The Reserve Bank Governor Charles Chuka is out of order by issuing threats that we stand to be ripped off if we invest our hard earned money in new financial schemes that are slowly gaining ground in the country.
The Governor and his team at RBM should know better why people are shunning the formal banking system and falling prey to Ponzi Schemes.
In case you are wondering why I am enraged, here is little background information.
The Reserve Bank of Malawi (RBM) last week issued a statement warning the public against falling prey to unlicensed financial or investment schemes that the central bank claimed have so far ripped off many people. (No number of people or amount was provided).
But RBM, which is the registrar of financial institutions, went on to advise the investing public to demand evidence of registration with the central bank before dealing with suspicious institutions.
Chuka—who signed the statement—said the central bank has noted that these institutions invite unsuspecting members of the public to join their schemes by paying an initial non-refundable entry fee.
According to Chuka, paid-up members are allowed to deposit investment funds with the schemes where the initial investor is then encouraged to recruit more people to accrue increased benefits.
“The bank wishes to inform and warn the public not to deal with unregistered financial service providers such as Pyramid and Ponzi schemes. The general public is further warned that any person doing financial business with unlicensed or unregistered financial institutions does so at their own risk,” he warned.
Now wait a minute Mr. Chuka. Are you not supposed to establish first why people are shunning commercial banks before you attack the new players on the market?
Word on the street is that, Chuka, just like his boss, APM are out of touch with reality.
What Chuka should know is that for many years, it has been business as usual for most commercial banks, and year-in year-out these banks have been posting super profits. But the coming in of innovative cooperatives such as banki nkhonde, office or village banks and Pyramid Schemes, the tide has turned on banks.
Should RBM now be fighting for the survival of commercial banks? Hell no.
Malawians are too poor to save their money in a bank that has no interest of a poor Malawian at heart. That aside, Malawians are too poor to save. A World Bank report Banking the Unbanked found that over 80 percent of Malawians find bank accounts not tailored to their needs.
The report also found that other factors such as transactional charges and distance drive away poor people from mainstream banking.
So if we add poor service, the gloomy bank teller, the ever non-functional ATMs, congested banking halls, high interest rates and zero interest on savings, useless bank fees and non-availability of loans tailor-made for the poor, you will see why people shun RBM regulated commercial banks. RBM must deal with these thorny issues.
In other words, Mr. Chuka commercial banks you regulate are old fashioned and unappealing to an average millennial.
What RBM must also know is that people in this country are poor but they are not daft. If poor people are taking a risk to invest in ‘Pyramid and ‘Ponzi, then something is seriously wrong with the banking system.
Commercial banks have been acting with impunity for many years and all RBM has done is to look the other way. The private sector in this country is wilting on RBM’s watch because commercial banks have no programmes to support industry growth.
These days, commercial banks have become specialists in repossessing customer’s property instead of helping them to get back on their two feet with products that can promote growth.
Word on the street is that, RBM and commercial banks are responsible for the mushrooming of illegal schemes and unregistered financial institutions in the country because commercial banks have been shortchanging Malawians.