Banks’ levy deduction concerns on the rise

Consumers Association of Malawi (Cama) says commercial banks’ decision to start deducting and recovering 0.05 percent bank levy will continue to scare consumers from using banking services. The development comes as banks have started collecting in arrears levies that were not collected for transfers done since December 30 2025 and February 9 2026 following the introduction of a 0.05 percent levy on electronic bank transfers in the 2025/26 Mid-Year Budget Review. It also comes at a time a FinScope Survey by FinMark Trust established that the past decade to 2024 has seen banks losing over 700 000 customers due to competition from mobile network operators on financial services.

In an interview on Friday, Cama executive director John Kapito said while Malawi lags behind in financial inclusion, efforts to encourage more consumers to use formal banking services will be hurt by this tax measure. “This means that few consumers would be willing to have their services in the banks as all these taxes will be passed on to consumers. I see a drop of depositors apart from corporates.

It’s unfortunate we are back to square one.” In the 2025/26 Mid-Year Budget Review Statement in November last year that Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha presented, he announced the introduction of a bank transfer levy at 0.05 percent on all bank transfers to be incurred by the sender. He also introduced a mobile money transfer levy of 0.05 percent on transactions above K100 000 paid by the sender. Mwanamvekha also increased the value added tax (VAT) rate from 16.5 percent to 17.5 percent.

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In a statement to its customers, National Bank of Malawi plc said recovery of the applicable levies is currently underway. “These charges are being applied to all qualifying electronic transfers processed from December 31 2025 in accordance with the new tax regulations,” reads a statement from the bank. First Capital Bank, NBS Bank plc, FDH Bank plc and Standard Bank Malawi plc also issued statements indicating that they are in the process of collecting the one percent difference in VAT and electronic money transfer levy.

Following the introduction of the new tax measures, Bankers Association of Malawi (BAM) acknowledged that the newly introduced bank transfer levy will make almost all banking activities taxable, leaving customers to bear the costs. BAM said the electronic transfers include account transfers, bill payments, tax payments, international transfers and inter-bank settlements. In an earlier interview, BAM chief executive officer Lyness Nkungula said it was important that taxes should be structured to encourage growth, observing that already, the new 17.5 percent VAT increases consumer costs and reduces disposable income while the 40 percent corporate tax after K5 billion profits discourages reinvestment and the 40 percent tax on Pay As You Earn (Paye) for income exceeding K10 million affects high skilled professionals and retention.

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