Malawi’s financial sector must balance innovation with responsible lending as it seeks to expand access to credit and promote financial inclusion, Reserve Bank of Malawi Governor George Partridge has said.
Partridge was speaking in Lilongwe during the official launch of Old Mutual Finance Limited (OMFIN), a licensed non-deposit-taking microfinance institution.
He said the entry of OMFIN, particularly its digital lending approach, would deepen the financial sector and bring more people into formal financial services.
However, Partridge emphasised that innovation should be accompanied by consumer protection, sound governance and responsible lending.
He said customers must receive clear information about loan costs, fees and repayment obligations, while lenders should assess their ability to repay to prevent over-indebtedness.
“Financial services should improve people’s lives not place them under unsustainable financial pressure,” Partridge said.
Meanwhile, Old Mutual Malawi chairperson Nkondola Uka said the new institution would provide affordable loans while helping customers improve their financial circumstances.
“We believe that by launching this new company, we will serve our customers better,” Uka said.
He said the products were designed to address barriers faced by people who struggle to access credit because they lack collateral.
Uka also noted the inclusion of retirees, saying they were often excluded from conventional lending.
OMFIN has launched two products, the Payroll Loan and the Golden Reserve Loan.
The Payroll Loan targets salaried employees whose employers have partnered with OMFIN, while the Golden Reserve Loan is designed for customers whose pension or annuity investments are held within Old Mutual.
Explaining the lending process, OMFIN General Manager Kisa Kalolokesya said collateral would not be required.
“Collateral is out of the equation,” Kalolokesya said, adding that the company would focus on borrowers’ character and capacity to repay.
Applicants will undergo credit checks and affordability assessments as part of OMFIN’s responsible lending approach.
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