Lilongwe — The country'slevel of financial inclusion interventions from both the public and private sectors has increased from 45 per cent in 2008 to 54 per cent in 2014, according to survey.
FinScope Consumer Malawi survey released by FinMark Trust on Friday in Lilongwe indicates that the banked population has increased by 14 per cent in the five years and the growth has been driven by transaction products.
Speaking during the launch of the Survey Report, Minister of Finance Economic Planning and Development, Dr. Goodall Gondwe said the survey, which measures the current level of financial inclusion in the country and tracks the changes in financial inclusion, provide data that the country can use to improve the lives of people in rural areas.
He observed that there was still growing poverty in the country especially in the rural areas despite the country's fifty years of independence.
"We have done well in infrastructure and education development, but we are lagging behind because our grand-parents in the villages are still living the old life they were living 50 years ago," observed Gondwe.
In his keynote address, FinMark Chief Executive Officer, Dr. Prega Ramsamy said the level of borrowing from formal credit providers, mainly banks, had dropped slightly.
"This trend in borrowing could point to the challenges with either the demand appetite or financial provider's low appetite for risk taking. The study indicates that 49 per cent of those that are not borrowing fear debts and 27 per cent are scared that they would not be able to pay back the money borrowed," explained Prega.
He, however said other formal credit providers including Malawi Financial Institution (MFIs) has steadily increased the number of people accessing financial services from 231 591 in 2008 to 276 366 currently borrowing in 2014.
He said 400, 000 Malawians claimed to have previously borrowed money from MFIs while the majority borrowed from Village Savings Loan Association (VSLA).
According to the Prega, the insurance sector in the country continues to be a small but growing, but shows that insurance products in the country largely targets the needs of those who are salaried, with large disposal incomes and with higher levels of education.
Prega said the survey also include the genetic barriers to financial inclusion and the biggest been insufficient income and fear of having debt or the inability to pay back borrowed money, the payments system in the country has undergone significant developments in recent years.
"On mobile money, lack of information or awareness of the mobile money facility poses a challenge as the survey indicates that 80 per cent adult Malawian are not ignorant of the facility.
"Farming and piece-works are two livelihood strategies that are often related to low level of income with about two in five Malawians earning less than K 10, 000 a month and low levels of finance literacy," he observed.
The FinScope survey was done with funding from FinMark Trust and the first survey was conducted in the country in 2008.