With seven recessions that have affected rain-fed agriculture in Malawi’s 55 years of independence, Reserve Bank of Malawi Governor Dalitso Kabambe believes that banking commercial banks’ hopes solely in investments in the agriculture sector is akin to putting all eggs in one basket.
It is a tricky situation, but one fraught with opportunities for investments in other sectors of the economy, Kabambe told delegates to the Institute of Bankers (IoB) fourth annual general meeting held under the theme ‘Financial Sector Synergies: A Catalyst for Financial Inclusion’ held on Friday and Saturday in Mangochi District.
“In terms of banks, they have to focus on sectors such as mining, transport, tourism, manufacturing, in line with Malawi Growth and Development Strategy. It is also high time banks started investing in promising business ideas. In other countries, commercial banks single out students with brilliant ideas, finance such ideas until such a time the idea starts attracting investors. That is the way to go,” Kabambe said.
He cited Africa Export-Import Bank (Afreximbank), which in July this year pledged to facilitate investments in the tourism sector.
President Peter Mutharika, who had an audience with Afreximbank President, Benedict Oramah, said Malawi would access a $1 billion facility from the bank.
Oramah also said Afreximbank was ready to finance private sector projects in the country, including the construction of the Liwonde Dry Port.
Addressing the bankers, Kabambe said: “Let banks invest in manufacturing. It is high time we identified specific projects. Banking should bring resources to finance projects. That is why, when Afreximbank officials came, they recognised tourism as one area with potential in the country. As rains fail, tourism, mining could be fertile grounds for investment.”
IoB President, Kwanele Ngwenya, who is also NBS Bank Chief Executive Officer, concurred with Kabambe.
“The banking industry is the nerve centre of economic growth and does so by providing loans.
“Commercial banks are ready to invest in loans and play a key role in driving economic growth. That said, economic growth is driven by a number of factors, including level of interest rate. When the environment is conducive, commercial banks stand ready to play their rightful role in national economic development,” Ngwenya said.
Malawi has recently seen a decline in bank lending interest rates, moving from as high as 37 percent at one point to 24 percent and below.