IFC, RBM launches campaign to boost financial literacy, inclusion

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Reserve Bank of Malawi

The International Finance Corporation (IFC) and the Reserve Bank of Malawi (RBM) have launched a national public awareness campaign to enhance financial literacy and awareness around credit reporting and asset-based lending.

The campaign which was launched on Tuesday in Blantyre, is part of a broader drive to increase business activity and financial inclusion in Malawi.

Supported by the governments of Ireland and Norway, the campaign will develop Malawi’s asset-based lending market and enhance the use of the collateral registry, an electronic database recording claims on movable assets like equipment, inventory, or receivables. This system helps lenders verify collateral and reduce lending risks.

The campaign, which will be implemented through press publications, social media, radio, and television, consists of two programs: the Credit Reporting Program and the Asset-Based Lending Program.

The Credit Reporting Awareness Program aims to educate Malawian consumers and businesses on the importance of maintaining a good credit history and encourages them to obtain their credit reports from credit reference bureaus (CRBs) to ensure accuracy. Malawi’s CRBs are responsible for collecting, storing, and disseminating credit information about individuals and businesses, including details about credit accounts, payment history, and outstanding debts.

The Asset-Based Lending Awareness Program focuses on increasing education and awareness of collateral reforms in Malawi and their benefits. Collateral reforms involve changes to the legal and regulatory framework to make it easier for borrowers to use their assets, such as inventory or machinery, as collateral to secure loans. This type of lending allows businesses, particularly smaller ones, to leverage their assets to obtain capital for investment and growth.

“Financial literacy is a crucial part of the overall credit information system. It involves understanding and effectively using various financial skills, including personal financial management, budgeting, and investing. Knowing your credit status is an important first step towards a brighter financial future,” said Dr Macdonald Mafuta Mwale, Governor at RBM. “The CRB is a key element of Malawi’s financial infrastructure designed to achieve access to finance and support financial stability.”

“Financial literacy empowers individuals to make sound financial decisions, manage their money effectively, and achieve financial stability and security,” said Madalo Minofu, IFC Country Manager for Ethiopia, Malawi, and Zambia. “IFC brings its global experience supporting private sector development to these awareness campaigns and our objective is to increase the availability and affordability of credit to underserved segments, including individuals and MSMEs.

Malawi has improved its credit information system by making it mandatory for banks and non-bank financial institutions to check a borrower’s credit report before granting a loan and to provide data on borrowers to the credit bureau.