ISLAMIC BANKING: ALTERNATIVE FINANCING FOR AGRICULTURE, SMALL AND MEDIUM ENTERPRISES, AND HOUSING IN MOZAMBIQUE

Abstract

The conventional banking system in Mozambique faces structural limitations that hinder equitable access to financing, particularly in rural areas and among economically vulnerable groups. The main obstacles include the high concentration of banking services in urban centers, the sector’s oligopolistic structure, high interest rates, strict real collateral requirements, and complex bureaucratic procedures. These limitations reduce financial inclusion and restrict financing for agriculture, micro, small and medium enterprises (MSMEs), and housing. In this context, the present study analyzed Islamic banking as a potential alternative for financing, using a qualitative, exploratory, and documentary approach. The results suggest that instruments such as Salam can reduce rural financial exclusion through advance payment for crops. In turn, Murabahah and Musharakah can facilitate MSMEs’ access to credit by prioritizing asset-based financing and risk sharing. Musharakah Mutanaqisah also proves promising for housing, through a co-ownership model with gradual acquisition. It is concluded that the gradual introduction of Islamic banking constitutes a viable alternative, provided it is accompanied by regulatory reforms, tax harmonization, and enhanced financial literacy.