Credit to the private sector edged up to 9.9 percent in August 2020 from 5.2 percent in the previous month, Reserve Bank of Malawi (RBM) figures have shown.
In its published August 2020 Monthly Economic Report, RBM figures indicate that this is, however, 18.8 percent lower than what was was recorded in the corresponding period of 2019.
Reads the report in part: “Month-on-month private sector credit increased by 2.6 percent [K14.3 billion] to K573.5 billion in August 2020 compared to a contraction of 1.2 percent in July 2020.
“During the month, all loan categories, including individual and household loans, mortgages, foreign currency denominated loans and commercial and industrial loans increased by K8.3 billion, K3.0 billion, K2.1 billion and K2.0 billion, respectively.”
In terms of economic sectors, the monthly increase in private sector credit emanated mainly from community, social and personal services (K7.2 billion); manufacturing (K5.7 billion); wholesale and retail trade (K4.7 billion); financial services (K2.8 billion); and construction (K1.4 billion) sectors.
Conversely, credit to agriculture, forestry, fishing and hunting and transport, storage and communications sectors declined by K6 billion and K1.3 billion, respectively.
However, the wholesale and retail trade sector continued to hold the largest stock of the outstanding private sector credit at 23.8 percent, followed by agriculture sector at 19 percent, community, social and personal services sector at 16.3 percent and manufacturing at 16.2 percent.
For months now, RBM has maintained the policy rate at 13.5 percent.
National Working Group on Trade Policy chairperson Frederick Changaya told Business News that the private sector would have loved a policy rate reduction as it competes regionally with economies whose policy rates are single digit.
He said: “This makes export growth difficult. It even spoils import substitution effort. As a result, we cannot achieve sustainable and meaningful economic growth.
“But we can do with the maintained policy rate. I guess on the balance of things it is fair.”