The bank base lending rates are just a punishment, this is why many people are getting poor and poorer because we have no any external empowerment. Our friends from other countries are able to do a lot of things with bank loans, they are able to start-up a business, grow a business, pay school bills because the loan conditions and rates are much lower and flexible. Right now to get a loan then you are just making money for the bank not yourself because. eg to take a loan of 1 Million Kwacha at an interest rate of 44% you have to pay back 1.44Million Kwacha, and with the other charges plus time factor you end up paying close to 2.5Million, so where is the advantage of risking to take a loan when the whole business profit will go to the bank. Many people have brilliant business ideas that can enable Malawi economy to grow fast, but they lack capital, and all the dreams remain nightmares. What can we do to lobby the banks to bring down their rates? Cooperative society is the immediate solution, no need to keep money in the banks, they are not being friendly.

By Stephen Amachi Chisati
lend

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1 ndemanga

  1. Stephen, the banks do make a lot of money, but the reason for the recent hike in lending rates was that government’s desire to borrow pushed Treasury Bill rates up towards 40%. in response, corporate and institutional depositors demanded similar rates for their funds from the banks. to maintain their margins, the banks passed the cost of these expensive deposits on to their loan customers. [while RBM haven’t changed the official bank rate, they don’t lend as low as 25%.]

    interest rates represent the price of money and as long as the government continue to spend billions that they don’t have, the demand (and the price) of money will stay high.

ZIMENE MUMAKONDA

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