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RBM moves to boost private sector credit

Reserve Bank of Malawi (RBM) says credit reporting and asset based lending will solve the country’s production challenges by improving the private sector’s credit access through borrowing using movable assets.

The development comes at a time the public sector continues dominating the credit market, having accumulated K5.7 trillion debt stock from the banking system as of November 2024 compared to private sector’s K1.5 trillion.

Speaking during the launch of a financial literacy campaign on credit reporting and asset based lending in Blantyre yesterday, RBM Governor MacDonald Mafuta-Mwale said the law only enhanced financial inclusion while credit access remains an issue, with only 10 percent of Malawians able to obtain loans from financial institutions.

Stakeholders follow proceedings at the launch of financial literacy campaign. | George Lumwira

He said the one year campaign, which is designed to address the country’s fundamental production challenges, hinges on access to capital, adding that when people borrow using movable capital like livestock or vehicles, most enterprises can borrow and boost production.

Said Mafuta-Mwale: “The economy is not producing. This is providing the solution because people will use their movable assets to access capital and invest in businesses that boost production and eventually exports.

“No matter where you are, no matter the financial position you are, turn out your assets to access capital for production. Let’s take the message as it is, let’s relate it to the right people.”

When asked if this can change the current situation where government dominates the credit market, Mwale was optimistic, saying the credit reporting encourages people to obtain their credit status cards from credit reference bureaus which would prompt banks to lend them money.

In his address, deputy registrar general Joseph Chintolo encouraged people to register their movable assets with its collateral registry to benefit from the credit market using asset-based lending saying such registration provides proof of ownership to banks.

He said: “Personal Property Security Registry is more than registry, it is a symbol of progress. We need to measure our progress by realising our asset stocks.

“The collateral registry is very viable, over 34 000 financing statements have been registered and the majority of people who are accessing loans using movable property are those who are taking small loans which one would consider small and medium enterprises.”

Meanwhile, International Finance Corporation (IFC), one of the financiers of the campaign, described the awareness campaign as key to unlocking the country’s financial inclusion further and increased economic activity for private sector.

In an interview, IFC country manager for Ethiopia, Malawi and Zambia Madalo Minofu said financial literacy empowers individuals to make sound financial decisions, manage their money effectively, and achieve financial stability and security.

The IFC portifolio in Malawi includes investments in financial markets, infrastructure, and agribusiness as well as advisory services programmes supporting both the private and public sectors.

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