The Reserve Bank of Malawi (RBM) and Consumers Association of Malawi (Cama) have called for customer-centric approaches to improve access to credit, which is at a paltry three percent.
In an interview in Blantyre on Monday, RBM Governor Dalitso Kabambe observed that despite the private sector growing, access to credit from formal financial services by Malawians is not encouraging.
“We have, for instance, university students with brilliant ideas. Banks need to be thinking of how to reach out to these so that they can access credit.
“Many of these have ideas, but not [acess to] credit. Banks need to be customer-centric to understand the needs of these people,” he said in Blantyre on Monday on the sidelines of the launch of the Credit Awareness Week.
The RBM concern comes against the backdrop of figures showing that in 2018, only 29 percent of the adult population had access to formal financial services, a rise from 16.9 percent in 2014.
Comparatively, a significant proportion of the adult population, at 45 percent, relies on the informal financial sector, a drop from 52.8 percent in 2014 and 22.5 percent of the population had no access to financial products and services down from 32.4 percent in 2014.
Cama executive director John Kapito expressed worry over the treatment consumers get from commercial banks, saying this is a major setback to access credit.
“If banks are to grow credit access and the economy in general, they need to focus on the 97 percent they have left out,” he said.
Bankers Association of Malawi (BAM) president Kwanele Ngwenya admitted communication flaws in some banks, saying they need to ensure more credit uptake and take advantage of business opportunities to grow their businesses.
“As banks, we need to listen more, engage our customer more because when a customer borrows money from the bank, they are entering in a financial obligation as such it is important that both parties understand the agreement,” he said.
Malawi Union of Savings and Credit Cooperatives (Muscco) chief executive officer FumbaniNyangulu highlighted that formal financial institutions have the role to provide to customers knowledge on credit access.
The Credit Awareness Week, which runs up to December 15, will also establish the merits of accessing and borrowing money from licensed or registered lending institutions.