Commercial banks’ attempts to annihilate ‘Banki M’khonde’ worrisome—Analysts

Socio-economic analysts have described as unfortunate bids by some commercial banks in the country to monopolize village banks also known as Banki M’khonde, saying the development will have far-reaching consequences for Malawian communities socially, both in rural and urban settings.

Of late, some commercial banks in the country have launched a spate of promotions whose chief aim is to woo village banks to do business with them.

National Bank of Malawi (NBM) was the first to advertise its Kasupe Village Bank followed by Standard Bank of Malawi’s Zichuluke Promotion. NBS and FDH banks also have Tidalilane Village Bank Account and Nkhokwe Savings Account promotions respectively.

Last Wednesday, FDH Bank’s Head of Personal and Business Banking, Kawawa Nsapato, said the Bank believed the account will “assist village savings groups to safely save the money contributed by the members whilst earning extra interest.”

‘Social Platform Threatened’

But renowned commentator, Wonderful Mkhutche, said the interest of the banks in the village banks had the potential to negatively affect people’s way of life socially.

“Village Bank is more about the money. It’s a social platform as well. I am afraid, when commercial banks step in, they will drain the social life from the Village Banks. People meet, talk about money, laugh, borrow money and go home, without much hustles. This may be lost,” bemoaned Mkhutche.

Dobbins Tembenu, commenting on ZBS Facebook page, opined that as long as the Banks were commercial, they will always look for something in any relationship.

“The village banks on the contrary have one reason why they were introduced, to improve on social-microeconomics on the lowest possible platform targeting those small village groupings in trying to bridge the big gap between the rich and poor. I believe it is the very same commercial banks which are partly to blame for the status quo.

“If the banks have something different to offer as opposed to the very reasons the village banks were established, then, I should believe they are trying to gag the very system which could have helped to cure our bed-ridden economy by widening the gap further,” wrote Tembenu.

He said he was not against the Banks’ new intervention but said was worried with the village banks if they were going to take the trending bets.

“If commercial banks are able to make exorbitant profits after tax in a crumbling economy, then surely something else is not in the right place. All said and done, it is up to the village banks themselves, who have the last say upon weighing the stones on offer to make a decision,” he said.

Malawians Prefer Banki M’khonde

According to the 2018 Malawi Population and Housing Census, 23 out of every 100 of Malawi’s 17.5 million people save their money; and that most of such savings are made with village banks (11 percent) and other means as opposed to commercial banks (7.4 percent).

Tusekile Mwanyongo, 48, a single mother and an ardent villager banker in Karonga told Nyasa Times on Saturday that she preferred Banki M’khonde because it was easier to access financial help.

“I once had a [commercial] bank account once, but they [the bank] treated me like a slave out of my own money. I am better off here [with the village bank]. The interest rates are fair at 20 percent.

“And the interest we make is shared equally at the end of the year making my savings worthwhile as I reap more than I could at a formal bank. Customer care is also 100 percent as compared to formal banks where they will deny you your own money for petty things such as a small mistake in your signature,” said Mwanyongo.

Retired Nico Holdings CEO now Finance Minister, Felix Mlusu, had at a 2016 bankers conference observed that failure by commercial banks to satisfy the needs of customers, citing poor customer service, lack of competition and lack of innovation, among others, has caused the phenomenon of village banks to spread like wildfire.

“If you don’t start giving the customers what they need, your market share will continue shrinking and you will wake up one day to find that village banks have taken over,” Mlusu had said.

‘Inclusive Financial System’

Bankers Association of Malawi Chief Executive Officer, Lynes Nkungula, said commercial banks recognize that a more inclusive financial system is critical to development, hence the initiative.

“Formalizing village savings will protect consumers from exploitation and, if the product is well managed, the risks could be very minimal. The purpose is not to wipe out the village banks but to work hand in hand,” Nkungula told The Daily Times.

But Pharrison Mwale, managing consultant for Intellect Link Consultants, told the paper in a separate interview that the development is an attempt by commercial banks to tap into members’ contributions to enhance their deposit base.

“The banks are indirectly tapping from the unbanked population through the village bank contributions,” Mwale said.

Follow and Subscribe Nyasa TV :

Sharing is caring!