As Malawi approaches its September 2025 general elections, political manifestos are once again filled with promises of infrastructure, education, and job creation. Yet, one critical pillar of economic transformation is conspicuously absent: banking reform. Specifically, the urgent need to expand the number of banks across the country. I haven’t seen pledges to set up national, regional and district investments banks across the country.
Malawi, one of the poorest nations in the world, doesn’t just need better banks— it needs more banks. And this is not just a matter of convenience; it’s a matter of urgent economic survival.
Drawing on the work of Richard Werner, a world-renowned economist known for his theory of credit creation, we begin to understand why banking is not merely a service but a powerful engine of economic development. Werner argues that banks are not intermediaries that lend out deposits, as commonly believed.
Instead, banks create money through the process of credit creation. When a bank issues a loan, it simultaneously creates a deposit in the borrower’s account— effectively generating new money. This means that banks have the unique ability to expand the money supply and stimulate economic activity, especially when credit is directed toward productive sectors like small and medium enterprises (SMEs).
In Malawi, however, this engine is sputtering. The country has fewer than a dozen commercial banks serving a population of over 20 million. Most of these banks are concentrated in urban centres, leaving rural districts underserved and unbanked. According to the Reserve Bank of Malawi, only about 30% of Malawians have access to formal banking services. This leaves the majority of citizens—especially small business owners, farmers, and informal traders—without access to the credit they need to grow their enterprises.
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The big banks that dominate Malawi’s financial landscape are often risk-averse and profit-driven, focusing on large corporate clients and government bonds. They rarely extend credit to small businesses in districts like Chitipa, Nsanje, or Ntcheu. The result is a financial system that excludes the very entrepreneurs who could drive local development and job creation.
Imagine a different model: one where each district in Malawi has at least three banks, or at least an investment bank of its own, tailored to the specific needs of local businesses. A bank in Mzimba might specialise in agricultural finance, offering loans for irrigation and livestock. A bank in Mangochi could focus on tourism-related enterprises, while one in Zomba might support educational startups and tech hubs. These district-level banks would be closer to the people, more responsive to local conditions, and better positioned to channel credit into productive uses.
This decentralised banking model is not a fantasy. It’s a proven strategy in countries like Germany and China. In fact, China’s economic miracle over the past four decades was made possible in large part by the aggressive expansion of its banking sector. The Chinese government licensed thousands of local banks and credit cooperatives, which flooded the economy with credit targeted at SMEs, infrastructure, and manufacturing. Today, China leads the world in banking assets and has one of the most extensive banking networks globally.
According to World Bank data, countries like Germany and France have over 30 commercial bank branches per 100,000 adults, while Malawi lags far behind. This disparity is not just statistical— it’s structural. It reflects the difference between economies that empower their citizens with access to finance and those that leave them behind.
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The political implications are profound. If Malawi is serious about creating millions of jobs, it must empower its SMEs. And SMEs cannot thrive without access to capital. This is where political parties must step up. Instead of vague promises about job creation, they should commit to banking reform that includes licensing more banks, encouraging district-level financial institutions, and ensuring that credit flows to the productive sectors of the economy.
Moreover, expanding the banking sector would have ripple effects across society. It would increase financial inclusion, reduce poverty, and stimulate innovation. It would also enhance the resilience of local economies, making them less dependent on foreign aid and more capable of self-sustained growth.
As we look ahead to the elections, it’s time for political leaders to recognise that banking is not just a technical issue—it’s a strategic lever for national development. The current number of banks is woefully inadequate for a country with Malawi’s aspirations. We need a bold vision that sees banking as a tool for empowerment, not just profit.
For Malawi to rise, we must bank the unbanked, finance the unfunded, and support the unseen entrepreneurs in every district. The road to prosperity runs through the doors of local banks. Let’s build them.
