Govt deems interest cap Bill unconstitutional

Despite a sugar-coated remark by Finance Minister Goodall Gondwe Thursday that the Financial Services (Amendment) Bill was being referred to relevant committees of Parliament for further scrutiny, it now appears government is not in favour of the Bill.

On Friday, a day after the National Assembly failed to table the Bill that among other issues seek to put limits on how much interest rates banks, microfinance institutions, Saccos and other lenders can put on loans, the government machinery, through Ministry of Information and Communications Technology, issued a statement, saying it does not support the Bill because it is not consistent with the Constitution of the Republic of Malawi and other existing laws.

Signed the statement: Mussa

But Dowa West MP Alexander Kusamba Dzonzi, Malawi CongressParty (MCP), who tabled the Bill, has reacted angrily to the government’s statement, accusing it of peddling lies and urging them that laws are made in Parliament and not by issuing media statements.  

The statement, signed by Information minister Henry Mussa,says the situation undermines duly constituted institutions such as Reserve Bank of Malawi (RBM) and jeopardises the gains that the economy has made.

Asked why the government side could not put the same grounds in the House as basis to defeat the bill than referring it to relevant committees for scrutiny, Mussa in an interview yesterday said a responsible administration could not have allowed a Bill that has loopholes.

Chidanti-Malunga: We fully support Dowa West

“There are processes we follow. If there were grey areas, we needed to point that out. Stakeholders are supposed to be consulted. This Bill is supposed to be refined, polished and taken back to the House when everything is in order.

“We don’t understand when some critics simply choose not to appreciate the fact that these are acceptable processes we follow,” he said.

Mussa in the statement argues that matters of monetary policy are provided for under Section 185 of the Republic Constitution and the Reserve Bank of Malawi Act under which RBM under the leadership of the Governor are given powers to set and implement monetary policy in this country.

“The Registrar of Financial Institutions has no powers over these matters as is being suggested in this Bill. Any amendments of this nature are, therefore, a violation of the Republican Constitution and as per Section 5 of the Constitution renders them invalid and are tantamount to usurping constitutional powers of the Reserve Bank of Malawi.

“Any amendments in this regard, ought to start from the Constitution and thereafter, the RBM Act,” said Mussa.

But the Dowa West legislator said, in an interview yesterday, that government is lying and that the Section they have quoted doesn’t talk about interest rate charging as an exclusive mandate of RBM.

“What government has demonstrated is failure to understand section 185 of the Constitution. It is sad that government and RBM have chosen to side with the banks when our people are being crushed by the high interest rates.

“All what the Bill is asking government is to heed to the cry of Malawians whose businesses have closed down; Malawians whose houses, farms and other properties have been taken away by banks even after 150 percent of the loan has been paid,” Dzonzi said.

He said he thought government would be in the forefront thinking about the welders, tinsmiths, plumbers, carpenters, taxi owners in Ndirande, Kawale, Chibavi and elsewhere to borrow cheaply to expand their businesses.

“There are no powers of the RBM that will be usurped by this Bill. What Malawians ought to know is that it is the Finance Minister who interferes with the monetary policy by forcing Parliament to pass a deficit budget because the funding of such deficits result in pushing interest rates high.

“But has the RBM blamed the Executive for interfering with the monetary policy? No. Lack of love and care demonstrated by [the governing] DPP administration has encouraged banks to exploit Malawians,” the MP said.

He said despite the irrelevancies the government press release has published, he will closely work with the referred committees of Parliament until the Bill is passed in Parliament to better the lives of Malawians.

Nsanje South West legislator and UTM publicity director Joseph Chidanti-Malunga, said it was clear from the word go that government was not interested in the Bill.

“There is no law that is 100 percent perfect. If government noticed some bad elements in the law, those should have been rectified. On our side, we fully support Dowa West,” he said.

Malunga said the interest rates banks impose are punitive and unacceptable; challenging that UTM would always be there to fight for poor Malawians.

The government statement says section 185 (1) of theConstitution states that there shall be Central Bank known as Reserve Bank ofMalawi established by an Act of Parliament, which shall serve as the State’sprincipal instrument for the control of money supply, currency and theinstitutions of finance and shall serve generally in accordance with the normalfunctions of a central bank. 

Share This Post