The Institute of Bankers in Malawi (IoB) says despite most people being poor and working in the informal sector, they still save, borrow and manage day-to-day expenses; hence, the need to enhance financial inclusion.
IoB Malawi chairperson Eric Ouattara said this in Mangochi last week during the Third Bankers Annual Conference under the theme Financial Sector Synergies: A Catalyst for Financial Inclusion.
He said: “However, without access to a bank, savings account, debit card, insurance, or line of credit, for example, they [people]must rely on informal means of managing money.
“This includes family and friends, cash-on-hand, money lenders or keeping it under the mattress. Sometimes these choices are insufficient, risky, expensive, and unpredictable.”
Ouattara, who is also managing director of FDH Bank, said evidence shows that appropriate financial services can help improve individual and household welfare and boost small-scale enterprises.
Over the years, research has shown that more inclusive financial markets are directly linked with economic growth and employment.
In his keynote address, Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe said the local financial system has aligned itself to global standards and best practices by fully adopting the International Financial Reporting Standard (IFRS) 9 early this year.
This has replaced the Incurred Credit Loss (ICL) model, as guided by the International Accounting Standards Board (IASB).
Kabambe said the banking sector remains sound and stable.
“The sector was adequately capitalised as at the end of June 2018 with both core and total capital ratios at 15.5 percent and 19.2 percent, respectively, above the minimum regulatory benchmarks of 10 percent and 15 percent,” he said.
IoB is the training arm of the Bankers Association of Malawi (BAM), which is a grouping of commercial banks in the country.