The World Bank Implementation Status & Results Report Mozambique: Financial Inclusion and Stability Project (P166107) Mozambique: Financial Inclusion and Stability Project (P166107) Eastern and Southern Africa | Mozambique | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2019 | Seq No: 7 | ARCHIVED on 10-May-2022 | ISR51025 | Implementing Agencies: Ministry of Economy and Finance, Ministry of Economy and Finance, Deposit Guarantee Fund, Bank of Mozambique, Instituto de Supervisao de Seguros de Mocambique, Fundo de Apoio à Reconstrução da Economia, Ministry of Justice and Constitutional and Religious Affairs, Centro de Desenvolvimento de Sistemas de Informação de Finanças (CEDSIF), Instituto Nacional de Accao Social (INAS), Ministry of Education and Human Development Key Dates Key Project Dates Bank Approval Date: 13-Dec-2018 Effectiveness Date: 29-Aug-2019 Planned Mid Term Review Date: 31-Aug-2021 Actual Mid-Term Review Date: 27-Sep-2021 Original Closing Date: 30-Jun-2024 Revised Closing Date: 30-Jun-2024 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the Project is to increase financial inclusion among underserved groups and MSMEs, while strengthening the overall financial safety net. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Increasing usage of transaction accounts and access to finance for MSMEs:(Cost $20.00 M) Financial safety net strengthening:(Cost $17.00 M) Project management, monitoring and evaluation:(Cost $3.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Unsatisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Unsatisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions The Project's objective remains attainable and some original targets have been achieved, although constraints to greater financial inclusion continue to exist. One constraints is the process for opening bank accounts, which is accompanied by a customer due diligence that continues to impose an excessive burden on the most disadvantaged and limit take-up of basic financial services such as setting up transaction account. The World Bank team noted that the Government of Mozambique is considering new legislation that would address some of these constraints and help increase overall financial inclusion in the country. The mission noted progress over the past six months, mainly: (i) new mass digital payments of social benefits to the mobile money wallets of beneficiaries processed through the new Automated Payments System (Sistema de Pagamentos Automatizados – SPA) developed with support 5/10/2022 Page 1 of 8 The World Bank Implementation Status & Results Report Mozambique: Financial Inclusion and Stability Project (P166107) from the Project; (ii) the second capitalization of the Deposit Guarantee Fund (Fundo de Garantia de Depósitos – FGD) upon achievement of disbursement linked indicators, for a total of US$4.1mn; and (iii) the official launch of the Movable Collateral Registry (Central de Registo de Garantias Mobiliárias – CRGM), as well as an increase in the number of registrations made by financial institutions of loans with guaranteed by movable assets. Four outcome indicators showed progress: the number of individuals receiving digital payments in urban and rural areas; the number of mobile money agents; the number of MSMEs and small entrepreneurs receiving loans guaranteed by movable assets; and the size of the deposit guarantee fund. However, some indicators continue without information and insufficient progress. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Substantial Substantial Macroeconomic Substantial Low Substantial Sector Strategies and Policies Low High Moderate Technical Design of Project or Program High Moderate Moderate Institutional Capacity for Implementation and Substantial Substantial Substantial Sustainability Fiduciary Substantial Moderate Moderate Environment and Social Low Moderate Moderate Stakeholders Low Low Low Other -- Moderate Moderate Overall Substantial Substantial Substantial Results PDO Indicators by Objectives / Outcomes Increasing usage of transaction accounts and access to finance for MSMEs IN01128366 ►Targeted recipients of government transfers that make or receive digital payments (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 25.00 Date 30-Sep-2018 21-Mar-2019 21-Mar-2019 31-Dec-2023 The percentage of recipients of government transfers (disaggregated by target groups, such as urban/rural, gender, teachers, lifelong learning facilitators, or social benefits recipients) who report using Comments: mobile money, a debit or credit card, or a mobile phone to make a payment from an account, or report using the internet to pay bills or to buy something online, in the past 12 months. It also includes respondents who report paying bills, sending or receiving remittances, receiving payments for agricultural 5/10/2022 Page 2 of 8 The World Bank Implementation Status & Results Report Mozambique: Financial Inclusion and Stability Project (P166107) products, receiving government transfers, receiving wages, or receiving a public sector pension directly from or into a financial institution account or through a mobile money account in the past 12 month (% age 15+) IN01128367 Life-long learning facilitators (Number, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 2,500.00 IN01128369 Beneficiaries of social transfers in urban areas (Number, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 16,929.00 85,683.00 100,000.00 IN01128371 Beneficiaries of social transfers in rural areas (Number, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 17,530.00 20,000.00 IN01128373 ►Adults making or receiving digital payments in the past year (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 34.00 32.00 32.00 42.00 Date 31-Dec-2017 31-Dec-2019 31-Dec-2019 31-Dec-2023 The percentage of respondents who report using mobile money, a debit or credit card, or a mobile phone to make a payment from an account, or report using the internet to pay bills or to buy something online, in the past 12 months. It also includes respondents who report paying bills, sending or receiving remittances, Comments: receiving payments for agricultural products, receiving government transfers, receiving wages, or receiving a public sector pension directly from or into a financial institution account or through a mobile money account in the past 12 months. IN01128374 Women (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 27.00 27.00 27.00 40.00 Date 31-Dec-2017 21-Mar-2019 21-Mar-2019 31-Dec-2023 IN01128376 Poorest 40% of the population (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 20.00 20.00 20.00 28.00 IN01128377 ►Active mobile money agents (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 25,000.00 83,022.00 98,548.00 100,000.00 5/10/2022 Page 3 of 8 The World Bank Implementation Status & Results Report Mozambique: Financial Inclusion and Stability Project (P166107) Date 31-Dec-2016 30-Jun-2021 30-Jun-2021 31-Dec-2023 Comments: Certified agents of electronic money institutions. IN01128378 Districts covered by active mobile money agents (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 77.00 98.70 98.70 99.00 IN01128379 ►MSMEs that received loans secured by movable assets registered in the collateral registry (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 38.00 217.00 3,750.00 Date 30-Sep-2018 06-Oct-2021 06-Oct-2021 31-Dec-2023 Number of individual entrepreneurs and legal entities classified as micro, small, or medium enterprise (as per the existing legislation) that have received a credit from a financial institution that has registered in the collateral registry a security interest of a movable asset given as collateral by the borrower (individual Comments: entrepreneur and legal entity). The latest data (October 2021) is preliminary and has not been validated by the authorities. IN01137602 Women-led MSMEs and women entrepreneurs that received loans secured by movable assets registered in the collateral registry (Number, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 2,664.00 3,000.00 Date 31-Dec-2018 -- 31-Mar-2022 30-Jun-2024 Strengthening financial safety nets IN01128359 ►Size of the deposit insurance fund as a share of total deposits (without contributions from other development partners) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.05 0.09 0.10 0.25 Date 31-Aug-2018 30-Sep-2021 31-Dec-2021 31-Dec-2023 The fund size is the market value in local currency of the DGF assets. The value of total deposits is the local currency value of the deposits in the banking system. The indicator excludes potential contributions Comments: by development partners other than the World Bank. The latest data (September 2021) is preliminary and has not been validated by the authorities. Overall Comments PDO The Project's Results Framework is expected to be restructured in line with the agreement reached in the mid-term review, to (a) simplify its structuring, by removing indicators that are less relevant to the Project's development objective, (b) adjust it based on the institutional capacity to collect data, (c) increase some targets that have already been achieved, and (d) add one breakdown outcome indicator to better monitor the 5/10/2022 Page 4 of 8 The World Bank Implementation Status & Results Report Mozambique: Financial Inclusion and Stability Project (P166107) impact of the new collateral registry on access to credit by women-led SMEs and women entrepreneurs. The version of the Results Framework included in this ISR is aligned with the revised results framework. Intermediate Results Indicators by Components Increasing usage of transaction accounts and access to finance for MSMEs IN01128380 ►IT solution that enables Treasury to interface with e-money payment systems installed and operational (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 30-Sep-2018 21-Mar-2019 21-Mar-2019 30-Jun-2021 The Government's financial management system (eSistafe) is expected to be able to make payments Comments: directly into a mobile account. Currently, the system can only make payments to bank accounts. IN01128382 ►Individuals benefitting from financial literacy awareness program (Number (Thousand), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.50 0.58 250.00 Date 30-Sep-2018 30-Sep-2021 31-Mar-2022 30-Jun-2024 Number of individuals that attended a financial education session or event or received specific training on the use of a new payment technology or money management. These events should last at least 15 Comments: minutes. IN01128384 ►Recipients of government transfers reporting satisfaction with the digitized payment method(s) (citizen engagement) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 66.40 66.00 Date 30-Sep-2018 21-Mar-2019 31-Dec-2021 31-Dec-2023 The latest data reflects the results of a recent survey of INAS beneficiaries who responded they would be Comments: interested in continuing to receive digital payments. IN01128386 ►A centralized, web-based collateral registry established and operational (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 30-Sep-2018 30-Jun-2021 31-Mar-2022 30-Jun-2021 A registry for security interests in movable property that is accessible through web and is centrally Comments: managed by an authorized body of the Government. 5/10/2022 Page 5 of 8 The World Bank Implementation Status & Results Report Mozambique: Financial Inclusion and Stability Project (P166107) Strengthening financial safety nets IN01128381 ►Strengthened bank recovery resolution framework (Yes/No, Custom, PBC) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 30-Sep-2018 01-May-2021 01-May-2021 30-Jun-2020 Comments: Described in the DLI Verification Protocol IN01128383 ►Improved DGF’s ability to undertake deposit insurance functions (Yes/No, Custom, PBC) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 30-Sep-2018 21-Mar-2019 21-Mar-2019 31-Dec-2023 Comments: Described in the DLI Verification Protocol IN01128385 ►Expanded coverage of deposit insurance (Yes/No, Custom, PBC) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 30-Sep-2018 21-Mar-2019 21-Mar-2019 30-Jun-2021 Comments: Described in the DLI Verification Protocol Performance-Based Conditions IN01128388 ►PBC 1 Strengthened bank recovery resolution framework (Yes/No, Output, 4,000,000.00, 100.00%) Baseline Actual (Previous) Actual (Current) Year 3 Value No Yes Yes -- Date -- 01-May-2021 01-May-2021 -- IN01128389 ►PBC 2 Improved DGF’s ability to undertake deposit insurance functions (Yes/No, Output, 4,000,000.00, 0.00%) 5/10/2022 Page 6 of 8 The World Bank Implementation Status & Results Report Mozambique: Financial Inclusion and Stability Project (P166107) Baseline Actual (Previous) Actual (Current) Year 3 Value No No No -- Date -- 21-Mar-2019 30-Dec-2022 -- IN01128390 ►PBC 3 Expanded coverage of deposit insurance (Yes/No, Intermediate Outcome, 4,000,000.00, 0.00%) Baseline Actual (Previous) Actual (Current) Year 3 Value No No No -- Date -- 21-Mar-2019 31-Oct-2022 -- Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P166107 IDA-D4050 Effective USD 40.00 40.00 0.00 9.30 30.97 23% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P166107 IDA-D4050 Effective 13-Dec-2018 01-Feb-2019 29-Aug-2019 30-Jun-2024 30-Jun-2024 Cumulative Disbursements 5/10/2022 Page 7 of 8 The World Bank Implementation Status & Results Report Mozambique: Financial Inclusion and Stability Project (P166107) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 5/10/2022 Page 8 of 8