Fueling Malawi’s Economic Surge: Central Bank Hails Vibrant Industry Credit Expansion

Key Business Points

• The Reserve Bank of Malawi (RBM) is promoting private sector credit growth to boost productivity, with a 48.7 percent increase in annual credit flow in September.
• Government borrowing is dominating the banking system, with a rise of K941.5 billion to K8.2 trillion in the third quarter of 2025, limiting access to credit for the private sector.
• The RBM has lowered its 2025 economic growth forecast to 2.7 percent, citing foreign exchange shortages, power outages, and increased operating costs as major challenges for businesses.

The Reserve Bank of Malawi (RBM) is focusing on private sector credit growth to accelerate productivity, with a significant increase in annual credit flow in September. However, government borrowing continues to dominate the banking system, limiting access to credit for the private sector. The RBM has lowered its 2025 economic growth forecast to 2.7 percent, citing foreign exchange shortages, power outages, and increased operating costs as major challenges for businesses.

The central bank’s efforts to promote private sector credit growth are crucial, as it is expected to empower the private sector as the primary engine of production and export growth. RBM Governor McDonald Mafuta Mwale emphasized the need for a collective effort to advance Malawi’s national growth agenda, commending banks for increasing lending to core productive sectors. The Bankers Association of Malawi President Phillip Madinga also stressed the need for stakeholders to collaborate in unlocking private sector credit, working with the central bank and the Malawi Confederation of Chambers of Commerce and Industry to support the private sector.

The foreign exchange scarcity persists, with foreign reserves lower in the third quarter at $511.8 million, equivalent to just two months of import cover. This has affected importation of raw materials and intermediate goods and services, leading to increased operating costs for businesses. The RBM’s report highlights the need for sustainable economic growth, driven by the financial sector, information and communication, and construction. As mphatso za mafuta (fuel challenges) and matenda a magetsi (power outages) continue to affect businesses, the private sector must ziwerengere (be resilient) and explore alternative sources of financing to drive growth. With the right support and collaboration, Malawi’s private sector can kugwira ntchito (create jobs) and contribute to the country’s economic development.

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