Housing Finance in Malawi

Overview

For the French version of this country profile, click here.

To download a pdf version of the full 2018 Malawi country profile, click here.

Malawi is a small, landlocked country with an estimated population of 18.6 million people, which is expected to grow to 20.2 million by 2020.It is a young country with 64.9 percent of the population falling under the age of 24.

 Malawi’s financial sector has consolidated in the last three years.  This is as a result of the acquisition of state-owned Malawi Savings Bank (MSB) by FDH Holdings Limited in 2015, the acquisition of majority shareholdings in IndeBank by the National Bank of Malawi (NBW) in 2016, and lately, First Merchant Banks’s acquisition of microlender Opportunity International Bank of Malawi (OIBW). As at December 2017, the  number of banking institutions in the country was 10 (one discount house and nine banks), down from 12 in 2016.

Financial inclusion remains a challenge in Malawi. According to the 2017 Global Findex data, 23 percent of adults (15 years or older) in Malawi report having an account (either a personal or shared account) at a bank or another type of financial institution. While this has increased significantly from 16.1 percent in 2014, it is still low.

Given the relatively low levels of financial inclusion, it is unsurprising that there are very low levels of consumer borrowing in the country. In 2017, only 8.6 percent of adults (15 years or older) reported borrowing money from a bank or another financial institution or using a credit card in the past 12 months.

According to Habitat for Humanity Malawi, an estimated 21 000 new housing units are needed every year for the next 10 years to meet housing demand. This far outweighs the current housing delivery by the public and private sector.

Malawi has faced tough economic conditions in recent years and continues to perform poorly on various macroeconomic indicators. Poverty levels remain high and affordability and access to decent housing remains a major challenge for the country. However, recent improvements in land reform policies and planned improvements to the country’s land registration system and title deed system are encouraging prospects.

A key development in recent years has been the reclassification of customary land to private land. The primary benefit of this being that a large portion of the predominantly rural population will now be able to own land individually and potentially use this land as collateral for future housing investments.

Furthermore, the base lending rate in Malawi continues to decline and currently stands at 16 percent down from 18 percent in 2017. The banks and other lending institutions have responded accordingly by cutting their rates thereby improving access to and affordability of loans, including mortgages.

The country’s housing market continues to struggle following the devaluation of the Malawian Kwacha and subsequent depreciation of the currency to the US dollar in the following years. However, the recent developments in land policy and the government’s commitment to improving housing conditions, as set out on the MGDS III, signal positive prospects for the country’s housing market in years to come.

Find out more information on the housing finance sector of Malawi, including key stakeholders, important policies and housing affordability:


Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2018 edition, which has up-to-date profiles for 54 African countries.

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