Firms’ credit rises to K2.3tn—report

Private sector credit grew by 44.7 percent to K2.3 trillion in 2025, but the stock position remains low at 20.5 percent of the K11.2 trillion total domestic net credit from banking system, a Malawi Government report has indicated. Figures contained in the 2026 Malawi Government Annual Economic Report show that the banking system’s net domestic claims increased by K3.5 trillion to K11.2 trillion, with central government stock at K8.7 trillion and private sector at K2.3 trillion. This was driven by a K2.6 trillion increase in credit to the central government, K694.6 billion increase to the private sector and K143 billion increase to other financial corporations, according to the report.

Although the private sector credit stock remains a small fraction of the total credit, the report highlighted the progress registered in the sector’s credit access as growth was much higher at 44.7 percent compared to the previous year. Reads part of the report: “The banking system’s credit to the private sector grew by 44.7 percent to a stock position of K2.3 trillion in 2025 compared to a growth of 29.4 percent in the preceding year. “This upturn in private sector credit was driven by individual household loans, commercial and industrial loans, foreign currency denominated loans and mortgages, which increased by K329 billion, K263 billion, K67.4 billion and K33 billion, to K1 trillion, K780.4 billion, K318.1 billion and K106.3 billion, respectively.” In terms of economic sectors, the highest growth was recorded in the community, social and personal services sector at K286.2 billion followed by manufacturing at K196 billion and agriculture, forestry, fishing and hunting sectors at K107.8 billion.

The figures further show that community, social and personal services sector continued to hold the largest share of the outstanding stock of private sector credit at 42.1 percent followed by agriculture, forestry, fishing and hunting at 21.4 percent and manufacturing at 16.9 percent. The figures also indicate that between October and December last year, the private sector added K100 billion in credit after its credit stock closed the third quarter (Q3) at K2.2 trillion, according to the Reserve Bank of Malawi (RBM) Financial and Economic Review for Q3. In an interview on Thursday, financial market analyst Brian Kampanje described the increased private sector credit as positive, observing the trend of improved credit access by key sectors such as manufacturing and agriculture.

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“There is, however, a positive trajectory in the manufacturing sector as credit increased from 20.7 percent of the total lending to the private sector to 23.6 percent in Q3, for instance,” he said. Economist Gilbert Kachamba said the growth in private sector credit suggests that banks are now apprehensive about lending to government after looking at how much domestic debt has ballooned over the past couple of years. “They would rather lend to the private sector and they can afford to take on a bit of risk since they are sitting on healthy levels of liquidity,” he said. Since the fourth quarter of 2025, government reduced borrowing appetite as it started rejecting Treasury bills (T-bills) bids, a development which resulted in dropping T-bills yields and banks willingness to lend to private sector.

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