Development economist Dalitso Kabambe says Malawi’s credit crisis is due to a “broken system” that prevents citizens and small businesses from accessing loans on viable terms.
According to the April 2026 World Bank Africa Economic Update, 57 percent of Malawian entrepreneurs rely on personal savings while 19 percent rely on family and friends with three percent relying on formal sources.
On the other hand, four percent relied on informal sources while 14 percent had no access to any form of credit.
The economist-cum-politician argued that excessive government borrowing has crowded out private sector lending, leaving banks with little incentive to finance businesses, urging urgent reforms to rebuild Malawi’s credit architecture.
Kabambe also pointed to high inflation, the 24 percent policy rate, and rising public debt as key factors worsening access to finance alongside structural barriers including lack of land titles, weak national addressing systems and absence of a comprehensive national identity database.
He said: “The government is consuming the system’s available credit and leaving crumbs for everyone else.
“A functional credit system does not only grow the economy, it protects relationships by removing financial pressure from families.”
In recent months, commercial banks have been reducing their lending rates following policy rate adjustment by the Reserve Bank of Malawi (RBM), a development analysts argued is not significant enough to transform the investment climate.
Cumulatively, commercial banks have cut lending rates since February from 25.2 percent to 24.7 percent before dropping twice in March to 23.7 percent and 22.4 percent after the RBM cut policy rate from 26 percent to 24 percent.
However, Mzuzu University economics lecturer Christopher Mbukwa observed that Malawi’s lending rates, ranging between 25 and 37 percent and among the highest in the region, are not only a deterrent, but also suppress enterprise growth.
He said: “Most enterprises find these loans expensive and uncertain. The repayment periods are oftentimes considered too short and to get the formal loans, businesses are required to meet strict requirements.”
Earlier, Bankers Association of Malawi president Phillip Madinga is quoted as having said banks wanting to make loans competitive while maintaining their sustainability will depend on inflation direction.
