By Kingsley Jassi:
The International Finance Corporation (IFC), a member of the World Bank Group, has hailed the country’s progress in credit reporting system.
It cites credit reference bureaux (CRBs) among players who have contributed to the situation.
IFC rolled out a Credit Reporting Awareness Programme.
As a result, asset lending has gained momentum.
In a brief on the initiative, IFC says Malawi has improved its credit information system by making it mandatory for banks and non-bank financial institutions to check borrowers’ credit report before granting loans and to provide data on borrowers to the credit bureau.
CRBs are responsible for collecting, storing and disseminating credit information about individuals and businesses, including details about credit accounts, payment history and outstanding debts.
“The Credit Reporting Awareness Programme aims to educate Malawian consumers and businesses on the importance of maintaining a good credit history and encourages them to obtain their credit reports from credit reference bureaus (CRBs) to ensure accuracy,” the brief reads.
In the brief about the campaign, the IFC Country Manager for Ethiopia, Malawi, and Zambia, Madalo Minofu, said the CRB is a key element of Malawi’s financial infrastructure designed to achieve access to finance and support financial stability.
“Financial literacy empowers individuals to make sound financial decisions, manage their money effectively, and achieve financial stability and security,” Minofu said.
The campaign is being implemented through the Reserve Bank of Malawi (RBM) and the national public awareness campaign is premised on enhancing financial literacy and awareness around credit reporting and asset-based lending in Malawi.
Supported by the governments of Ireland and Norway, it is part of a broader drive to increase business activity and financial inclusion in Malawi as it aims to develop Malawi’s asset-based lending market and enhance the use of the collateral registry, an electronic database recording claims on movable assets like equipment, inventory or receivables.
Collateral reforms involve changes to the legal and regulatory framework to make it easier for borrowers to use their assets, such as inventory or machinery, as collateral to secure loans.
In the brief, RBM Governor MacDonald Mafuta Mwale hailed this type of lending, saying it allows businesses, particularly smaller ones, to leverage their assets to obtain capital for investment and growth.
“Financial literacy is a crucial part of the overall credit information system. It involves understanding and effectively using various financial skills, including personal financial management, budgeting, and investing. Knowing your credit status is an important first step towards a brighter financial future,” Mafuta Mwale said.
The IFC portfolio in Malawi includes investments in financial markets, infrastructure and agribusiness, as well as advisory service programmes that support both the private and public sector.
In 2024, the IFC said it committed $36.4 million to Malawi and mobilised an additional $144.8 million in investment from private sector and other partners, including regional programmes.
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