Reserve Bank of Malawi hopeful on cheque phase out
Malawi will, by July 2020, walk in the footsteps of Southern African Development Community-member states, such as Namibia, that have phased out cheque transactions in government operations in favour of electronic systems of payment.
Reserve Bank of Malawi Governor, Dalitso 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’,on Friday in Mangochi District that the new Integrated Financial Management System (Ifmis) would enable the government to do away with cheques when making payments.
This was after one of the bankers had queried the financial regulator on why it was still accommodating cheques, which are cumbersome, in bank and government transactions.
“With the new Ifmis, which we hope will be in place by July 2020, we will have an Electronic Transfer System in place, meaning that we will do away with cheques. With this, it will be possible to conduct all transactions, including getting cheques cleared, electronically.
“It is hoped that, by January 2019, procurement and other processes will be done,” Kabambe said.
The development comes barely three months after Namibia took to the cheque-less transaction path. The Bank of Namibia, Payment Association of Namibia and Namclearin in July this year announced the discontinuation of cheques as a payment instrument within the national payment system.
However, they announced that the decision was effective June 30 2019.
Consequently, the last processing day for the cheque to be cleared by the cheque payment stream took place on Saturday, June 29, and what was remaining was for the deactivation and decommissioning processes to be initiated, which involved making sure that all cheque participant members in Namclear were removed from payment applications, followed by the shutting down of the cheque payment stream.
Namibian media reported that, as part of the Namibian National Payment System reform initiative to establish local payments infrastructure— undertaken by the Bank of Namibia, the Payments Association of Namibia, Namclear and other players in the banking industry— the cheque system went live in September 2005, almost two years after the establishment of Namclear as the automated clearing house in November 2003.
IoB members, including president, Kwanele Ngwenya, heaved a sigh of relief when Kabambe made the announcement, which comes at a time the government has been working towards improving operations of the financial and accounting sectors.
Among other mechanisms, according to Finance Minister Josephy Mwanamvekha, is the introduction of the International Public Sector Accounting Standards, where government officials are currently sensitising stakeholders to its application in the local setup.
A cheque is a very old payment instrument that originated in the eastern Mediterranean during the first millennium as a convenient form of payment between local merchants, according to the Journal of Information Engineering and Applications.
It further indicates that although the correlation coefficient is-0.73 between domestic cheque volume and global cheque volume, global cheques are decreasing despite that the United States remains the dominant user of the cheque payment instrument globally.