It is essential for fintech businesses operating in Africa, for their own protection and the integrity of the system and financial sector, to ensure they have proper governance arrangements, says banking and technology law expert Diogo Pereira Duarte.

“Any lack of proper governance and control opens the door to risks of data breach, money laundering, or even fraud,” says Duarte, a partner at Abreu Advogados, a Portuguese firm which shares a longstanding, special relationship with JLA Advogados in Mozambique.

Fintech is a relatively new industry (and legal field) in Mozambique, so JLA’s partnership with Abreu benefits both lawyers and clients, says Carol Matias of JLA Advogados. “Abreu has advised in legal systems that are much more advanced than Mozambique. We can benefit from that expertise and provide better services that are more tailored to our clients’ needs.” 

In recent years, the Central Bank in Mozambique, as part of the Financial Sector Deepening Project (FSDMoc) to expand financial inclusion, conducted two ‘regulatory sandboxes’ to incubate fintech startups and assist with development and testing of products and services. 

“We have seen the fintech ecosystem develop noticeably in Mozambique,” says Duarte, before noting that there is still a gap in terms of legislation and regulation in many areas. 

Looking ahead, say Matias and Duarte, fintech businesses operating in Mozambique and beyond should establish themselves in a more formal way, adopting international standards.

“Cyber risk and data protection are serious issues for financial companies, and are two key risks that our clients in the fintech sector are facing,” says Matias. “It is important for the government and others to push for regulation to address those areas and see if the customer data is being managed properly or not.”

While Mozambique has laws relating to electronic transactions, Matias and Duarte believe a specific law and regulations for data protection, modelled on the GDPR, would be beneficial. 

“The revision of data protection frameworks is paramount to foster innovation in financial services, because these business models used by fintechs are supported by the treatment of personal data at large scale,” says Duarte. “This space of data, this economy of data, should come with new rights for people and new measures to protect people’s rights.”

The free and well-protected movement of data is essential, add Duarte and Matias, particularly given the international nature of the fintech industry. “It is paramount to ensure that in Mozambique that there are some commonly accepted international standards otherwise it would be very difficult to ensure the international transfer of data.”

Duarte, a Professor of Civil and Financial Law at University of Lisbon, is part of Abreu’s banking and finance team of 20 lawyers “completely devoted and specialised” in financial sector matters, advising on fintech, cloud computing, algorithmic trading, and crypto-assets. 

That deep, cutting-edge fintech expertise blends with Matias and JLA’s knowledge and deep understanding of the Mozambique market and legal system. “We think these two factors combined can benefit a lot of our clients because there are synergies created for both local clients including fintechs, and international clients related to Mozambique.”

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