MAPUTO, Mozambican Finance Minister Adriano Maleiane has urged the country’s commercial banks to cut their interest rates, which are throttling Mozambican businesses.

Speaking at the launch here Monday of the latest research report on the country’s banking sector, organized by the consultancy company KPMG, and the Mozambican Association of Banks (AMB), Maleiane said there was a lack of clarity in defining the price of money and he urged the banks to publish the rules for establishing interest rates for the various categories of loans that they grant.

Despite gradual reductions in the benchmark interest rates charged by the central bank, the Bank of Mozambique, the rates charged by the commercial banks remain extremely high, at around 30 per cent. The annual inflation rate has now fallen to below ten per cent, but this too has had no impact on the banks as they pile up huge profits.

It seems we have a lot of work to do for transparency and for fixing interest rates. Apparently, those who look at our interest rates may understand that there is no connection between the costs of funding, inflation and risk. It seems that these things are rather dissociated. So I’m challenging the financial system to bring me a reference rate. I’d like to see a reference rate for 90 days, 180 days, 360 days. I hope that the sector will explain, Malkeiane said.

Outside the country, the impression was that somehow the authorities fix the interest rates � but this was untrue, Maleiane stressed. You (the banks) are fixing the interest rates, and the argument you present is that it’s the responsibility of the central bank, but the central bank denies that. There is an agreement under which you fix the cost of the risk premium. This premium is there, and nobody knows how it moves. It’s important that we, the consumers, can know, he added

The performance of the financial sector suffered from the crisis into which the Mozambican economy plunged last year. Data provided at the meeting shows that the credit provided by the banks to the economy fell by 25 per cent between 2016 and 2016, and that the proportion of non-performing loans increased by 66 per cent.

In terms of assets, lending and deposits taken together, the Commercial and Investment Bank (BCI), has become the largest commercial bank in the country, overtaking the Millennium-BIM (International Bank of Mozambique). In third and fourth places are Standard Bank and Barclays-Mozambique. But Millennium-BIM remains the most profitable bank in Mozambique.