RBM Islamic Finance Review: Advancing Business Impact in Malawi

Key Business Points

• Explore the K50 billion financing window: Manufacturing firms and other established businesses should approach FDH Bank’s Salama offering to test whether its Islamic banking products can support working capital, expansion and investment.
• Prepare for a larger Islamic finance market: Banks, insurers and borrowers should strengthen Shariah-compliant expertise, product design and public awareness, including possible participation in Islamic bonds.
• Track regulatory and legal reform: The Reserve Bank of Malawi’s guideline review and needed legal changes could improve confidence, dispute resolution and capital mobilisation, so businesses should stay informed and engage with regulators.

RBM moves to widen Malawi’s development financing options

The Reserve Bank of Malawi (RBM) is reviewing its 2017 Islamic finance guidelines to strengthen oversight as Malawi seeks alternative sources of development funding amid fiscal pressure.

Speaking at the opening of an International Islamic Finance Conference in Blantyre, RBM director of banking supervision Chimwemwe Kachingwe said the existing framework had created an enabling environment for Islamic banking. FDH Bank plc, listed on the Malawi Stock Exchange, now offers Shariah-compliant services through a dedicated window.

The window has K50 billion in financing capacity, used mainly by manufacturers. Kachingwe said the products could support broader business investment. For Malawi’s entrepreneurs, this creates an opportunity to kusamirira, meaning to invest, through financing aligned with religious principles.

Businesses should compare fees, structures and repayment terms before committing, and include Islamic finance in broader funding strategies for growth.

The need is significant. The African Development Bank estimates that Malawi could face an annual financing gap of US$3.3 billion, about K5.8 trillion, by 2030. This equals 58 percent of the K10.9 trillion 2026/27 National Budget. The pressure is intensified by declining foreign aid and public debt, which reached K23.9 trillion, or 90 percent of gross domestic product, as of December 2025. The International Monetary Fund estimates bilateral aid to the region fell by between 16 and 28 percent in 2025.

Takaful LDC Malawi founder and managing director Adilu Chirungu said slower uptake shows the market needs suitable products, stronger awareness, trained specialists and closer cooperation with RBM and financial institutions. His organisation is working with the central bank and lenders to build capacity. Growing interest from commercial banks and insurance companies at the conference suggests the sector is moving from exploration toward expansion, although Chirungu warned that speed would depend on correct product design.

Absa Bank Kenya head of Islamic banking Tego Wolasa said Islamic finance could widen inclusion by serving customers who avoid conventional banking for religious reasons. He also pointed to Malawi’s potential to attract Middle Eastern and other overseas capital through Islamic bonds, which can finance asset-backed infrastructure projects.

FDH Bank head of corporate banking Kawawa Msapato said the bank’s Salama offering had registered thousands of customers, with transactions running into billions of kwacha. FDH Salama Advisory Committee chairperson Sheikh Ibrahim Lethome described the experience as exciting, but said staff training was essential. He also called for legal reforms that provide clear mechanisms for resolving disputes in Islamic banking transactions.

Lethome, who is based in Kenya, said a fully licensed Islamic bank could become viable if local institutions used the existing window effectively. Kenya already has three thriving Islamic banks. Malawi’s strongest path forward will combine regulatory clarity, capable institutions and investor education, giving businesses more choice while supporting wider infrastructure and development financing needs.

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