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Access to credit, which can be a true lifeline for micro, small, or medium sized businesses, remains one of the key challenges that individuals and small companies face in Malawi.
RBM Governor Dalitso Kabambe ICF's Madalo Minofu (2nd right) Kapito (2nd left) stressing a point during the panel discussion
This was said by World Bank Group's International Finance Corporation's Resident Representative for Malawi and Zambia, Madalo Minofu at the launch of the 2019 Credit Awareness Week graced by the Governor of the Reserve Bank of Malawi, Dalitso Kabambe, who is also the Registrar of Financial Institutions.
With support from the World Bank, the initiative is to increase the general public and specific target groups' awareness and understanding of the merits of accessing and borrowing money from licensed or registered lending institutions including banks, microfinance institutions and savings and credit cooperatives (SACCOs) as opposed to borrowing from informal lending institutions.
Minofu said if a business can access credit, it can grow and create jobs, leading to a stronger, more productive economy and a better quality of life.
"As we are gathered here today to launch the credit awareness week in Malawi, I would like to re-iterate the World Bank Group's continued commitment to helping Malawi develop a strong and sustainable financial sector, including through credit infrastructure," Minofu said.
"Credit infrastructure is one of the building blocks that allows financial institutions and other lenders to grow their portfolios -- increasing access to credit and, at the same time, maintaining financial stability.
"It protects the interests of financial institutions and lenders, and it also protects the rights of borrowers."
She observed that over the past years, Malawi has made incredible strides in enhancing its credit infrastructure -- including through its well-functioning and modern collateral registry and improving its credit reporting system.
One of the partners to the awareness campaign are credit reference bureaus, that will be sharing with the public their importance in order to access credit facilities from financial service institutions.
Credit reference bureaus provide a potential loan borrower's credit history that is passed on to financial institutions for them to make informed decisions whether to award the loan or not.
This is one other system that clients can use their credit reputation as collateral apart from using moveable collateral.
Minofu said for credit to truly have a positive effect on the lives of Malawians, credit providers and consumers alike need to better understand their rights and obligations when it comes to lending and borrowing.
"For this reason, initiatives like this credit awareness week are critical; by spreading financial education and awareness to communities, workplaces, and places of worship, you are helping all Malawians take control of their financial future.
"Malawians should feel empowered to use their credit history as a tool to access credit with better terms and conditions; understand how credit works and borrow responsibly; and feel confident that their rights as consumers are also protected in the process.
"It is also our hope as International Finance Corporation that all Malawians -- whether a small business owner, an entrepreneur, a salaried employee, or even a student -- will become financially healthy and check their free credit report once a year."
She congratulated the Reserve Bank of Malawi for organizing the credit awareness week and for Kabambe's steadfast partnership with IFC and dedication to improving access to finance in Malawi.
One of IFC's financial partner, the Kingdom of Denmark, is supporting the credit infrastructure work in Malawi.
There was also a panel discussion at the launch that involved Kabambe himself, Consumer Association of Malawi executive director, John Kapito; Bankers Association of Malawi president, Kwanele Ngwenya (who is also chief executive officer for NBS Bank); Malawi Union of Savings & Credit Cooperatives (MUSCCO) CEO Fumbani Nyangulu and Rogers Lungu, representing credit reference bureaus.
They all touched on the importance of understating credit terms and conditions such interest rate, repayment period, short term or long term loan, consequences of default before signing a credit agreement between a lending institution and a borrower.
They also talked on consumer rights and obligations when accessing credit and the benefits of accessing and using credit history reports from credit reference bureaus for informed financial decision making.
Kapito asked the RBM Governor if the commercial banks and other lending institutions must always civic educate clients before they sign loan forms on some of the conditions that are always attached but presented in fine print, which are not always known by the client.
"Some people have fallen into credit traps because they did not know of some of the loan conditions which were written in fine print," Kapito said.
"After a client has been paying for a while, and thinking that they have completed the loan, they discover to their horror that what they have been repaying was the interest and that they need to start repaying the premium.
"The banks need to sensitise the clients on all conditions attached because in most cases people needing a loan are always desperate for the money and don't have the patience to go through the fine print," he said.
Kapito said the awareness campaign should also sensitize people that they should not borrow when there is a need only but when they identify an opportunity for that loan to make more money.
Kabambe, who said it is unfortunate that out of the Malawi's total population, only 3 percent are accessing credit facilities because of financial illiteracy, which the awareness campaign aims at addressing.
He said others opt to borrow from loan sharks (katapila), which does not protect the interest of the borrower and in most cases, they fall into credit traps that end into seeing their property confiscated.
Source: Allafrica.com

The implementation of the African Continental Free Trade Agreement (AfCFTA) will create opportunities for the BRICS investment partners to develop infrastructure on the continent, says President Cyril Ramaphosa.
South Africa, he says, sees an important role for the BRICS formation to contribute to these efforts.
The President made these remarks at a cocktail reception he hosted in honour of African Ambassadors accredited to Brazil. President Ramaphosa is in the South American country, where he is leading a South African delegation to the 11th BRICS Summit from 13 - 14 November 2019.
"We seek to build a more inclusive partnership between the leaders of BRICS countries and the elected leaders of African institutions. Apart from the BRICS Framework of Cooperation, BRICS countries have worked individually to promote cooperation and development with Africa," the President said.
President Ramaphosa said the partnership pursued through the BRICS-Africa outreach is rooted in a firm belief in the political, economic and social potential of the African continent.
"It speaks to the promotion of peace and security, advancing industrial capacity and economic integration, and champions a people-centred approach to sustainable development.
"As African nations, there has never been a better time to deepen our collaboration to ensure the African Continental Free Trade Area, our most ambitious collective venture yet, is a success."
This, he said, is an opportunity to grow the continent's economies and to use its considerable collective resources to uplift citizens and improve their conditions.
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"Together, we are working to grow the economies of African countries through innovation, infrastructure development and trade."
Speaking on the pending countdown to the launch of the AfCFTA, the President was confident the agreement would, in addition to its economic impact, have far-reaching political, social, physical and international effects.
"On the economic front, it will improve access to existing markets and lead to the creation of new ones. The free flow of goods and services will enable African businesses and entrepreneurs to expand their horizons and unleash the industrial capability of the continent.
"The removal of trade barriers will lower prices and benefit consumers. Business costs will be reduced and business efficiency will be raised," said President Ramaphosa.
On the political front, he said, the AfCFTA will help to consolidate the union among all African States and reduce the potential for conflict.
"From a social perspective, it is likely to result in a more cosmopolitan Africa as the greater movement of people and skills brings more people of diverse backgrounds and nationalities together," he said.
He said the AfCFTA will also have a broader international impact as Africa will be able to deal with other trade blocs from a position of greater strength, able to demonstrate economies of scale.
As the incoming chair of the African Union next year, South Africa will put great emphasis on giving effect to the agreement on the Continental Free Trade Area.
Source: Allafricanews.com

Chiredzi — High input costs are threatening the viability of the 2020 sugarcane farming season.
Cane farmers say the prices of fertilizers and herbicides are now beyond their reach and this may affect sugarcane production.
Commercial Sugarcane Farmers Association of Zimbabwe Chairperson, Admore Hwarari said they were concerned about the rising cost of fertilizers and herbicides.
"As farmers we have not been spared by the current economic crisis particularly on the prices of our inputs; fertilizers, herbicides as well as spare parts," he said.
A Hippo valley sugarcane farmer, Muchineripi Mazhata added that inputs played a critical role in the seasonal cropping plans and any upward adjustment of prices had an effect of increasing production costs.
A survey by CAJ News Africa showed the price of fertilizers had increased by 60 percent.
Before the recent wave of price hikes, the average prize of a 50kg bag of Ammonium Nitrate was 320 Bond (Z$320) but it has shot up to 660 Bond (Z$660) at hardware shop, Farmware.
At Farm and City and Electro Sales in Chiredzi, the price of Ammonium Nitrate was on Monday pegged in Bond at 854 (Z$854) while compound D was prized at Z$665 with Compound C going for Z$800.
Sugarcane is a perennial crop grown in Lowveld's Mkwasine, Hippo valley and Triangle which typically takes 12 months to reach maturity.
It is also a luxuriant consumer of Nitrogen, Phosphorus and Potassium as well as various herbicides for high yields.
"Proper soils and nutrient management is key to achieving high yields from sugarcane farmers. Farmers must buy phosphorus which provides the sugarcane with energy it needs to grow both above and below ground," said Hwarari.
"An adequate supply of phosphorus at the beginning of the season helps crops to grow a large health root system which it uses to absorb water and nutrients while potassium provides the mechanism with which to move the sugar produced from the leaves to the internodes for storage," he said.
Source: Allafrica.com

Africa, where close to half of its 1.2 billion have access to electricity, is set to become a world leader in renewable energy. As global business and development leaders met in Johannesburg, South Africa, to attend the Africa Investment Forum (AIF), one of the key focuses of the deals being discussed was around sustainable, renewable energy.
Organized by the African Development Bank (AfDB) and its various partners, the forum is expected to see $68 billion in deals closed over the next few days.
Leaders are doing all they can to encourage investment

In attendance where heads of state from South Africa, Ghana, Rwanda and Mozambique. At an invitation-only discussion among the leaders, Rwanda's President Paul Kagame said there was a lot of progress in Africa as a whole.
"I have always thought it was Africa's time. We African's have let ourselves down, we are now realizing it has always been our time. And we are now seizing every opportunity and be where we should be by now," Kagame said.
Kagame was the driver of the African Continental Free Trade Agreement (AfCFTA) during his time as chair of the African Union in 2018. The agreement had not been in existence during the first AIF last year.
Established in March 2019, the AfCFTA has now been signed by 54 of the 55 African member states.
Alain Ebobisse, CEO of Africa 50, the Pan-African infrastructure investment platform capitalized by the AfDB, said that there was a consensus from African leaders that they needed to do whatever they could to attractive more private investment. He said that the AIF attendance showed that there was a changing narrative for investment on the continent.
Earlier figures had been revealed by the South African premier of Gauteng Province, David Makhura, that over 2,000 delegates were in attendance from 109 countries. Of this, only 40 percent where from Africa with the majority of investors attending from Asia, Europe and the Americas.
Gauteng is South Africa's wealthiest province of and includes the financial centres of Johannesburg and Sandton, as well as the seat of government in Pretoria.
Renewable energy on a positive trajectory

Ebobisse said that a lot was already happening on the continent and while the media focused on the challenges there were huge success stories too -- like the 1.5 GW Benban Solar Park in Egypt, which is the world's largest solar photovoltaic plant.
"I'm sure that people are not talking enough about this major achievement which is the Benban Solar Programmer, 1.5 GW of solar that was invested mostly by the private sector in a record time," he said.
Africa 50 invested in 400 MW in that project and completed it from design to commercial operations in two and a half years.
Ebobisse went on to highlight Kenya's opening this July of the Lake Turkana Wind Power project, which at a generation capacity of 300 MW makes it the largest wind power project on the continent.
"It was funded by the private sector," Ebobisse told the media. He also looked towards Senegal which was implementing many independent power producers or IPPs in the solar sector.
"So there is a lot that is happening. We need to also widely understand the challenges and understand what is happening on the ground. And people are actually making good money in this investment. And there is nothing wrong about that. Let's celebrate those successes," he said.
Making Africa a world leader in renewables

A few weeks ago, the Governors of the AfDB met in Cote d'Ivoire's capital Abidjan, approving a historic $115 billion increase to the bank's authorized capital base to $208 billion. "This is the highest capital increase in the history of the bank since its establishment in 1964," AfDB president Akinwumi Adesina said today.
During the October announcement Adesina had said that a significant portion of funding would be invested in climate change.
Today, in response to a question from IPS, Adesina further explained that the bank had doubled its investment in climate finance from $12 billion to $25 billion by 2020.
"Almost 50 percent of our finance will be going to climate adaptation as opposed to climate mitigation. So we are the first multilateral development bank to actually reach that balance in terms of adaptation and mitigation," he said.
Climate mitigation is the actions taken to reduce or curb greenhouse gases, thereby addressing the causes of climate change to prevent future warming. However, climate adaptation addresses how to live with the impacts of climate change.
"I believe that coal is the past. I believe that renewable energy is the future and we as a bank are investing in not in the past, but in the future in making sure that we are investing in solar energy, in hydro energy, in wind, all types of renewable energy that Africa needs," Adesina said.
"We want Africa to lead in renewable energy."
He said one of the projects was the AfDB's Green Baseload Facility, which according to the bank, aims "to accelerate the transition towards more sustainable baseload power generation options and prevent countries from locking themselves into environmentally damaging and potentially economically costly technologies".
"It's a $500-million facility that we have set up to support countries that want to shift out of fuel-based energy into renewable energy and providing access to finance at a cheaper rate to be able to make that transition," Adesina said.
The bank's biggest investment is the Desert to Power project, which was announced in December at the United Nations' Climate Conference in Katowice, Poland.
The initiative plans to supply 10 GW of solar energy by 2025 to 250 million people across 11 Sahelian countries.
"That would make it the largest solar zone in the world," Adesian stated. The bank will work in partnership with various investors to also establish plants on the continent that will manufacture the solar panels for the project.
The AfDB has always stated "a lack of energy remains a significant impediment to Africa's economic and social development".
According to AfDB, energy poverty in Africa is estimated to cost the continent 2 to 4 percent GDP annually.
Africa's climate crisis

The continent is facing climate change impact with rising temperatures and reduced rainfall.
The Sahel, which lies between The Sahara and the Sudanian Savanna, offers a blaze of sunlight with little rain as it is the region where temperatures are rising faster than anywhere else on Earth, according to the Great Green Wall initiative, a project that aims to reverse desertification and land degradation in the area.
Last month, IPS reported that as The Sahara Desert continues to expand, it tears apart families, forces migration from rural areas to cities and has contributed to conflict for precious resources of water, land and food.
In July, IPS reported that the parts of Kenya had already warmed to above 1.5˚C -- a figure deemed acceptable by global leaders during the 2015 Paris Agreement. But at such high temperatures a study found that over the last four decades livestock some Kenyan counties had decline by almost a quarter because of the temperature increase over time.
During the United Nations Framework Convention on Climate Change in Paris in 2015, all countries committed under the Paris Agreement to "holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C".
But last year the U.N.'s Intergovernmental Panel on Climate Change released a special report warning that the world would face the risk of extreme heat, drought, floods and poverty at a temperature rise of 1.5°C.
However, the forum showed that there remain a number of investors looking to provide funding for renewables and other development project on the continent.
Siby Diabira, regional head for Southern Africa and the Indian Ocean for PROPARCO, a subsidiary of Agence Française de Development (AFD) focused on private sector development, told IPS that last year the group did $1.76 billion in investment deals, half of which was in Africa. The AIF was still in its early stages to make a pronouncement on the success of the deals, Diabira said, but "so far so good".
Diabira said the French development agencies aimed to be 100 percent compliant with the Paris Agreement and hence were investing heavily in renewable energy.
She explained that PROPARCO was involved in "all types of renewable energy from hydro to solar to wind", adding that there was a need for a mix of both traditional and renewable energy generation.
"I have been attending some of the boardroom [discussions]. It is a quite interesting gathering to have for the second year and to have so many different types of investors and projects that are raising funds for these types of events," she said.
"We have been present in financing the first few rounds of renewable energy projects in South Africa and our idea is also as a [Development Financial Institution] DFI to be able to contribute to create this market for the commercial banks to come with us on those types of projects," Diabira said.
Admassu Tadesse, President of the Trade and Development Bank, also pointed out that partnership agreements among the various banks and partners had strengthen their position in deals.
"If you have smart partnerships you can scale up collectively. With the African Development Bank we have signed a risk participation agreement to the tune of $300 million, which will allow us to move speedily into fields and have partners coming into deals alongside us."
He said they expected to soon sign a deal with the European Investment Bank (EIB) that will again strengthen their position.
EIB vice president Ambroise Fayolle said they were attending this year with great intentions to develop transactions. He said it came on the back of their 2018 record year of investments in the continent, which amounted to some $3.6 billion - more than 50 percent of which was in the private sector. The bank signed 3 partnerships already, he said, none of which would have been possible without the AIF.
Source: Allafrica.com