As early as 6.30am, Enelesi Phiri has to prepare her shop for the day’s business. She makes sure her phone is fully charged and loaded with money.
After completing training in accounting, Phiri works with Shawa Diamonds Mobile as a mobile money agent in Malangalanga, a busy area of Lilongwe City.
By 7am, customers are already requesting mobile money transactions.
“Customers come here to send money to their relatives, children and businesses because it is very fast and convenient. They also come to withdraw money sent by others from elsewhere,” she says.
As time rolls towards midday, Malangalanga is buzzing with activity. Several other mobile money agents have opened their shops—all serving their customers.
Phiri became a mobile money agent in November 2019 and the business has been good.
On a good day, she assists customers withdraw about $6 500 and $3 000 as deposits. Phiri also sells airtime.
Mobile money transactions are now common across Malawi. They are easily accessible and fast in sending and withdrawing money.
The entry of these non-bank players into the payments space has changed the payments landscape.
The mobile network, which is either 3G or 4G, reaches almost 88 percent of the population. This has made it easier for people to benefit from mobile money transactions.
The active mobile money accounts in the country rose from fewer than 1 000 to 1.8 million between 2012 and 2017. The proportion of Malawians with a mobile money account increased from four to 20 percent between 2014 and 2017.
Remittances are primarily sent or received through mobile phones.
“It is very convenient for people to send and receive small amounts of money than go to the bank and stand in a queue just for this amount, which is why our transactions are so widely used,” Phiri said.
The 13th edition of the Malawi Economic Monitor shows that the foundations of the country’s digital infrastructure are relatively well-developed.
Digital technologies have the potential to transform all aspects of the economy by lowering the cost of economic and social transactions for firms, individuals, and the public sector.
“Digital investments boost economic growth, expand job opportunities, and improve service delivery,” says World Bank country manager Hugh Riddell.
While mobile money and access to the mobile network has expanded, low electricity coverage has partly contributed to low access and use of broader ICT devices in the country. Additionally, high costs of Internet-smart devices as well as lack of digital skills also prevent the nation from fully benefitting from its digital infrastructure.
In the country, a 300-megabyte monthly mobile data plan costs $1.70, which is 5.4 percent of gross national product per capita per month. Similarly, the cost of a 20 gigabyte plan exceeds monthly gross national income per capita, making it prohibitively expensive for most Malawians.
The economic monitor recognises that Malawi has an opportunity to kick-start digital transformation by enabling the growth of a robust digital economy ecosystem by:
l Improving the enabling environment for the digital economy, including lowering, or removing, distortionary sector-specific taxation for ICT services. Regulatory fees should be tied purely to cost recovery of fees.
lDriving digital transformation and demand through a coordinated public-private innovation venture fund that can mobilise private investment for new digital startups and provide equity capital for established digital firms.
lStrengthening competencies for digital skills and entrepreneurship through investments in infrastructure, and stronger linkages between the government, academia, and private sector.
Malawi’s economic growth is projected to increase to 2.8percent in 2021 and maize harvests will have a one-time jump due to Affordable Inputs Programme (AIP) and favourable weather.
However, looking toward 2022 and beyond, continued universal fertiliser subsidies are unlikely to lead to another boost of maize production and they will not help diversify growth.
Over the long term, AIP will deplete fiscal space and divert resources from most-needed investments.
Therefore, Malawi needs to implement policies to strengthen and diversify growth while reducing domestic borrowing.
It needs to improve growth to at least five percent to increase incomes and employment as well as to reduce a growing domestic debt burden.
The government should continue current efforts to contain the Covid-19 pandemic to reduce vulnerability to future waves.
It should also reduce high fiscal deficits and domestic debt to create a foundation for macrostability and growth, promote diversification and growth to increase incomes and revenues, and invest in shock-responsive social protection systems that can help prepare for future crises.