Credit to the private sector from financial institutions maintained an upward trajectory in June, hitting K1.1 trillion, figures from the Reserve Bank of Malawi (RBM) show.
The value grew by K100 billion within a month.
In its June 2023 Monthly Economic Review issued on Wednesday, RBM says annual growth of private sector credit strengthened to 19.4 percent in June 2023 from 15.9 percent in May 2023.
But it was lower than 27.4 percent registered in June 2022.
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“The outturn was attributed to a rise in commercial and industrial loans (K47.0 billion), individuals and household loans (K16.7 billion) and foreign currency denominated loans (K1.0 billion).
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“However, a net repayment of K78.5 billion mortgages somewhat eased the pressure on private sector credit,” the report reads.
Growth in credit access was recorded in the manufacturing sector, at K22.8 billion, community, social and personal services at K18.9 billion and agriculture, forestry, fishing and hunting at K9.9 billion.
Financial services sector credit was seen at K6.2 billion while credit to the construction sector stood at K4.0 billion.
Wholesale and retail credit stood at K1.9 billion while credit to electricity, gas, water and energy sectors was at K1.2 billion. Restaurants and hotels accessed credit worth K631.4 million.
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“In contrast, the transport, storage, communication, real estate, mining and quarrying sectors reported net repayments of K533.1 million, K182.0 million and K4.2 million, respectively,” the report adds.
Economist from the University of Business and Applied Sciences Betchani Tchereni said the movements of manufacturing surpassing community, social and personal services may be a result of monetary policy adjustments.
“Nevertheless, it is exciting to see the manufacturing sector borrowing more than consumption because, if sustained, this can be the right direction towards having an industrialised nation,” Tchereni said.
Malawi Confederation of Chambers of Commerce and Industry President Lekani Katandula said the industry expects the environment to favour production.
“We would also need to understand whether that extra funding is actually going to expand production capacity or not,” Katandula said.
