RESERVE BANK OF MALAWI
REMARKS
BY
DALITSO KABAMBE, PhD
GOVERNOR
AT THE INAUGURAL FINANCIAL
INCLUSION INDABA AND LAUNCH OF THE
NATIONAL STRATEGY FOR FINANCIAL
INCLUSION
AT BINGU INTERNATIONAL CONFERENCE CENTRE (BICC)
LILONGWE
27 JULY, 2017
The Secretary to the Treasury, Mr. Ben Botolo;
Senior Private Sector Development Economist,
World Bank Country Office, Mr E Chilima;
The Deputy Governor, Economics and
Regulation, Reserve Bank of Malawi, Dr Grant
Kabango;
Representatives of all Development Partners
here present;
Representatives of FinMark Trust;
Senior Government Officials here present;
Chief Executive Officers and Representatives of
Financial Institutions;
Representatives of Non-Governmental and Civil
Society Organizations here present;
Distinguished Guests;
Ladies and Gentlemen:
I am delighted to be part of this Indaba where the
country's
Strategy for Financial Inclusion for the period
2016 to 2020 is being launched.
Firstly, I wish to agree with other speakers that this
meeting could never have taken place at such an
opportune time other than this. Our country has just
weathered off some of the major shocks of our time.
First was the historic devaluation in 2012, then cashgate
in 2013 which led to withdrawal of general budget
support and then the effects of climate change in 2015
and 2016. As a result of these shocks, inflation
persistently remained high over the years, interest rates
were also high, Kwacha was volatile and public debt
soared.
However, the Malawi economy has now weathered off
these shocks. The economy is now steadily recovering.
Inflation, at 11.3 percent is now the lowest in 7 years,
and is expected to be in single digit very soon, Kwacha
has been stable for the past 15 months and is expected
to remain so. Foreign exchange reserves are at 3.3
months of imports and are expected to remain above 3
months of imports. Lending rates are now on a
downward trajectory and growth which was subdued in
the previous years is expected to rebound to 4.5 percent
or higher this year. These are all hallmarks of a
recovering economy.
The Indaba therefore is coming at such an opportune
time that we can discuss how we can consolidate these
gains going forward and deepening of financial
inclusions is one such option to support the needs of a
growing economy.
The case for financial inclusion can never be over
emphasized. The country has many people who are not
yet reached with financial services. The Strategy being
launched today therefore highlights what can be done to
ensure that all Malawians regardless of their
geographical disposition are reached with financial
services. On one hand, we know that Malawi is
predominantly a cash based society to the extent that
75% of the cash in the economy is outside the banking
system leaving only 25% in the banking system. Going
forward, we need to reverse this trend and ensure that
all Malawians are reached with various financial
services and products so that people can intelligently
invest their money and also be able to access capital for
their various needs.
A practical example is where if one had K100 in 1996,
then he/she decided to keep it in the pocket, it could
remain K100 today but with inflation, that money could
have lost value in terms of how much that money could
buy today. If it was put in savings account in the Bank,
it could be around K2,300 with interest by now. If it
was invested in Treasury Bills, it would be around
K13,000 while if it was invested in shares, the value of
those shares in one of the companies could be around
K23,000 by now. These are the issues which must be
brought to the attention of all Malawians so that they
can make intelligent and informed decisions at all times
whether they choose to keep their money in the home,
invest in business, buy shares or deposit in Banks.
Financial Inclusion is therefore critical in this regard.
On the other hand, if one wishes to access capital to do
a business or otherwise, financial inclusion is also
critical so that people across the country can access
capital for their various needs including running of
businesses. Our country needs to grow and as it grows,
create jobs most needed especially by the youths. As
such, our investments decisions and how we use our
money is very critical. The economy could do better if
all the resources around us are intelligently invested so
that the Private Sector, the engine of growth, should use
the resources to develop our country. Hence, the issue
of access and cost of capital to all Malawians across the
country are the issues the Strategy is addressing.
On our part, as a Registrar of Financial Institutions, the
Reserve Bank of Malawi is involved in drafting various
pieces of legislation and regulations for the smooth
running of the financial sector. The Bank is also
involved in enforcing the various pieces of legislation
that have been approved by the National Assembly. We
will continue to play this role and do it better all the
time.
As part of this, we take pride in some of the efforts
which have been made over the years in this area
including modernization of existing financial sector
laws, such as the banking, insurance, securities,
microfinance, pension, financial cooperatives, agent
banking, credit reference bureau, payment systems,
introduction of the National Switch which has promoted
mobile money banking, which have all improved the
architecture of our financial systems and advanced the
financial inclusion agenda.
The Reserve Bank continues to play this pivotal role
and is currently championing the Microfinance
Processing Hub, the Automated Trading System for the
Malawi Stock Exchange, the Central Securities
Depository system for securities and equities. These
initiatives will benefit the public through increased
access to finance and, most importantly, at affordable
cost.
The Bank is also active in consumer protection and
financial literacy. The importance of the consumer
protection and financial awareness needs no emphasis
here. It aims to empower the consumer so that they
transact in the financial sector with confidence. In
keeping with this, the Reserve Bank created a Unit to be
responsible for Financial Consumer Complaints and
Literacy matters. The Reserve Bank, in collaboration
with its stakeholders, has implemented financial
awareness campaigns in order to empower financial
services consumers. But, I must mention that the
implementation of the financial awareness program
requires a lot of financial resources. The Reserve Bank
will therefore put in place a sustainable way of
implementing the program.
let me
Distinguished Guests, Ladies and Gentlemen,
conclude my remarks by congratulating and
commending the Ministry of Finance, Economic
Planning and Development for coming up with the 2016
-
2020 Strategy for Financial Inclusion. This strategy
will surely provide a guided direction to achieving and
promoting inclusive finance in this country. This being
the second strategy, we trust that it has built on the
shortfalls of the initial strategy.
I thank you all for your kind attention and may God
bless our country.