Malawi go backwards on banking, financial inclusion

Experts have said Malawi is moving a step forward and miles backwards in policies meant to stabilise the economy one of them being financial inclusion.

This is coming just few days after Minister of Finance Ken Lipenga reported to Parliament that government had made headway to include those in need of banking services through Financial Inclusion Malawi project.

Only 18 percent of Malawi’s 13 million people have access to banking services and the project is meant to increase accessibility of the services.

Lipenga: Claims the country has made headways

However the same government is busy hitting itself below the belt as it has now started to collect 16.5 percent of value-added tax (VAT) on banking services with effect from February 1.

Members of the banking industry who are in the forefront to implement the financial inclusion project say the decision will make banking services unattractive.

“This government stopped listening years back because commercial banks cannot pay for this tax, it will be passed on to the consumers and they are now giving us a tough assignment by expecting us to go out there and convince the illiterate members of society on how they must spend more of their hard earned cash by keeping money in banks, it is totally impossible,” said one banker.

Consumers Association of Malawi (Cama) said it is worried because the development is coming at a time when the economy had gone south.

Cama executive director John Kapito the coming in of Vat on banking services means there is no point of keeping money in banks as people will pay more.

“Already we have complained of hidden banking costs and government thinks its wise to bring more taxes on the suffering Malawians which is not fair many people are strained with numerous taxes that are there and this is multi-taxation because it is the same money that being deducted everywhere,” said Kapito.

Rising commodity prices and erratic fuel supplies has exacerbated Malawi’s economic crisis and prices for basic commodities such as maize and bread, jumping up by over 60 percent since November 2011.

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