In which Will sees Blantyre's flourishing banks at close quarters – and the magazine’s progress is pagono, pagono…

Dear MT,

At the moment, I’m in Blantyre, the financial capital of Malawi, to launch the magazine. Or was: the printers had forgotten to print the magazine, so the launch has been delayed, which is a bit embarrassing. I do have assurances, though that it will be ready tomorrow. Not that I can be sure. Pagono, pagono.

The unexpected time off has, though, given me a chance to explore the city. Sitting in the beautiful garden of a guest house in the centre of the capital in glorious sunshine, it’s easy to forget I’m in one of the poorest countries in the world. Blantyre breathes business: as suited businessmen rush around, the shell of the enormous new headquarters of the National Bank looms above me. It’s vibrant and exciting, and thoroughly dominated by the banking sector.  

The new National Bank building is one of many the company’s erecting across Malawi. In fact, almost all the new buildings across the country are glistening new banks, towering above market stalls and dilapidated shops and offices. The banking industry is phenomenally wealthy compared to the rest of the country – and it’s easy to see why.

Take my personal account, for example: it’s actually a savings account, but we chose it because it offers a better interest rate than the standard current account. It pays 2.5% a year, roughly in line with what others pay. The central bank rate, on the other hand, is 15%. For the privilege of being 12.5% poorer each year, I pay 800 Kwacha (£3.70) a month. If I wanted a loan, I could expect to pay around 30% - and outside the banking system, I would be looking at 50%.

In the UK, we think lack of competition in the banking sector is detrimental to the consumer. That argument isn’t borne out in Malawi: there are 12 national banks, and only about 19% of the population have bank accounts – which means just 2.7m people fund the profits of 12 banks.

And those profits are huge – last year, National Bank paid out K1.2bn (£5.5m) in dividends on a pre-tax profit of K5.6bn (£26bn), which means the profits of one of 12 banks was equivalent to 1.15% of GDP for the whole of Malawi. Yesterday, the state-owned Malawi Savings Bank posted a profit of K865.5m (£4m) (up 101% from the previous year - crisis, what crisis?). That’s an astonishing performance on revenues of K2.1bn (£9.7m).

People here don’t have pensions or investment instruments, so the money’s largely circulated around a small group of politicians and professionals. There’s only one cinema in Malawi and, being based in Blantyre, it’s likely its patrons will be comprised of this small group. It makes me wonder if the new Robin Hood film will be a success here.

Yours,   
William Mitting