a dedicated, well-trained staff that maintains close relationships with its clients, and its ability to thrive despite harsh macroeconomic conditions. Socremo serves businesses in a broad range of sectors, such as agriculture, education, retail, fishing, and food processing.
Most of Socremo’s operations are manual, including in-person customer acquisition and loan renewals. Over the next few years, the company aims to expand its digital capabilities so they can reach more of the region’s underserved populations, improve operational efficiency, and expand offerings. By leveraging technology, Socremo can save entrepreneurs time and money and ensure its clients feel more secure in their daily financial activities. Small business owners will no longer have to make long trips to physical branches. They’ll be able to manage their business financing directly from their mobile phones, reducing the costs and risks associated with transporting cash. This digital shift will improve the customer journey and experience when interacting with Socremo’s financial products.
Accion values Socremo’s role in driving financial inclusion in Mozambique, and we’re excited by their vision for the future. So when we had the chance late last year, we purchased all of AfriCap Microfinance Investment Company’s shares in Socremo. This investment provided Accion with an opportunity to become the bank’s largest minority shareholder. Along with our co-investors (GAPI, Nordic Microcap, and Norfinance), we see enormous opportunity to grow and expand service offerings in an underserved market.
Our partnership with Socremo includes guidance from our Global Advisory Solutions team to help achieve digital transformation of Socremo’s products and scale its operations. This digitization will involve introducing new collateral-light lending and new-generation savings products, implementing alternate channels such as agency banking, mobile banking, and hub-and-spoke branch model to reduce the cost of serving clients. We’re looking forward to supporting Socremo to optimize its processes, decrease costs, and reach more clients.
Socremo has already accomplished so much with its traditional model. We’re looking forward to supporting them as they continue to conquer financial exclusion in Mozambique with even-more-effective digital financial tools.
Robert Ongodia coauthored this post.