Government courts investors in banking sector
Malawi Government has branded the banking sector as the most profitable in the Common Market for Eastern and Southern Africa (Comesa) region, calling for more investment in the sector.
“The banking sector in Malawi is the most profitable sector not only in Malawi, but also in the region. The nature of the industry is characterised by monopolistic competition where the magnitude of the profits can only decrease with the introduction of more competition in the sector,” Cliff Chiunda, Principal Secretary (PS) in the Ministry of Industry and Trade has said.
With over 80 percent of adult Malawians unbanked, Chiunda said there are opportunities for expansion of existing banks as well as room for new banks to offer their services.
Chiunda was speaking during a news conference on Tuesday evening when he read out a 14-page communiqué marking the conclusion of Malawi Investment Forum (MIF) held at the Bingu International Convention Centre (Bicc) from June 29 to 30.
The PS was specifically wooing potential investors in the financial services sector which also provide capital market, foreign exchange transactions and insurance services, among others.
Said Chiunda: “There are opportunities to provide various forms of electronic banking though financial institutions themselves or through technology providers.”
Citing a number of innovations in the banking sector, Chiunda said an automated transfer system has been implemented in Malawi which has improved efficiency and volume of bank transactions.
“The improvements in the National Switch [NAT Switch] has opened up opportunities to reduce cash based payments from as high as 60 percent at present,” he said.
Chiunda said there are also opportunities for long-term and project financing saying currently the domestic economy is bank-based and hence concentrated with short-term finance which he said is expensive.
He also stated that Malawi has few insurance products on its market and more products are necessary, hence, need for more investors in the insurance market.
“Additionally, the trend now in most economies is where banks are also offering insurance services,” he said.
In May this year, the Reserve Bank of Malawi (RBM) said it remains worried that 80 percent of Malawian adults are unbanked.
RBM director and banks supervisor Eldin Mlelemba indicated that the central bank has lined up several initiatives ensuring that a majority of Malawian adults should be banked.
“The central bank and other commercial banks, we want to make it possible that majority of Malawians have access to banking services,” said Mlelemba.
Currently, Malawi has 12 commercial banks namely National Bank of Malawi (NBM), Standard Bank Malawi, NBS Bank, FMB, Nedbank, Indebank, Malawi Savings Bank (MSB), Opportunity International Bank Malawi, Ecobank, FDH Bank, CDH Investment Bank and New Finance Bank.
