Commercial banks’ extension of credit to the private sector surged to 32.7 percent in the second quarter (Q2) of 2025, up from 17.8 percent, a development experts attribute to seasonal trends and banks’ willingness to lend to firms amid piling government domestic debt.
In the corresponding period in 2024, according to the Reserve Bank of Malawi (RBM) Financial and Economic Review for Q2, the sector recorded 31.8 percent credit access. This means that on a year-on-year basis, it increased by 0.9 percentage points.
Data contained in the report show that the private sector added K402.8 billion to peak at K1.9 trillion in the quarter with expansions being registered in manufacturing, agriculture, forestry, fishing and hunting, community, social and personal services and wholesale and retail trade.
Reads part of the report: “Growth was recorded in foreign currency-denominated loans, commercial and industrial loans and individual loans amounting to K165.2 billion, K125.4 billion and K104.7 billion, respectively.”
Meanwhile, total credit from the banking system to the domestic economy increased by K1.3 trillion to K9.4 trillion as the public sector continues to dominate as it added K847.9 billion to K7.3 trillion in the quarter.
In an interview on Monday, financial expert Brian Kampanje said the quarter-to-quarter comparison is sometimes obscured by fluctuations considering that in the second quarter, the rate was 31.8 percent indicating a meagre 0.9 percentage points growth.
He said: “There is, however, a positive trajectory in the manufacturing sector as credit increased from 14 percent of the total lending to the private sector to 20.7 percent. This is certainly a positive sign of possible increase in the supply side of the economy.”
In a separate interview, economist Gilbert Kachamba said the growth in private sector credit suggests that banks are now apprehensive about lending to the government after looking at how much domestic debt has ballooned over the past couple of years.
“They would rather lend to the private sector now and they can afford to take on a bit of risk since they are sitting on healthy levels of liquidity,” he said.
Speaking at its Investor Day last Thursday in Lilongwe, Standard Bank plc head of personal and private banking Charity Mughogho said although the bank lends significantly to the government, its K400 billion loan book also consists of considerable customer loans to ensure it balances up.
Earlier this year, RBM Governor MacDonald Mafuta Mwale said credit reporting and asset-based lending is expected to accelerate private sector credit access through borrowing using movable assets.
He said the credit reporting and asset based lending campaign which the bank is implementing this year wants to address the access to capital challenges, saying when people borrow using movable capital like livestock or vehicles, most enterprises can borrow and boost production.
