Malawi MPs lament ‘economic terrorism’: Bank interest rates are extortionate

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 .

Bisnowaty: Subjeted to slurs by MCP

Bisnowaty: Subjeted to slurs by MCP

Menyani: MCP for electoral law reforms

Menyani: We have been reduced to economic slaves for the bank master

Gondwe: We are at the bottom end of the cave

Gondwe: We are at the bottom end of the cave

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.

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10 thoughts on “Malawi MPs lament ‘economic terrorism’: Bank interest rates are extortionate”

  1. Ubunthu wamntundu says:

    This guy is a Jew. And as far as I know in that religion interest is prohibited. In fact in all religions. Nde akuthandauza chani? Why doesn’t he get his fellow Jews to come and set up interest free banks. Zachamba et… Whether 40 percent 10 percent or 100 this system of the bank is what has sucked up most of the blood and sweat of nations and has resulted in the incapable state of the average Malawian man to obtain any lad due to lack of collateral – to be in such a state. This guy is speaking on behalf of the already capable or his just trying to sound clever quoting people like Jefferson. Can you compare the lively financial state of America then to inevitably dying state of our. Unless you believing in the rising of ghost then maybe but otherwise don’t take us to be fools!! Go blow your trumpet in Israel maybe you can buy time for some of the world countries that are in their dying breaths!

  2. Pop Francis says:

    Israel or Malawi economy

  3. Mbutuma says:

    …..is it that the captain of a ship be the MBALE of one with knowledge and art of navigation or the possesor of the knowledge and art it self………? ……..the one who enjoys the shadows remain there and elect master of shadows to lead them, but the master takes them to nowhere apart from dip corner of the cave….but the realization that you are in a cave means you have seen the light and that is the first step out of the cave, but if the king is benefiting from the caves darknes do u think will allow anyone to follow the light. ………….??????? Probably will remain slaves forever..

  4. Abeat Minthu says:

    That is why NO foreign company want to come and invest in Malawi. Interest is high too abnormal high. Then they take charges on savings. What a heil is this? How can small savers save money in the bank? This is why people found there own way of borrowing “Bank Nkonde” this is illegal in civilised world. But small businesses especially women is better with 20% Interest than 40%. I went to Zambia there were many foreign banks. TZ is the same. If Malawi could get foreign banks people will never bank in traditional Malawi banks. They will go bank rupt.

  5. The Ambassador says:

    Yes honorable mp,
    Remember this interest and that inflation are the works of you Jewish people.
    It’s your own make this syndrome in order to reduce the number of the would be rich or well to do people of another nation. Yet,you today seem as if you are concerned with our plight.

  6. Dengulanga says:

    What type of Economics do you expect from a DPP government whose anchor foundation is woven in ABSOLUTE KLEPTOCRACY. A government with corrupt rulers (kleptocrats) inclusive of Bisnowatty, CHAPONDA,MUSSA,NAKHUMWA,GONDWE,APM, MULLI, that use their power to exploit the people and natural resources of their own territory in order to extend their personal wealth and political power.

  7. Kent Y.G. Mphepo, Blantyre says:

    Countrymen,

    I always get angry when some people speak as if they have the monopoly of wisdom or knowledge in this country. Malawians, let’s accept that our economics are upside down and all these debates we are having today are a result of the bad economic trajectory we have chosen to walk on for the past two decades. Being someone who was born and raised on farmland in the 60s, 70s and 80s I always wonder why some people think that answers to our economic quagmire will come from textbooks and the jargon that goes with them. To me the problem is clear: since 1994, Malawi has been prioritizing politics over sound agricultural and economic policies and pursuits. The politics of populism and political vengeance is what has killed the agricultural sector more than anything else starting with the Muluzi administration in 1994.

    For example, the introduction of Kaunjika business killed cotton production; allowing untrained people to grow and trade in tobacco killed the tobacco industry; the introduction of starter packs that graduated to input subsidies (sold below market value) killed both livestock production, tea production and maize production; the unplanned phasing out of the Malawi Young Pioneers killed the irrigation schemes that used to supplement agricultural production in the country; the non-repairment of the railway system (by those who wanted to make money through tracks) led to the high cost of road maintenance and heavy expenditure on fuel; the destruction of DEMATT, SEDOM, MDC, farm loans by commercial banks etc led to the death of SMEs and big industries; the introduction of privatization of national assets let to the flight of capital through crooked foreign businessmen who bought the once stable national assets such as David Whitehead @ Sons; the selling of government houses for a song to wealth businessmen and civil servants opened the floodgate of asset-stripping culture that has resulted in the loss of many national asset including MSB; the removal of the forfeiture Act that has led to the growth of corruption including cashgate – I can go on and on. In simple terms, Malawi has now become a shell of its own past.

    Only 10% of the population of Malawi have 90% of the country’s wealth leaving the majority in abject poverty. The education sector is dead; the health sector is dead; the power sector is dead; the security sector is dead (thieves can even break into the VP’s house and go uncaught! – my foot!! What Malawi needs right now is a complete overhaul of this crop of leaders. Many of them need to pay back the money that they have stolen over the years. Malawi needs a new set of leaders who have the people of this country at heart not those who just want to line their pockets with public funds.

    To me, discussing bank rates at this point is immaterial because what is happening now in the banking sector is a sign and a result of bad politics. Malawi has turned into a consuming country in the past twenty years. Malawi has entertained the culture of theft and plunder. Where are those big estates that used to produce beautiful maize, cotton and tobacco crops? Where is ADMARC that used to buy and sell farm produce in a timely manner and at affordable prices? Where are those big prison and MYP farms that used to supply food to our patients in hospitals? Where are those big estates that used to grow a beautiful crop of tobacco? Where are those railway lines that used to transport fuel and other goods at an affordable cost? Where are our men and women of integrity that used to run our banks, government offices, hospitals, schools, etc??? Where are our leaders who used to conduct crop inspection tours knowing that the Malawi economy relies on nothing but agriculture? Where is the youth week that used to mobilize the whole Malawi population to carry out development work in each and every corner of the country for free???

    Unless Malawi gets rid of leaders who think about nothing but partying, campaigning, stealing from the poor; amassing wealth for themselves and their cronies; promoting their tribal groupings instead of preaching the message of national unity; selling party manifestos instead of developing the national vision, etc we should forget about making the nation great again. These people have too many things to hide and that’s why they keep flocking to those who are controlling the ACB, police and the judiciary. They want safety from prosecution!

    But, as they put it, a day is coming when the truth will out. I can’t wait for that day. This is the day that will save Malawi. It is the day that banks will start behaving.

    I rest my case.
    Kent Y.G. Mphepo, Blantyre, 0888435629 (for constructive discussion only)

    1. Qwerty says:

      Insightful analysis Kent. Sound policy (economic, agricultural, etc.) has indeed been wantonly sacrificed at the alter of political short-termisim for the convenience of the elite. The transition to democratic pluralism was badly managed and we have descended down the path to rot ever since with successive governments since 1994. In the name of inclusive economic growth, we swallowed hook and sinker the deregulation, privatization and marketization gospel preached by the Bretton Woods institutions without adequate consideration of our local settings. As you posit, we need a different kind of structural adjustment to rebalance the levers of our politics and economics. We need a leadership that can restore the integrity and functionality of governance institutions as well as instil sanity in free enterprise. The important question is however one of practicality: How do we drain the swamp? What you propose is nothing short of a political and economic revolution: Who will lead this? The current political and economic establishment would certainly fight back as such a revolution would disrupt the incentive structure: Where would we start from and how would we practically move from here?

      1. Kent Y.G. Mphepo, Blantyre says:

        Qwerty, I hope that’s your real name (and I have chosen not to hide my ID. I don’t see the reason for doing so in my own country – who should I fear? Man??), I like your statement though “The current political and economic establishment would certainly fight back as such revolution would disrupt the incentive structure.” I totally agree with you. Getting out of the mess the country is in will take nothing less than a revolution and bloodshed if that’s what you want to hear from me.

        Malawi has already reached a post-democracy era and, as such, only serious mass action will dislodge the current crop of self-serving leaders and not the ballot box. See how the ATI bill, electoral laws, Section 65, etc are becoming difficult to discuss and agree on in this country. If you look at the manner the police, army and the rest of the civil service is recruited you will notice that those in power are up to no good. Those of us who grew up in the one-party era still remember how openly army and police recruitments were done. Like Mlaka Maliro puts it: “amabwera pa galaundi la mpira kwinaku akutiponyera bifi.” Sure, some things were not done right in those days. But, let’s face it the country was not as bad as what is taking place today. I can’t remember when I saw a public notice on army or police recruitment process during since we entered this political dispensation. We just see children and wives of security officers serving in the security arms of government. How they get recruited no one knows or dares to question. Are we Malawians dead or zombies?? This should tell you that those in power have turned these state organs into instruments of state capture. This I hate from deep down my heart. And this is what all of us citizens must reject at all costs.

        However, without wasting much of your time, this is how I think we Malawians can push this crop of thieves aside using democratic means: a) There has to be a clear understanding among us that Malawi is for all of us – besides, no one is more Malawian than another and we have a collective duty to safeguard the future of our children and no one but us will solve our problems b) In situations where democracy has failed there are ways in which those who love their country can restore it buy using democratic (or undemocratic means where the situation so requires? I leave it to you to decide) – but as law abiding citizens I prefer Malawians should use democratic means in getting this sorted out the soonest c) For this happen a group of “akadziotche” must emerge like it happened in in 1944, 1953, 1959 and the early 1990s. These people should be ready to put their lives on the line for no freedom comes without the shedding of blood (check the scriptures). This is why I don’t like the idea of hiding our names or using pseudos. I already see signs that the DPP government is ready to use guns to perpetuate power BUT we need to prepare to face them will peaceful action d) We need to agree on a day when students, civil servants, trade unions, farmers, vendors, etc will unanimously agree to withhold labor and flood the streets until a referendum date is set to decide on the finalization of the Constitutional Review process (that was abandoned in 2007) and when it must implemented. My heart bleeds each time I see the current crop of leaders rape our constitution left, right and center (like the crossing of the flow buy some Parliamentarians particularly those from UDF and PP and independent members of parliament). This evil needs to be dealt with once and for all and this is the time. Actually, the continued merging of UDF, PP and DPP in Parliament is meant to ensure that come 2019 power remains in the hands of thieves that have managed to silence the ACB and all law enforcement bodies in the country so that they continue enjoying our taxes illegally. e) Malawi needs the Senate so it should veto self-serving decisions usually made by our partisan Parliament. Malawians, know that the current state of Parliament will not take this country anywhere f) Develop the national vision to be manned by the Senate but only use party manifestos for recruiting a befitting political party to implement the national plan every five years. Party manifestos are useless without a national plan g) call for early general elections to be conducted under a new Constitution.

        I know that there are Malawians who are as angry as I am and are willing to just me in this mission. These are just my views but I know that there are other equally concerned Malawians who are fed up with the deteriorating situation in our country. Please, let’s link up and begin to talk. Let those who want to arrest us do so. This is our only country on planet earth and we cannot just watch our country being plundered as if we are all headless. Let’s wake up and make Malawi Great Again. I hate to see Malawi sinking and yet the rest of us are just watching. I hate the stealing of money that is going unabated and yet the rest of us are just watching. I hate the asset stripping that continues to occur among us and yet the rest of us are just watching. I hate to see people losing their jobs due to dwindling production in sectors of our economy and yet the rest of us are just watching. I hate to hear lies on critical issues in the country such as the ATI, electoral reforms and yet the rest of us are just watching. I hate to see farmers working all year round but only to be cheated at the auction floors and yet the rest of are just watching! Wake up Malawians you are the greatest losers, NJOKA SAWETA!!!

        I rest my case.
        Kent Y.G. Mphepo, Blantyre, 0888435629 (only serious-minded citizens should enter this discussion)

        1. Karrim says:

          Well narrated. However, we must not overlook that some of these problems are externally induced. Before we rush to oust the current regime over some of those issues, we must well in advance contemplate how the issues could be successfully addressed without external reprissals. Let’s admit, the world economies are more interdependent than it it were a decade ago, just as they were more interdependent a decade ago than half a century ago! Your presentation leaves a lot to be desired if it is really about prohibitive interest rates.

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