NBM Development Bank ‘game changer’: Minister bemoans loan default by Malawi business persons

National Bank of Malawi (NBM) plc has launched the NBM Development Bank which has been descfribed as a game-changer in solving capital challenges for small businesses.

Kawawa: NBM Development Bank chairperson

The NBM Development Bank was launched on Thursday in Lilongwe and is the first ever private sector led development institution to be set up in the country, intends to support businesses as way of creating enterprises.

Malawi Stock Exchange-listed bank’s   chief executive officer Mac Fussy Kawawa  said the NBM Development  Bank brings a difference in the sense that it is what the market has been waiting for in the sense that currently commercial banks target has been mostly for short term lending.

“We are looking forward to helping those that have projects or have ideas that have to be translated into projects that have long term tenure to start bringing in cash flows.

“And in doing so we believe we will contribute towards the creation of employment and the growth of businesses that the country will very much need,” said Kawawa, who is also NBM Development Bank Chairperson.

He said the development banks’ support towards start-ups will be in different forms either by putting in direct equity capital or by extending a long-term loan at an interest rate that will be lower than the commercial loan.

Speaking at the launch, Minister of Finance, Economic Planning and Development, Joseph Mwanamvekha bemoaned the loan default culture by some business community in the country, saying such a tendency has led the financial sector to face challenges.

He said such a culture is killing the Small and Medium Enterprises (SMEs) as some have lost trust in them hence cannot be accorded loans due to repayment default of others.

“This culture prognoses the instability of the financial system in the country and discourages institutions from financing or lending to SMEs,” the Minister said

Mwanamvekha appealed to Malawians to start taking responsibility for their actions and respect agreements put in place by servicing their loans once they are borrowed.

For this reason, Mwanamvekha said, the intention cannot materialize if SMEs opt to default loan payment.

He cautionedinstitutions and even individuals to desist from this behaviour saying failure to do so will lead to the law taking its course.

“There are business persons out there who roam from one bank to the other with the plan and objective of defaulting payment. Even for enterprises that are making money enough to cover their operations and even to pay loans, would deliberately choose to default.

“When the finance providers demand payment from them they would rush to the courts to take an injunction although it is clear that they have borrowed and have failed to pay,” the Minister said.

Mwanamvekha said government together with the Banks needs to make sure that the commercial court works so that this behaviour should be reduced while at the same time ensuring that credit reference bureaus are working and playing their role in ensuring that this behaviour is brought to an end.

He observed that despite being at the heart of government’s development agenda, SMEs face challenges in access to finance and as such the coming in of NBM Development Bank would work towards addressing that hence the need for SMEs to honour their loans by paying them.

Mwanamvekhacommended NBM for setting the pace by establishing the bank thereby complementing government’s efforts to industrialise the country and make Malawi a producing and exporting nation.

He appealed to the development bank to work towards addressing challenges that SMEs face.

NBM Development Bank is 100 percent owned subsidiary of National Bank of Malawi meant to support start up as well as existing businesses.

It is the transformation of Inde Bank which NBM acquired in 2015 whose aim for the acquisition was to transform it (Inde Bank) to its original mandate of providing long term financing to SMEs.

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Ungwelu
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Ungwelu

Although I have reservations about NBM establishing this other Bank, the fact of the matter is that Banks and related institutions in Malawi swindle Malawians who are honest. Indians and Chinese are dishonest and are the ones enjoying banking. My friend complained to me that he applied for K1,000,000,000 from a local bank but by the time he received the money into his account he paid out almost K500,000 (excluding his time+other running costs) to get collateral. He said he had to deal with Lands, Registrar General, Attorneys, etc. He lost a lot yet the actual value of application was… Read more »

Njolo mpilu
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Njolo mpilu

Fact on [email protected] koment

Justice Uris's
Guest
Justice Uris's

Cash gate made most Malawians to lose their businesses. How could rates jump from 22% to 48% then confiscate citizens property and say the country economy is doing fine while mukubela anthu.

Mr Truth Pains
Guest

Welcome development @ National Bank, keep it up but plz avoid kulanda zinyumba chifukwa uku ndiye kuphana.

DRAKE
Guest
DRAKE

I have my reservations with National Bank, I wish a different investor had established this

Wina Mpoto
Guest

The interests rates are very high for Malawians to afford a good return on investments hence the high rate of defaults.

Mandado@147
Guest

Same shit just a different brunch! Collateral ndi zizake! Fix taxation policy and Forex externalisation policy among others for business to flourish! These digital banking are supposed to be free and user friendly not these outdated shit on the market! Go abroad and learn how its done. Not these BS Mpamba, airtel, Visa and all in Malawi.

BICC
Guest
BICC

A bank that is supposed to help small businesses has launched another institution to help small businesses. Got it. And what was minister Joey doing at the launch? Can you (Joey) be useful for once?

JOSHUA JEDEGWA
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JOSHUA JEDEGWA

that is a good news we have been waiting for, for so long and GOD have answered our prayers through NBM, this is a good development it will help to develop our country and make Malawi a good place to leave rather than going to South Africa in the name of searching green pasture and end up being tortured by tsotsis. I will would like to encourage other stakeholdersto join hands with NBM to support that a genda. A person is only person through another person from unknown

Analyst
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Analyst

Excellent! Bravo NBM