The Minister of Finance and Economic Planning Sosten Alfred Gwengwe on Friday signed a USD14 million grant (approximately MK12 billion) with African Development Bank (AfDB).
Speaking after the signing ceremony, which took place at the Capital Hill in Lilongwe, Gwengwe said the grant will be used for financial inclusion, competitiveness and digitalization.
He described the grant as a timely intervention towards the attainment of the Malawi 2063, the country’s long-term vision.
Gwengwe assured AfDB that the grant will be managed in accordance with the provisions of the agreement.
The minister added that DFIC project is aligned with the Malawi Digital Economy Strategy (2021-2026) and the Third National Strategy for Financial Inclusion (2022-2026); both contribute to achieving Malawi’s long-term objective of inclusive wealth creation supported by an inclusive financial system and digital economy.
“I am delighted to have signed, on behalf of the Government and people of Malawi, a grant agreement with the AfDB Fund, for the implementation of the three-year Digitalization, Financial Inclusion and Competitiveness (DFIC) Project, to the tune of 10 million Unit of Accounts (approximately MK11.7 billion),” he said.
Gwengwe said the main objective of the DFIC Project is to promote digital financial inclusion and develop an enabling environment for digital trade by building a robust and harmonized e-payments policy to enhance economic competitiveness and social resilience.
On the other hand, the specific objectives are to (a) develop a digital payment ecosystem that will improve financial inclusion, accountability, efficiency and transparency of the payments system and reduce costs associated with a cash-based system; (b) strengthen mechanisms to support the competitiveness of the private sector and improve access to national and export markets; (c) improve access to financial services among the general population with a particular focus on Small and Medium Enterprises (SMEs), women, youth and rural populations.
Gwengwe said access to quality and affordable financial services, particularly to the excluded, enhances inclusive economic growth and reduces both poverty and income inequality.
“As a country, we have made positive strides in increasing access to financial services among our people. However, the majority of our population remain excluded from accessing basic financial services such as savings, credit, insurance and payments,” he said.
According to the Malawi Financial Literacy and Consumer Protection Household follow-up Survey, overall, only 29.1 percent of Malawians have access to formal financial services. In addition, there are huge disparities in access across areas as well as gender.
Only 24.7 percent of rural residents have access to formal financial services compared to 53.1 percent.
Among other things, the bank expressed commitment to continue helping the government of Malawi through various interventions, with infrastructure development being one of the major items on the agenda.
Speaking earlier, ADB Country Manager Macmillan Anynwu said the digitalization project aims to help increase access to financial services and efficiency of business transactions for small businesses in Malawi.
Anynwu said Malawi and AfDB) will ensure smooth implementation of DFIC project.
“This grant resources will be used to upgrade the financial system infrastructure to a more efficient and transparent digital payment system.
“The signing of the DFIC project grant agreement today is an important step towards promoting the use of electronic transactions in Malawi to increase access and use of affordable financial services, particularly, amongst women, youth, and rural dwellers,” he narrated.Follow and Subscribe Nyasa TV :