Key Business Points
- Aim for lower borrowing costs as banks cut reference rates to 24.70%, easing loan repayments.
- Monitor government’s reduced T-bill borrowing, which may free up credit for private businesses (mabizinezi).
- Prepare for improved access to loans (ndalama zokweretsa) if rate cuts target productive sectors like agriculture.
Malawi’s business community has reason to cautiously welcome falling borrowing costs as banks cut their reference rate for February 2026 to 24.70%, down from 25.20% in January. This marks the second consecutive monthly drop, signaling a gradual shift in lending conditions after years of high interest rates.
The decline is tied to reduced government borrowing through Treasury Bills (T-bills). Since January, the Treasury has rejected K540 billion in bids for high-yield T-bills, pushing yields down. For example, 90-day T-bill rates fell from 16% to 15%. Finance Minister Joseph Mwanamvekha confirmed this strategy is deliberate: “We are cutting interest rates to reduce domestic borrowing and redirect bank lending to the private sector.”
For businesses, this easing ndalama zokweretsa (interest rates) could lower loan repayment burdens. Phillip Madinga, President of the Bankers Association of Malawi, noted the reference rate aligns with inflation, liquidity, and deposit costs. “Even small changes influence lending rates and credit affordability,” he explained. Edward Lemani, an economics lecturer, added that sustained rate cuts could reduce the crowding-out effect, where government borrowing starves businesses of credit.
However, challenges remain. Domestic debt stands at K14 trillion (65% of public debt), consuming resources that could support growth. Reserve Bank of Malawi spokesperson Boston Maliketi Banda stressed that high borrowing costs hurt fiscal sustainability, urging banks to lend more to productive sectors like manufacturing and agriculture (ulimi).
Entrepreneurs should watch for targeted lending policies. Lemani advised that rate cuts must prioritize sectors boosting exports or domestic production to tackle Malawi’s forex shortages and unemployment. Kuthekera kwa mabizinezi (business opportunities) may arise if banks channel funds into agribusiness, renewable energy, or small-scale industries.
While the rate drop is modest, it reflects a broader strategy to stabilize debt and stimulate enterprise. As Mwanamvekha stated, “Reduced borrowing means lower debt burdens and more capital for private sector growth.” For Malawi’s businesses, patience and strategic planning could turn these shifts into tangible gains.
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