The World Bank-funded five-year Financial Sector Technical Assistance Project (Fstap) amounting to $28.2 million (K9.8 billion) will help to increase financial access to 60 percent of the population, the Reserve Bank of Malawi (RBM) has said.
The need to increase financial access is on the premise of a Finscope Study conducted in 2008 which indicated that a paltry 19 percent of the country’s 14 million people use formal financial institutions and that financial services are not contributing fully to economic growth and poverty reduction.
Fstap project manager MacDonald Mafuta-Mwale said the project will aim to accelerate financial inclusion by 2016 from the current figure to around 60 percent, and also ensure that financial services contribute to inclusive economic growth.
“We still believe it is no longer at 19 percent, it has gone beyond that. The beneficiaries of the project are the currently excluded adult population,” he said, adding that the RBM has since contracted a local firm, Wadonda Consult, to conduct another study on financial inclusion.
Mafuta-Mwale said the project is in five components of financial sector regulation and supervision, financial infrastructure, consumer protection and financial literacy, financial sector policy and implementation support.
He said, among others, the project will also help to develop regulation for mobile money transfer and mobile banking so that they operate within the confines of the law.
Of particular interest is the consumer protection and financial literacy which Mafuta-Mwale said will be rolled-out in all the country’s schools.
“Our kids will start learning personal finance. This will really change our perception of the banks and the financial sector in general,” he said.
Meanwhile, the RBM has said the country’s payment system has helped to support its core functions such as monetary and financial stability, monetary policy, speed of funds transfer and financial inclusion, according to the director of national payments system Fraser Mdzawika.
He said since the national payments system came into being, there have been a number of projects that have been implemented such as the Malawi Interbank Transfers and Settlement System (Mitass) with a daily transaction of K19.1 billion, Malawi Switch Centre Limited (Malswitch) and the Electronic Cheque Clearing House (Ecch) which has reduced the clearing cycle of cheques.
Mdzawika said Malawi is currently testing and will soon be connected to Sadc Integrated Regional Electronic Settlement System (Siress), which went live in July and the Comesa Regional Payment and Settlement System (Repss).
Meantime,the legal framework with the Payment Systems Bill (2013), is yet to go to Parliament.