The Reserve Bank of Malawi says a rebound in economic activity in the second quarter of this year pushed up credit to the private sector.
In its Monetary Policy Report for July published on Tuesday, the central bank said during the review period private sector credit grew by 20.7 percent from17.4 percent in the first quarter.
“On monthly basis, private sector credit expanded to K738.6 billion in May from K723.4 billion in April,” said the report.
The report shows that the notable credit increases were K20.5 billion for the commercial and industrial loans and K1.1 billion for individual loans.
However, repayments were made in respect of mortgages at K4 billion and foreign currency denominated loans at K2.9 billion.
Commenting on the growth, Chamber for Small and Medium Businesses Association president James Chiutsi said businesses took advantage of the marketing season to borrow to boost their ventures.
He, however, said the rising cases of Covid-19 which is a major concern for local businesses has continued to burden businesses.
Said Chiutsi: “The rise in credit does not necessarily mean all is well for businesses.
“This partly reflects the marketing season in which businesses took advantage of the period and events to borrow to finance various activities that come along with the marketing season.”
In terms of sectoral credit concentration, the report shows that concentration remained high and dominant in the community, social and personal services, wholesale and retail trade and agriculture, forestry, fishing and hunting sectors.
Commercial banks have since mid-last year offered a moratorium on interest rates in response to Reserve Bank of Malawi’s call to effect the measure to cushion customers who are in financial distress induced by the Covid-19 pandemic.
Borrowers were granted relief not to be repaying their loans on condition that their businesses and cash flows have been affected by the Covid-19 pandemic.