Socio-economic analysts have called the unfortunate offers of some of the country’s commercial banks to monopolize village banks also known as Banki M’khonde, saying the development will have far-reaching social consequences for Malawian communities, both in rural and urban environment.
Recently, some commercial banks in the country have launched a series of promotions whose main objective is to attract village banks to do business with them.
The National Bank of Malawi (NBM) was the first to announce its Kasupe Village Bank, followed by the Standard Bank of Malawi Zichuluke Promotion. NBS and FDH banks also have promotions on Tidalilane village bank account and Nkhokwe savings account respectively.
On Wednesday, Kawawa Nsapato, head of personal and business banking services at FDH Bank, said the bank believed the account “would help village savings groups to safely save money paid by members while at the same time. earning additional interest â.
“Threatened social platform”
But renowned commentator Wonderful Mkhutche said that banks’ interest in village banks has the potential to negatively affect people’s lifestyles socially.
âThe Banque Village is more about money. It is also a social platform. I fear that when commercial banks step in, they drain the social life of village banks. People meet, talk about money, laugh, borrow money and go home, without much hassle. It can be lost, âlamented Mkhutche.
Dobbins Tembenu, commenting on ZBS’s Facebook page, felt that as long as banks were commercial, they would always look for something in any relationship.
âVillage banks instead have a reason why they were introduced, to improve social microeconomics on the lowest possible platform targeting these small village groups trying to bridge the big gap between rich and poor. I think it’s the same commercial banks that are partly responsible for the status quo.
“If the banks have something different to offer than the very reasons why village banks were created, then I should believe they are trying to gag the very system that could have helped heal our bedridden economy by digging into it.” further away. âTembenu wrote.
He said he was not against the further intervention of the banks, but that he was worried about village banks if they were going to take the bets on the trends.
âIf commercial banks are able to make exorbitant after-tax profits in a collapsing economy, then something else is surely not in the right place. All in all, it is up to the village banks themselves, who have the last word when weighing the proposed stones, to make a decision, âhe said.
Malawians prefer Banki M’khonde
According to the 2018 Malawi Population and Housing Census, 23 out of 100 of Malawi’s 17.5 million people save their money; and that most of these savings are made with village banks (11%) and other means as opposed to commercial banks (7.4%).
Tusekile Mwanyongo, 48, a single mother and ardent village banker from Karonga told Nyasa Times on Saturday that she preferred Banki M’khonde because it was easier to access financial aid.
“I once had a [commercial] bank account once, but they [the bank] treated me like a slave with my own money. i’m better here [with the village bank]. The interest rates are fair at 20 percent.
âAnd the interest we earn is shared equally at the end of the year, which makes my savings worthwhile because I am harvesting more than I could in a formal bank. Customer service is also 100% compared to formal banks where they will deny you your own money for trivial things such as a small mistake in your signature, âMwanyongo said.
Retired CEO of Nico Holdings, now Finance Minister Felix Mlusu, observed at a 2016 bankers conference that the inability of commercial banks to meet customer needs, citing poor customer service, the lack of competition and the lack of innovation, among others, caused the phenomenon. village banks to spread like wildfire.
âIf you don’t start giving customers what they need, your market share will continue to decline and one day you will wake up to find that village banks have taken over,â Mlusu said.
“Inclusive financial system”
Malawi Bankers Association CEO Lynes Nkungula said commercial banks recognize that a more inclusive financial system is essential for development, hence the initiative.
âFormalizing village savings will protect consumers from exploitation and, if the product is well managed, the risks could be very minimal. The aim is not to wipe out village coffers but to work hand in hand, âNkungula told the Daily Times.
But Pharrison Mwale, management consultant for Intellect Link Consultants, told the newspaper in a separate interview that the development is an attempt by commercial banks to exploit members’ contributions to improve their deposit base.
âBanks indirectly tap into the unbanked population through contributions from village banks,â Mwale said.
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