Empowa and World Mobile Partnership

Combating the Housing Crisis and Bridging the Digital Divide in Mozambique

Empowa is excited to share our Partnership with World Mobile, which seeks to combat the existing housing crisis and bridge the digital divide in Mozambique. We have been working together on our first collaborative project in Beira, Mozambique, which we look forward to sharing with everyone very soon! However, to provide some context around the journey we are embarking on, this blog will be focused on sharing some details of the various foundational challenges and RealFi opportunities which currently exist in Mozambique.

Unrealised Potential

The World Bank describes Mozambique as a country endowed with ample arable land, water, energy, mineral resources and newly discovered natural gas offshore. The country has three, deep seaports; and a relatively large potential pool of labour. It is strategically located with four of the six countries it borders being landlocked, and hence dependent on Mozambique as a conduit to global markets.

Despite the above natural advantages, Mozambique remains one of the poorest and most climate impacted countries in the world.

A major contributor to this poverty is the systemic failures of the financial sector, which Empowa is addressing, and a lack of connectivity, a problem World Mobile is solving. Both of these factors have contributed to many Mozambicans being excluded from both economic activity and the global economy.


The Mozambique Housing Crisis

Mozambique’s population is currently 31 million, but there are only 600 mortgages in the country. The cheapest available house in the formal market costs $55 000.

Home loan finance is almost impossible to secure, with interest rates ranging between 20 – 30%. This means that home ownership is only affordable for the top 1% of the population. To make things worse, Mozambique is also badly affected by climate change with cyclones being a nearly annual occurrence. A recent example of this is Cyclone Idai which was one of the worst tropical cyclones on record to affect Africa. The long-lived storm caused catastrophic damage, and a humanitarian crisis in Mozambique, Zimbabwe, and Malawi, leaving more than 1,300 people dead, even more missing and many losing their homes in the disaster.

Due to these challenges, almost 80% of homeowners have resorted to constructing their homes themselves, often with poor quality materials and improper building techniques for the tropical storms. Sadly this means many people’s homes are destroyed almost annually during cyclone season.

Through utilising new technologies and thinking, Empowa will enable our local building partner to build environmentally friendly, cyclone-resistant starter homes for $10 000. More than this we enable the life-changing, lease-to-own financing option, reducing the interest rate to under 10%. This provides access to the financially excluded and makes the houses affordable.

Through this approach and at this price point, market research indicates that Empowa could grow the market for such home loans to 4.5 million households. The impact of such an opportunity is almost impossible to quantify.


Connectivity in Mozambique

As of January 2021 internet penetration in Mozambique stood at 21.2%. This is after the number of internet users in the country increased by 1.4 million (+25%) between 2020 and 2021.

When one considers those who have access to mobile connectivity, the numbers aren’t much better with 34.2% of the population having 3G coverage.

Beyond connectivity concerns, the cost of data within Mozambique is prohibitive with one gigabyte of data in Mozambique costing on average 2.79 U.S. dollars in 2021. This ranks Mozambique in the top 100 most expensive countries for data.

The challenges around lack of reliable and affordable connectivity are only exacerbated in rural areas where it is estimated that two-thirds of the country live and work.

According to the GSMA intelligence assessment of key enablers and drivers of connectivity, Mozambique scores 36 or below on a scale of 100 for infrastructure and affordability with an overall score of 34.95. The World Bank’s recent Mozambique Country Economic Update (2021) cited the importance of connectivity in supporting sustainable and inclusive growth for Mozambique in the medium term.

World Mobile’s offering is geared toward solving the challenges around the last mile of connectivity. Mozambique with its large geographic area and a high percentage of people living in rural areas present the perfect opportunity for World Mobile’s solution to make a real-world impact.


RealFi Collaboration, with Real World Impact

Given such real-world challenges and unrealised potential, even in a country such as Mozambique, this seemed like the perfect place to partner with World Mobile to explore and implement RealFi solutions in Mozambique. As mentioned, we will be sharing some details very soon about our first collaboration which will plant the seed for real world impact in Mozambique. Through implementing RealFi solutions in Mozambique, Empowa and World Mobile will prove that it can be done anywhere in Africa, and beyond!