National Bank of Malawi (NBM), on Friday said the cost of credit on the local market remains high for the majority of Malawians, including the youth.
NBM Chief Executive Officer, Macfussy Kawawa, was speaking in Lilongwe on the sidelines of an interface with young entrepreneurs.
Kawawa said, although the cost of borrowing had been coming down in recent years, it remains on the higher side.
He said there was action NBM was taking to make the cost of borrowing cheaper.
“One measure we have taken is that we have operationalised our long-term financing arm, the NBM Development Bank, so that start-up capital will be one of the types of finance we will be providing and the cost, thereof, will be slightly lower than that of facilities that will be available under commercial banking.
That’s our way of making sure that we can extend cheaper credit.
“But let me emphasise that we need to work towards making sure that the cost of doing business is low for banks to afford to pass on those benefits through low lending rates,” Kawawa said.
He said NBM was committed to supporting the youth of the country to realise their entrepreneurship dreams.
“We are also having programmes to do with youth innovation activities where we are encouraging youths to innovate and those that impress us would have some support and all this would go a long way in encouraging the youth to participate more in business activities,” Kawawa said.
He said, through NBM Development Bank, the bank would be able to offer collateral-free facilities by just looking at the idea and supporting it in deferent forms, whether through direct capital injection or extending a long-term loan at interest slightly lower than that imposed by commercial banks.
“However, we expect the entrepreneurs to be serious so that, once things start moving, they will pay back as promised.
“We have started on a path that would benefit the bank and young entrepreneurs,” Kawawa said.
One of the entrepreneurs, Allan Chidzanja, hailed NBM for organising the interface which, he said, enabled the youth to understand some of the facilities the bank offers.
Chidzanja said the interaction also helped the youth to meet each other and share ideas.
Malawi’s policy rate stands at 13.5 percent.