Africa-Press – Malawi. The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has proposed the introduction of a differential policy rate by the Reserve Bank of Malawi (RBM) to enhance access to affordable credit for productive sectors and boost economic growth.
MCCCI Business Development Director Lucky Mfungwe made the proposal during a Monetary Policy Committee (MPC) stakeholder meeting in Blantyre.
Mfungwe observed that at 26 percent, Malawi’s policy rate remains higher than in neighbouring countries; Zambia at 14.5 percent, Mozambique at 12.25 percent and Tanzania at 6 percent.
He warned that this disparity could hamper industry growth and ability to compete with neighbouring countries.
Mfungwe cited MCCCI’s analysis of macroeconomic trends from 2015 to 2025, noting persistent inflation, reactive monetary policy and sluggish gross domestic product (GDP) growth.
“There is a need for strong legal and policy instruments to implement a differential policy rate system, to ensure the system is transparent, targeted, and effective. This differential policy rate could be a viable, short to medium-term solution for Malawi to cushion the private sector while maintaining monetary discipline,” he said
However, he cautioned that success hinged on clearly defined sector targets and eligibility criteria to avoid abuse of the system.
Mfungwe further said while RBM’s policy is actively tackling inflation, structural challenges continue to limit sustainable growth— suggesting that monetary measures alone are insufficient.
Meanwhile, Financial Dealers Association of Malawi President Leslie Fatch has welcomed the decision to hold the policy rate steady, saying further increases would have worsened inflationary pressures.
“RBM has other tools for managing inflation, which should be leveraged alongside the current stance,” Fatch said.
RBM Director of Financial Markets Chakuza Linje confirmed that discussions on a differential policy rate are ongoing.
“We are assessing how such a system would impact money supply, production and overall economic health. It is under serious technical review to determine whether it would be beneficial or counterproductive,” Linje said.
Economic Association of Malawi senior economist Luscious Pawa stressed the importance of complementing monetary policy with supply-side measures.
He applauded the MPC’s consistency in policy despite global uncertainties and market volatility.
“We are pleased that earlier recommendations are being considered, especially regarding inflation control and foreign exchange supply,” Pawa said.
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