Malawi, advancing steadily towards financial inclusion

James Schintz|Feb, 2015

The outlook for Financial Inclusion in Malawi continues to improve, driven by new products and reach of market actors.  The technology infrastructure for financial service is improving, finally implementing a much needed national switch[i] to improve interconnectivity between banks.  Mobile Money is maturing, seeing the entrance of a second major player in the market, TNM, in addition to dominant Airtel[ii].  Evidence of success from a 2011 agent banking initiative by the Reserve Bank of Malawi[iii] can be seen from the number of Commercial Bank Agents present in districts where traditional brick and mortar bank branches are not.  Even mobile money seems to be actively adopting a similar strategy of using established retail outlets for agent roll-out, circumventing infrastructure woes prone to small agents[iv]


The testament to these improvements can be seen in the most recent Finscope survey, increasing financial inclusion from 45 per cent in 2008 to 54 per cent in 2014 in the formal and informal access strands[v].  But even with all this progress, Malawi still has far to go, with most service points continuing to gravitate to the three largest cities.  Compounding this issue, a major problem to small agents in Malawi has been liquidity as well as general infrastructure woes, minimalizing the impact of small agents[vi]



The result of these issues can be seen in geographic patterns for the ratio of # Access Point to Adult Population.  In the less populous Northern Region, districts have a slightly higher ratio, indicating that supply of Cash-In Cash-out Access points is being driven by geographic coverage focused on market centers, and not pent-up demand.  An important note to this trend is that data on ATM’s and Mobile Money Agents were not attainable for this release, and are likely to change this outlook greatly.



Luckily MIX has gained continued support from UNCDF to specifically tackle this lack of market information through the MM4P program by working directly through local market actors to collect this data[vii].   For a country where 2/3’s of the population is rural and 3/4’s of the population lives on less than $2/day, the next stage of growth in financial inclusion will depend on reaching consumers through pro-poor products[viii].  The most recent Finscope survey reveals that affordability is the largest inhibitor to uptake of financial services.  With the average Malawian taking 77 minutes to reach the nearest bank branch, that hidden cost of location adds up[ix].   Determining where to place access points to new financial products will be a critical step to inclusive finance, and for that one needs to know where access already exists.  Enjoy exploring MIX’s financial inclusion analytics for Malawi.