Maputo — The electronic payments system used by most Mozambican banks has ceased to work because of "blackmail" by the Portuguese company that owns the computer application, accused Gertrudes Tovela, chairperson of SIMO (Mozambican Interbank Company), on Sunday.
Her remarks were the first official reaction to a crisis that hit the banking system on Thursday, when the debit cards of most of the banks stopped working. So did Automatic Teller Machines (ATMs), and POS (Point of Sale) machines in shops and other establishments. All the machines that stopped working were connected to Ponto24, the system used by SIMO.
Fortunately for the Mozambican financial system, the largest commercial bank, the Millennium-BIM (International Bank of Mozambique) is not yet in the Ponto24 system. So BIM bank cards, ATMs and POSs were not affected and continue to function as normal.
SIMO was set up to unify the electronic systems used in the banks and to rationalise operating costs. But the current crisis shows that such a unified system is highly vulnerable. SIMO is 51 per cent owned by the Bank of Mozambique, and 49 per cent by the various commercial banks.
Tovela, who is also a member of the Board of Directors of the Bank of Mozambique, denied that SIMO is in breach of contract with the provider of its computer application, or that it owes the provider any money. SIMO has paid "everything that was owing, and in advance", she said.
The current crisis came about, she said, because the provider demanded a series of conditions for SIMO to use the hardware, which were not envisaged in the contract. She described those conditions as "unsustainable" and as threatening to the country's sovereignty.
Initially, Tovela refused to name the provider, but after insistent questioning she admitted it is a Portuguese company. AIM's own investigations suggest that this company is the Lisbon-based Bizfirst, which had developed the Ponto24 electronic platform.
Tovela said that blackmail by the provider lay behind brief stoppages of the system in June and in July "when we were obliged to sign an addendum to the contract".
As from early November, the application only operated partially, and on Thursday the provider cut Mozambique off entirely. But Tovela insisted that SIMO would not yield to blackmail. She accepted that the current situation is critical, "but it would be worse if we were to accept these conditions, because the blackmail would continue".
But Tovela gave few details of the conditions the provider tried to impose. One, however, was exclusivity. The provider would not allow SIMO to develop any other system as long as it was using Ponto24.
Furthermore, the provider did not have Mozambique's interests at heart, since it was prepared to cut off a vital service without any warning. Its way of operating was "to put SIMO up against the wall and say 'Agree to what we want, or we'll cut you off!'"
SIMO would not negotiate any new arrangement with this provider, Tovela said. Instead, it was looking for another solution that would meet Mozambique's needs and would not compromise the country's sovereignty.
The situation is dramatic - prior to the shutdown, the SIMO network was handling 465,000 domestic and 14,000 international transactions a day, adding up to 14 million transactions a month.
Most clients of the banks were caught entirely unawares. Customers in shops or restaurants suddenly found that their cards were declined.
It was much worse abroad - Tovela admitted there were cases of Mozambicans undergoing medical treatment outside the country who could no longer pay their medical costs. There have even been reports of Mozambicans abroad who were arrested when their cards were declined.
Several of the banks affected opened their branches on Saturday to allow clients to withdraw cash, and did not charge them the usual fee for cash withdrawals. This may become the norm as the crisis continues, for Tovela admitted she has no idea when a new computer application will be up and running.
SIMO was working "day and night" to seek a solution", she said. "The entire Mozambican people have been taken by surprise. It's a very difficult situation".
She could not say whether clients of the banks will be compensated for their losses, and would not even answer a question as to whether SIMO, or the Bank of Mozambique, has asked the government to intervene. These were legal and diplomatic issues that were not part of her remit.
But she did admit that SIMO had no alternative system that it could fall back on. Ponto24 was adopted because it was already in use in some of the banks, and proved to work well under Mozambican conditions. But there was no Plan B.
Tovela thought it unlikely that the current crisis would drive any of the smaller banks out of business, and insisted that the Mozambican financial system remains fundamentally sound. Yet it is obvious that the longer the crisis continues, the more likely it is that people will transfer their savings into the only bank that is still working properly, the Millennium-BIM.