Only 3% of Malawians have access to formal credit: RBM Governor bemoans

Written by  Felix Mponda

 Only 3 % of Malawians have access to formal credit from banks and other formal lending institutions, Reserve Bank of Malawi Governor Dalitso Kabambe said on Monday, bemoaning this as “too low” to make any meaningful impact on wealth and job creation and spurring the much needed economic growth development.

RBM Governor Kabambe: Access to credit too low. RBM Governor Kabambe: Access to credit too low.

“Less than 3 % of the population access formal credit. That’s too low, its too ineligible. Why are we not lending to Malawians? What will it take for more Malawians to start accessing credit?” asked Kabambe as he launched Credit Awareness Week (CAW)  at the RBM branch in Blantyre. The CAW ends on December 15.


In collaboration with the Bankers Association of Malawi (Bam), Institute of Bankers (IOB), Malawi Microfinance Network (Mamn) Malawi Union of Savings and Credit Cooperatives (Muscoo) and Credit Reference Bureau, the CAW chiefly seeks to create awareness of the benefits of following effective credit management practices and use of credit history reports from credit reference bureau.


The week also aims to disseminate and facilitate an understanding among the general public and specific target groups including employees of various public and private organisations, micro, small and medium enteprises.


The RBM Chief, who is also the Registrar of Financial Institutions, said the week should help kick-start conversations seeking to find answers why Malawians are not borrowing big sums of money that would spur wealth and job creation at individual , company to national levels.


He said all nine Malawian banks were “highly liquid” and customers money was safe with RBM, but wondered why Malawians prefer to borrow money from loan sharks and other unorthodox sources with huge interest rates.


Kabambe said Malawi was at the crossroads having stabilised the economy the past three years, with single digits inflation, a steady foreign exchange regime and sufficient foreign exchange cover.




“Stabilising the economy is done and dusted, but we need economic growth and jobs…that’s the game we have to play.”


He said the “story is no longer about inflation…we want Malawians to see the fruits of a performing economy. By virtue of having low inflation, it should be advantageous to many Malawians. A stabilised economy is a good phenomenon, we should use it as a lynchpin to economic growth so that more people see the benefits.”


Kabambe, a former top civil servant who was PS for several ministries, said: “ It’s time all of us focused on growing the economy.”


Malawi’s economy is dependent on agriculture, especially tobacco which rakes in more than half of the country’s forex, but Malawi has been eyeing other sectors such as mining, tourism and energy to diversify from farming and rive the economy.


Agriculture alone contributes up to 35 % of the national income.



Kabambe said the country needs labour, land and capital to “produce goods and services to create wealth and jobs.”


He said credit was “paramount at household, business and national levels,” urging Malawians to take credit from formal finance institutions to be utilised to develop the country.



Madalo Minofu, Resident Representativeof the World Bank’s affilliate International Fiannce Corporation (IFC), said at the launch the IFC was a sister organisation of the World Bank with a mission to promote private sector growth.

Minofu, a Malawian national based in Zambia, said access to credit was one of the “key challenges” back-pedalling growth and job creation.

She said she wants to see more Malawians getting credit, even fro IFC, using reputation as collateral. “Malawians should feel empowered to access credit,” Minofu added.

Kabambe earlier said IFC was the biggest fiancing instituiton in the world and encouraged Minofu to do more for Malawi since she is at the centre of money borrowing.

"Stamp your authority in Malawi as we want to see more projects in Malawi fiannced by IFC,"



Prominent consumer rights activist John Kapito took a dig at high street banks, saying there was no transparency as banks do not “disclose the fine print” of loan documents and “don’t tell borrowers the truth…they hide a lot of information.”

He said people were “so illiterate that they don’t know why they borrow money. People don’t think and read the loan documents, they just want the money and go.”


The CAW wants Malawians to understnd consumer rights and obligations when accessing credit aaprt from getting tips on how borrowers can avoid falling into credit traps or non-performing loans and realise the most from personal, household and business credit.


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