The Indigenous Business Association of Malawi (IBAM) has welcomed the central bank’s decision to have the current policy rate maintained at 12 percent, with a plea for government to prioritize indigenous businesses in awarding contracts and tenders.
Speaking during an exclusive interview, IBAM president Mike Mlombwa said though the decision is expected to ease the cost of borrowing, most SMEs in the country would still find it tough to service their loans due to reduced business activities in the work of Covd -19 pandemic.
Mlombwa, whose organisation is the mother body of all home grown businesses therefore appealed to government to at least ensure that sixty percent of all government contracts and tenders are given to local businesses.
“Currently there are no businesses due to restrictions meant to reduce further spread of corona virus pandemic. So despite the reduced costs of borrowing, most SMEs would not rush into getting loans as they would find it difficult to service such loans with the current business environment.
“We therefore appeal to government which is the biggest buyer to at least prioritize indigenous businesses when giving out contracts and tenders. That way, we shall match the reduced cost of borrowing with an increase in business activities and therefore making repayment of such loans easier, said Mlombwa”.
The Central Bank’s Monitory Policy Committee (MPC) recently maintained a policy rate at 12 percent which was dropped by 150 basis from 13.5 percent in November last year as a means of supporting economic recovery from the shocks of Covd 19 pandemic.
Economists hailed the move saying it was an indication that the economy was still in shape despite uncertainties triggered by the Covd-19 pandemic.