Two Malawian Banks participated in the Malawi Diaspora Consultative Meetings in the United States of America. The meetings were called upon by Hon Emmanuel Fabiano, MP, Minister of Foreign Affairs and International Cooperation and took place in New York and Virginia on 24th September and 1st October, 2017 respectively. The Banks made presentations on their product offerings and how the Diaspora can participate in the financial sector back home. .Presenting to the gathering in New York, Mr. William Mpinganjira, Deputy Managing Director of FDH Bank , outlined products that the Bank recommends to the Diaspora. He said that FDH Bank is accessible 24/7 through FDH Online banking, or FDH Mobile app. He further explained that, with FDH Bank, it is possible to pay someone in Malawi even though the person does not hold an account with any bank. This is made possible by creating a mobile wallet which sends e-value to a mobile number. The Bank decided to come up with this exciting product considering that about 60% of Malawians do not have a bank account while most them have a cellphone.
On investments, he explained that FDH Bank offers high interest earning investments. According to Mr. Mpinganjira, the Bank is excellent in execution of clients’ instructions when they want to invest on the money market inclusive of the stock exchange. FDH Bank is part of a larger Financial Holdings Group which owns an investment firm, FDH Discount House and a foreign exchange bureau, FDH Money Bureau. He further explained that investing on the stock market requires patience as gains are realized in
the price movements rather than dividend. He said “even though economists would factor in
the value of the Kwacha over time and discount the gains, it remains one of the profitable ways of participating in the financial sector in Malawi. Funds can be repatriated back to the host country in observance with exchange control guidelines with the critical point being that funds have to be taken into Malawi through proper channels”
On Insurance products, Mr. Mpinganjira said that FDH Bank offers Funeral Cover and Death Benefit policies which can heavily reduce the burden of funeral expenses in the event that one loses a family member. The burden of repatriating remains of loved ones can be eased by enrolling in such a policy. The policies are underwritten by Old Mutual one of the Bank’s major shareholders.
Lastly he encouraged the Diaspora to open the FDH Diaspora Account popularly known as the Kumudzi Savings Account. The Account does not attract monthly charges and deposits can be made in US Dollars, Euros, Sterling Pound or South African Rand. The account is available to individuals as well as companies. Account holders are able to access their funds in foreign currency only when they are traveling from Malawi otherwise all withdrawals are in Malawi Kwacha.
Mrs. Sitabene Malange Majamanda, Head of Corporate Banking for New Finance Bank (NFB) presented at both meetings in New York and Virginia. She explained the shareholding structure of the Bank. The New Finance Bank is owned by My Bucks and Finsbury. In her presentation titled “The African dream – Let NFB make it happen”, she advised the Diaspora to have all the comfort in dealing with NFB as it is a solid bank even though it is new on the Malawian banking industry. NFB approaches the Diaspora through a consortium of six companies including New Finance Bank, Malawi Stock exchange, Smile Life, Charter Insurance, Alliance Capital and Public Private Partnership Commission.
She encouraged the Diaspora to invest back home citing the naturalization drives around the globe. “If not us then who” she asked stressing the point that Malawians had a critical role of taking part in the economy in Malawi. She said donor fatigue has resulted in a greater need for private sector participation to spur national development. She emphasized this point using a regression model that showed how aid locks up other variables that are dependent on public consumption which is a direct determinant of economic growth. Aid has drastically been reduced, creating a gap in public consumption. This presents a big opportunity for private sector involvement in economic activities that can spur growth. Through Public Private Partnership, the Diaspora can invest in projects that are profitable while participating in the economic activities of the country.
During Q&A session, many issues were raised that touched upon the cost of banking being too high, the controls and monitoring of the Kwacha that they are restrictive in nature, and the cost of remittances.
The two bankers explained that the cost of banking is primarily linked to the performance of the economy with the policy rate, which is determined by inflation being the primary reference point. Banks charge a margin over the policy rate and apart from that rate, there is a requirement for compliance with the Liquidity Reserve Ratio (LRR). After factoring in the LRR, Banks then add a premium for risk, so that they can be profitable hence remain operational. As for the cost of banking, they encouraged the Diaspora to ask for low cost accounts that are available with the two banks.
One of the participants stressed the importance of liberalizing the dollar on the Malawi market giving examples of economies that had liberalized and are developing at a faster rate. In their responses, both bankers agreed that though this could be the correct move, however, there is need to be cautious of the consequences of releasing the Kwacha without cushioning against the shocks that may arise. The Malawi kwacha is allowed to float but there is need to improve productivity in whole before fully liberalizing the Kwacha.
The Diaspora appreciated the two banks for presentation which cleared gaps in information that was available to the community the community. Most of them said that they were encouraged and made indications that they would take steps to start investing in Malawi immediately.
“We are there for you when you want to invest in Malawi”
The succinct message from both Banks to the Diaspora.