Financial Crime World

Malawi’s Fintech Sector Sees Significant Growth with Regulatory Compliance in Focus

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Malawi has made substantial progress in increasing access to finance for its citizens, thanks to the implementation of the Financial Sector Technical Assistance Project (FSTAP) from 2011 to 2018. The project aimed to modernize financial infrastructure and national payments systems, improve financial literacy, and strengthen the regulatory framework.

Key Achievements

  • Modernized the national payments system in 2015, enabling interoperability between point-of-sale terminals, automated teller machines, and mobile payments services.
  • Developed the Microfinance Institution (MFI) Hub in 2017, allowing microfinance institutions and savings and credit cooperatives to play a more significant role in serving clients.
  • Integrated mobile money services into the national switch, expanding access to finance for a wider range of customers.
  • Introduced an Automated Trading System in 2019, enabling the leveraging of technology to improve transaction processing efficiency.

Outcomes

  • Increased the proportion of women within the adult population that is formally banked from 17 percent in 2011 to 38.5 percent in 2018.
  • Achieved capacity building on digital transformation at various institutions, including the Reserve Bank of Malawi (RBM), Ministry of Finance, microfinance institutions, and savings and credit cooperatives.

Global Recognition

The project’s success has not gone unnoticed, with the RBM receiving inquiries from countries in the Global South, including Zambia, Somalia, and Kenya, on how to replicate its digital transformation initiatives.

Funding

FSTAP was financed by the International Development Association (IDA) to the tune of $28.2 million, which was used to kick-start the digital transformation of Malawi’s financial sector and strategically reposition financial intermediaries.

Legacy

The project’s legacy is set to continue with the approval of the Financial Inclusion and Entrepreneurship Scaling Project in August 2020, which aims to further improve access to financial services for micro, small, and medium enterprises. This new project builds on the foundation laid by FSTAP and seeks to increase access to finance for a wider range of customers.

Conclusion

Overall, Malawi’s fintech sector has seen significant growth under FSTAP, with regulatory compliance playing a key role in driving innovation and increasing access to financial services for all citizens.