The Reserve Bank of Malawi wants most money transactions to be done electronically and currently a policy is being put in place which will make all local businesses offer customers at least one method of digital payment. The options include mobile money/banking, Point of sale, internet banking or other digital payment systems approved by the central bank.

Currently, the central bank along with stakeholders including the Bankers Association of Malawi, Malawi Revenue Authority, the trade ministry and the justice ministry are working on a legislation bill which will make businesses do most of their money transactions electronically.

The Reserve Bank is waiting for the justice ministry to finalise drafting a bill which is expected this month and tabled in parliament. "It is our hope that by next year we should have the law implemented in full swing,” said spokesperson Mbane Ngwira. The bank’s aim is to increase the use of digital payments and enable an environment for digital financial services accessible to all.

While the policy will give choices to businesses willing to transact electronically it will hope to encourage others who have been reluctant to offer digital payment options.

But it won’t be straightforward, cash is still king in Malawi where just 19 per cent of the population are banked, according to the Bankable Frontier Associates.

With 84 per cent of Malawians living in rural areas, it is mostly just urban and formally employed Malawians who have bank accounts. Cash dominates with subsistence farmers selling their produce and other informal sectors.

And yet, there is plenty of hope thanks to the success of mobile money in the country and a key reason for financial regulators to feel confident enough to make this push. In a country of around 19 million people there were 1.8 million active mobile money accounts in 2017 up from a mere 1,000 five years earlier, according to the Global Findex report from the World Bank. Mobile money services are used by at least 20 per cent of the country’s adult population. The Reserve Bank says 30 per cent of Malawians use digital financial services overall.

Malawi is following in the steps of countries including Kenya and Zimbabwe where mobile money now plays a significant role in their respective economies, growing rapidly over the last decade.

Financial regulators will likely be hoping enforcing the use of at least one digital financial system will help engage more of the informal sector of small businesses into formal tax systems.

Agencies