Private sector credit demand rises, hits K899bn
The Reserve Bank of Malawi (RBM) says annual growth in private sector credit accelerated to 21.8 percent in May 2022 from 13.3 percent in April 2021and 20.5 percent in a corresponding month of 2021.
On a monthly basis, the stock of private sector credit increased by K80.4 billion or 9.8 percent to K899.9 billion in May 2022.
This follows another expansion of K16.9 billion or 2.1 percent in the preceding month.
In its June 2022 Monthly Economic Review, RBM said that the monthly increase in the private sector largely reflected an increase in seasonal facilities for business activity as the agricultural marketing season progresses.
Reads the review in part: “This development was largely explained by commercial and industrial loans, foreign currency denominated loans, individual loans and mortgages increased by K29.8 billion, K27.7 billion, K16.9 billion and K5.5 billion, respectively.”
In terms of economic sectors, the report further shows that private sector credit increased in almost all sectors where Agriculture, Manufacturing, Wholesale and Retail recorded K32.0 billion, K19.0 billion, K12.6 billion, increases respectively.
On the other hand, Community, Social and Personal Services, Restaurants and Hotels, Transport, Storage, and Communication; Construction, Financial Services, and Mining sectors recorded increases of K5.5 billion, K4.4 billion, K3.7 billion, K1.4 billion, K925.6 million and K166.4 million, respectively.
Accordingly, the community, social and Personal Services sector continued to hold the largest share of outstanding private sector credit at 31 percent, followed by the Wholesale and Retail Trade at 22.3 percent, Agriculture, Forestry, Fishing and Hunting at 18.6 percent, and Manufacturing at 11.1 percent.
Consumers Association of Malawi executive director John Kapito said in an interview yesterday that faced by the challenging macroeconomic environment, consumers are being forced to seek relief from commercial banks, a development he said has pushed up the demand for personal loans.
He said: “Most of the consumers are borrowing for consumption. Our key economic drivers are not performing well to boost economic activities.”
