Commercial bank branches, as measured by geographical presence and in relation to population tripled in the last two years consequently improving access to financial services.
The International Monetary Fund (IMF) Financial Access Survey (FAS) data updated this week indicate that bank branches per 1 000 square kilometres more than tripled, rising to 3.04 in 2013 from 0.96 in 2011.
Along with the improvement in geographical presence, commercial bank branches per 100 000 adults rose by over 200 percent to 3.31 from 1.05 within the same period.
But regardless of the increase in the commercial bank branches, Malawi trail neighbouring Zambia and Zimbabwe which stood at 4.85 and 5.12 per 100 000 adults in 2013 respectively while Tanzania stood at 2.56 branches per 100 000 adults.
The FAS is the sole source of global supply-side data on financial inclusion, encompassing internationally-comparable basic indicators of financial access and usage.
The FAS data, however, indicates that ATMs by both geography and relative to population have not risen as much as the commercial bank branches with the machines rising only by about 26 percent from 3.76 to 4.74 between 2011 and 2013.
However, presenting the budget two weeks ago, Minister of Finance, Economic Planning and Development Goodall Gondwe said government has removed Customs Procedure Code 487 which allowed duty free importation of goods by banks covering ATMs, Point of Sale (POS) devices and mobile banking vans.
Clarifying the measure, Malawi Revenue Authority (MRA) said that this means that commercial banks will pay 10 percent import excise and 16.5 percent import VAT on POS devices and 16.5 percent import VAT on ATMs and mobile banking vans.
Presenting the budget statement, Gondwe argued that government believes that the implementation of this measure over the past two years has supported the banking sector enough and enabled the expansion of the banking services.
Bankers Association of Malawi (BAM) president Misheck Esau is however worried that the withdrawal of the tax waiver will likely slow down the financial inclusion, which has jumped 14 percent within five years to 54 percent, according to a latest Finscope study.
Regardless of the increase in financial inclusion, the Finscope study reveals that level of borrowing from formal credit providers—mainly banks, has dropped slightly apparently pointing declining demand due to high interest rates.
According to the study released recently, other formal credit providers including Microfinance Institutions (MFIs) have steadily increased the number of people accessing financial services with an increase from 231 591 in 2008 to 276 366 currently borrowing in 2014 while a further 400 000 Malawians claimed to have previously borrowed money from MFIs. According to the survey the majority of these borrowers borrow from Village Savings Loan Association (VSLA).
