3% Malawians Access Formal Credit – RBM
The Reserve Bank of Malawi (RBM) says only 3% Malawians access credit from formal financial institutions.
RBM Governor, Dr. Dalitso Kabambe, said on Monday in Blantyre that the population is worrisome, saying a lot needs to be done for people to start accessing credit from formal institutions.
He was speaking during a launch of Credit Awareness Week.
“The majority of people, around 20% are accessing credit from non-formal places. That is a challenge. Although private credit sector is growing strongly, the rate at which Malawians are accessing is very low. What it means is that we have few Malawians that are borrowing huge sums of money.
“In commercial banks alone, they are lending out in excess of K700 billion. It means that all that money is going to a handful of Malawians who are constituting this 3%. That is a serious matter that needs to be discussed going forward,” said Dr. Kabambe.
Executive Director for Consumers Association of Malawi (CAMA), John Kapito, blamed the banks for not being open enough to clients on loans’ conditions.
“The conditions that banks set out are depressing for the ordinary person. The rate of default is high among Malawians because of the calculations. The figures that they add on are exorbitant.
“For example, if you borrow K400 thousand, you end up paying K800 thousand because of all sorts of charges that they add on. That I think discourages people from borrowing money,” he said.
The bank is conducting the awareness campaign from 9 to 15 December, 2019 to create awareness of the benefits of following effective credit management practices and use of credit history reports from credit reference bureaus.