Businesses, Cama differ on interest moratorium benefit

Businesses and Consumers Association of Malawi (Cama) have differed on the benefits of the moratorium on payment of interest and principal on loans meant to help businesses remain afloat in times of the Covid-19 pandemic.

The moratorium on interest rates was effected by banks from April last year in response to Reserve Bank of Malawi’s (RBM) call to effect the measure to cushion customers who were in financial distress induced by the Covid-19 pandemic.

According to Chamber for Small Scale Business Association executive secretary James Chiutsi,  the stance by the central bank and commercial banks had a noticeable impact on small and medium enterprises (SMEs).

“The extension of the same from the banks is thus welcome as this measure has positive impact on SMEs,” he said in a written response to questions on Monday.

On his part, Indigenous Businesses Association of Malawi (Ibam) president Mike Mlombwa also said businesses have had  breathing space thanks to the moratorium on interest rates.

He said with the rising cases of Covid-19; which is a major concern for local businesses, the moratorium has and continues to ease the burden on businesses.

Said Mlombwa: “Almost all business, including us in the transport sector, are operating at a minimal capacity due to the Covid-19 effects.”

But Cama executive director John Kapito, while indicating that the moratorium has had its positives, said what authorities missed was to have a model suitable for the Malawian economic and social dynamics.

He said: “It is unfortunate that only a few consumers benefited from such an initiative that was initiated at a time when the Covid-19 pandemic was not as hostile as it is today.”

On her part, Bankers Association of Malawi chief executive officer Lyness Nkungula insisted that the moratorium has helped a number of stakeholders to be afloat.

She indicated that bank customers have overwhelmingly applied for the facility and granted access, but highlighted that banks hope that the pandemic will ease so that things normalise.

“The moratorium has only given a relief and still customers have to repay the loans, so we only have to pray that businesses pick up for the betterment of businesses and the economy,” she said.

Nkungula said customers in dire distress due to Covid-19 effects are encouraged to engage their banks for the flexible loan facilities. 

RBM spokesperson Onelie Nkuna has since said as the Covid-19 situation is not yet under control, the central bank has asked banks to continue implementing measures for the next six months subject to review in June 2021.