[Malawi] Interest rate capping will not offer sustainable solutions, MCCCI
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says there are policy alternatives that can protect borrowers from excessive interest rates instead of introducing interest rate caps which could not offer sustainable solutions.
While acknowledging that high cost or finance remains an obstacle to doing business in Malawi, MCCCI Chief Executive, Chancellor Kaferapanjira said capping interest rate is not the best mechanism to address the challenge.
"We think that interest rates should indeed go down, but that we are putting a permanent structure and the law will be very difficult to change.
"We agree that there is a high rate of borrowing But the challenge is that RBM is going to intervene in making sure that the commercial banks are not just adding unnecessary risk premiums," said Kaferapanjira. He said that for example RBM Governor can not do anything.
Member of Parliament for Dedza North West Alekeni Menyani moved to parliament in 2016 proposing a law to introduce interest rate capping, after noting exorbitant interest rates on loans.
Earlier, Bankers Association of Malawi President Paul Guta concurred with MCCCI that the proposed bill could be applied instead of the root cause of high interest rates in Malawi.
"Let us find solutions or what should be done at affordable rates. The rates are high as a result of so many factors That include; operational factors zoals electricity and connectivity as well as inflation," He said.