The Reserve Bank of Malawi (RBM) says growing levels of bad loans and reduced access to banking services are negatively impacting access to credit by the private sector.
Speaking during a media workshop on the Malawi Financial Literacy Campaign on Credit Reporting and Movable Asset-based Lending yesterday in Blantyre, RBM consumer protection and financial literacy chief examiner Madalitso Chamba said as a consequence, credit ratio to the private sector, currently at 34 percent, is fast dwindling.
She said: “We all agree that credit is key to the development of a country. High levels of bad loans from the financial sector are making institutions to shun credit issuing.
“This underscores the need for financial literacy to build capacity so that people use credit effectively and pay back to have a good credit history.”
Chamba said that while financial inclusion has increased to 88 percent from 78 percent within five years, only 13 percent of the population has access to bank accounts while majority are on mobile money.
Launched in January this year, the campaign is expected to address the country’s fundamental production challenges focusing on credit provision by encouraging the use of asset-based lending to promote increased access and usage of credit.
Among others, the movable asset-based lending allows the use of personal property such as machinery, shares, financial statements and vehicles for collateral for credit.
Data shared during the workshop shows that as at March 2025, Malawi Stock Exchange-listed NBS Bank plc had issued K10.4 billion in movable asset lending to 372 customers with assets valued at K14 billion as collateral.
Other financial institutions are also following suit, according to RBM.
Meanwhile, the public sector continues to dominate the credit market, having accumulated K6 trillion while the private sector stood at K1.5 trillion as at December 2024.
On the other hand, the share of bad loans, or non-performing loans ratio for the banking sector rose from 6.7 percent in October 2023 to nine percent in October 2024, exceeding the regulatory threshold of five percent for over 12 months, according to published RBM data.
Meanwhile, RBM financial literacy examiner Adrian Namata said during the workshop that access to credit has been on the decline, with most consumers failing to access credit despite the existing demand.
Credit Reference Bureau marketing officer Alfred Mtira has since asked consumers to safeguard their credit status by accessing credit reports to know their financial status and protect their identities.
In Malawi, Credit Data Reference Bureau Limited and TransUnion Malawi provide credit reports.
