Members of Parliament have lamented over sky-high interest rates, rolling over personal loans, saying many Malawians are facing hardships as commercial banks have been accused of ripping off customers .
Lilongwe City Centre MP, David Bisnowaty of ruling Democratic Progressive Party (DPP) who is also a businessperson, accused the banks of profiteering.
Bisnowaty in his contribution, quoted Sir, Thomas Jefferson, the third President of the United States giving an advance warning some 200 years ago, saying “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 issues of their currency first by inflation and then by deflation, the banks and corporation that will grow above around these banks will deprive the people of all property until their children wake up one day homeless on the continent their fathers conquered.”
The legislator said it is “most amazing how accurate Thomas Jefferson was 200 years ago because this is exactly what is happening in Malawi today.”
Bisonwaty pointed out that many Malawians are facing serious economic hardships; companies are closing businesses while banks are boasting on posting billions of kwachas in huge profits.
“These economic obscenities are among all of us. We have now just been reduced to economic slaves for the bank masters,” said highly charged Bisnowaty.
The lawmaker said Malawians and many organisations are paying about 40 per cent or more in interest rate to the banks while the same banks, pay them only 10 per cent or less on their saving and fixed deposits.
“Such a practice and wide gap between the two interest rates are blankly illegal in many civilized communities. Investors are kept away and our businesses continue to fail because of such sky high bank interest rates. The banks are blinded by the financial greed of such absurd injustices.
“We all know, Mr Speaker, Sir, for companies to grow, they need to borrow money. We all know that for the families to improve their life, they need to borrow money. Well, this is not the case in Malawi,” said Bisnowaty.
According to Bisnowaty, what is happening in Malawi by commercial banls imposing prohibitive rates on loans Malawi is “economic terrorism.”
He said: “ It does not make sense in fact, it is an economic absurdity in Malawi it must therefore be a clear indication that the banks are busy making billions of kwacha in profits while Malawians are getting poorer by the day.”
The MP called for “ serious and drastic action” to be taken to correct the “injustice” which he said is dragging Malawi into economic crises and not allowing the nation to develop.
Bisnowaty made the remarks when seconded a private members motion by Dedza North West MP, Alekenu Menynai of Malawi Congress Party (MCP).
Menyani said most Malawians have given hope and have counted themselves out of enjoying the fruits of what would come out of commercial bank loans.
“We, therefore, as a National Assembly should try and endeavour to uplift low earners by making necessary amendments to allow for Malawians to be able to access loans,” said Menyani.
In his remarks. Minister of Finance, Economic Planning and Development Goodall Gondwe said government is also concerned about the interest rate levels in the country as anybody else.
“We have done a lot to see to it that rates should be reduced and we are still doing that. As matter of fact, we are hoping very much that in the course of this or next month, something drastic should take place,” Gondwe said.
Reacting to what Bisnowaty said by quoting Thomas Jefferson, Gondwe said the lawmaker did not quote Hamilton who at that time was the Secretary to the Treasury and in fact he had quite an opposite view that in fact prevailed over that of Jefferson.
“The reason is that there is a lot of background that we should cover in order to reach decision on interest rate. Economics is a very delicate subject in this case. If you do one thing against the market, something else will crop up that will also hurt you.
“We had a problem in 2009 of lack of foreign exchange. The reason probably some people would say it is because we artificially reduced interest rate at the time, people will say so and this is the possibility that could happen now,” said Gondwe.
Gondwe called for caution on legislating on an economic matter.
“You could legislate on one thing; something else is going to crop up later which will be even perhaps worse. I would suggest that we should approach this subject with sober minds. There is no emotion that will help us in this matter. I think that if you left it to us and the Reserve Bank, we should be able to resolve the matter amicably and see to it that we come up with a balanced approach,” he said.
“We will have to find it because everybody in the country now knows that we are at the bottom end of the curve and we will really have to get out of it in terms of economic growth which is now at about 2.9 per cent. We are aiming at a very rate if we are going to do something about poverty issues in the country, everybody knows that.
“And we as a government are particularly concerned that we should move out of this situation as quickly as possible but in a balanced way because if we just say 100 per cent interest rates now will be reduced so much, we may create another problem as we did before,” Gondwe said.
The Finance Minister explained that interest rates work hand in hand with inflation.
“The fact that in this country we agreed with the IMF that the exchange rate should float freely meant that at the same time, we agreed that inflation will grow up freely. Since May 2012, this has been the case and we allowed that to happen and the result is that the interest rates are very, very high and we will have to deal with the situation in a more balanced way. It will not happen by legislation,” he said.
He asked that government should work with the Reserve Bank to come up with a balance approach to interest rates, exchange rate as well as inflation.
Meanwhile, the central bank has announced the reduction of the policy rate or the bank rate from 27 percent to 24 percent.Follow and Subscribe Nyasa TV :