RBM, SMEs differ on NPLs outlook


The Reserve Bank of Malawi (RBM) has said it is targeting a further drop of Non-Performing Loans (NPLs) in 2020 and beyond, a projection some industry players have rated as unrealistic.

In an interview RBM spokesperson, Mbane Ngwira, said the economy has performed exceptionally well this year hence, the optimism.

“The issue of NPLs is multifaceted. It is a fact that the economy has stabilised and has grown in comparison to the previous year, the interest rates this year are lower than last year and inflation has remained in single digit.


“In addition, banks are mandated to use the credit reference bureaus before giving out loans coupled with the use of the national identity cards. The RBM and other stakeholders have embarked on credit awareness drive for both individuals and SMEs, the combined impact of these factors is therefore, a reduced level of NPLs in 2020,” Ngwira said.

The bad loan ratio stood at 4.8 percent in June 2019, compared to a 6.1 percent ratio the previous quarter.

The ratio reached an all-time high of 18.8 percent in September 2017 and a record low rate of 3.1 percent in June 2009.


In a separate interview, Indigenous Business Association of Malawi president, Mike Mlombwa, said warned of a possible rise in the default rate in the short term as 2019 was a bad year for most businesses with economic activities registered.

“2019 was a very bad year, there was not a single month that small businesses were able to thrive and make profits yet they borrowed,” Mlombwa said.

Executive Director of the Chamber for Small and Medium Enterprises, James Chiutsi, concurred with Mlombwa, saying most business were hard hit by the political tension in the country.

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