Thomas Jefferson, 3rd President of the United States (USA) giving an advance warning some 200 years ago said: “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around (these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.
It is most amazing how accurate Thomas Jefferson was 200 years ago, because this is exactly what is happening in Malawi today. Many of us are facing serious economic hardships; companies are closing businesses, while banks are boastfully posting billions of kwachas in huge profits”.
These are economic obscenities among all of us who have now just been reduced to economic slaves for the bank masters. Malawians and many Organizations are paying 40% or more in interest rates to the banks,while the same banks pay them 10% or less on their savings or fixed deposits. Such a practice and wide gap between the two interest rates are blatantly illegal in many civilized communities.
Investors are kept away and our businessmen continue to fail because of such sky high bank interest rates. In fact many Malawi companies are now choosing to invest in neighboring countries. It’s now time our relevant authorities took action against such banks by simply regulating banking practices.
The banks are blinded by their financial greed to such absurd injustices. I call what is happening in Malawi today “ECONOMIC TERRORISM”. We must all be surprised by the fact that the kwacha is devaluing on a daily basis while we are in the tobacco season. This does not make sense; in fact it is an economic absurdity in Malawi.
It must therefore be a clear indication that someone must be manipulating the currency and making billions of Kwacha in profits on the benefits undeniably reaps from these currency fluctuations. We have seen recently that banks have suddenly dropped their interest rates drastically! While we commend them for this move we must wonder what is different today, which was not there before.
Well, banks will blame RBM for the high requirement of the Liquidity Reserve and high inflation but we all know that they could have easily dropped these rates much earlier. In fact they need not have had the bank rates that high at all.
The only reason for the banks to have had such high interest rates is no other but to make very huge and obscene profits in the middle of so much economic suffering by us all. One wants to know if it is not just callous determination to rip off the innocent and ignorant public. You don’t have to be an economist to see that something is very wrong here. You will note that Thomas Jefferson had in mind been effective control of these banking institutions.
Government, through its agents including the Reserve Bank and through the peoples’ representatives in Parliament, supported by effective legal processes in the Judiciary must always be vigilant and ensure that the beast is tamed. Has this happened?
Although Reserve Bank policies also have an impact on banks Beauvoir as recently we have seen in reduction of Liquidity Reserves Requirement from 15% to 7.5% which has led to reduction in interest rates or RBM directives on currency trading have also slowed down Kwacha depreciation.
I am, though, skeptical that these desperate moves will really make a difference because they are ‘knee-jerk’ reactions. We need to find more permanent solution to stop this madness.
- Honorable David Bisnowaty, MP Lilongwe City Centre Constituency, -Malawi Parliament.