By Kingsley Jassi
As the economy is projected to slow down to 1.8 percent this year, the financial sector is on its way towards growth, estimated to rise by 4.4 percent from 4.2 percent last year.
In its recent Financial and Economic Review, the Reserve Bank of Malawi says the growth in the financial sector is driven by increased demand for credit and insurance products.
“The upward revision in 2024 reflects the increase in demand for products and services from the sector, evidenced by the increase in the credit to the private sector on account of the stabilisation in the policy rate.
“In addition, the increase in the use of digital banking and the rise in demand for insurance services has improved performance in the industry, hence a higher growth rate compared to the previous year,” the report reads.
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The central bank projects that the sector would grow further by 5.5 percent in 2025.
One of the financial experts, Lesley Mkandawire, said demand for financial products could be explained by increased efforts in agricultural commercialisation with the development of mega farms and increased interest in tobacco production.
He doubts this is emanating from the other productive areas such as manufacturing, saying the cost of financing is very high currently and could drive high their margins.
“We should look at which specific areas of the private sector are demanding more credit and insurance products with high interest rates. I doubt the private sector could increase borrowing, that would affect their margins,” Mkandawire said.
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Growth for other sectors, including manufacturing and construction, has been revised downwards.
