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Home Business Business News

Treasury hails NBM Development Bank

by Steve Chilundu
09/09/2019
in Business News
3 min read
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Minister of Finance, Economic Planning and Development Joseph Mwanamvekha has commended National Bank of Malawi plc for establishing the NBM Development Bank Limited, saying it will contribute to the country’s economy and poverty alleviation.

Speaking during the launch of the bank in Lilongwe on Friday, the minister said the Malawi Stock Exchange-listed bank is the first institution to establish a purely private sector-led development bank.

Mwanamvekha (L) hands over operational licence to Kawawa

He said the development bank has come at a time interest and inflation rate are low and stable for more than three years.

“After having a stable economy for about three years, our agenda now moving forward is to achieve growth. We would like to take advantage of the lower interest rates, the stable exchange rates and also reduce domestic borrowing.

“The setting up of this development bank will ultimately contribute to poverty reduction. We have never had such a private sector bank in the country, and as government, we are happy with this development,” said Mwanamvekha.

Speaking at the same event, Reserve Bank of Malawi Governor Dalitso Kabambe said the development bank will bridge the gap of the lack of long-term financing.

He said there has been a mismatch in the financial sector as people have been borrowing from commercial banks for long-term investment while the nature of the banks is to offer short-term loans with immediate repayment.

NBM Development Bank Limited chairperson MacFussy Kawawa, who is also chief executive officer of NBM, said the development bank is what businesses have been demanding over the years.

He said the bank will take up all viable investment proposals for capital facilitation.

“We have sufficient capacity to take up more projects that need financing. As a financial institution, apart from our own capital we also rely on external capital.

“Under the commercial bank licence, we have had approaches by external long-term financiers but we did not take that up because we couldn’t do that under commercial licencing,” he said.

The development bank will provide long-term financing for small and medium enterprises and other life-changing investments.

The bank is expected to be providing loans ranging from K15 million to K150 million and K200 million in exceptional circumstances, with a grace period of two years and interest rates from 15 to 18 percent.

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