Credit to the private sector increased for a third consecutive month in May 2018, as it grew by K15 billion to K421.1 billion, figures from the Reserve Bank of Malawi (RBM) have shown.

During the corresponding month in 2017, credit to the private sector had declined by K882.1 million.

“The picking up of private sector credit partly reflects the declining path of interest rates in the country and a seasonal increase in economic activities associated with the harvest season,” says RBM in it’s recent Monthly Economic Review.

Early this month, the Monetary Policy Committee (MPC) meeting of the Reserve Bank of Malawi (RBM) resolved to maintain the indicative price of money, technically known as policy rate, at 16 percent.

This is the second time MPC has kept the policy rate unchanged since slashing it by 200 basis points in December 2017.

The adjustments led to subsequent reductions in base lending rates for commercial banks averaging.

Malawi Confederation of Chambers of Commerce and Industry President, Prince Kapondamgaga, recently said, despite the significant fall in cost of borrowing, businesses are struggling to access finance from the country’s institutions.

In the month under review, the largest movement was recorded in commercial and industrial loans, which increased by K28 billion to K172.2 billion.

In contrast, according to the report, foreign exchange dominated loans and mortgages fell by K14.1 billion and K1.0 billion to K126.3 billion and K39.0 billion, respectively.

“This partly counteracted the growth in credit to private sector,” reads the report in part.