AGENCY BANKING

Before the introduction of agent banking, I was taking me 30 minutes to travel from Limbuli
to Mulanje Boma, which is a 30-minute drive, just to deposit or withdraw money. Apart from
the cost of transport, which hovers around K2,000 to and from the bank, the process was
time-consuming, keeping me busy with transaction processes instead of doing other
productive work.”

These are the lamentations of Martin Baluti, who works for Priceworth Wholesalers and has
been a National Bank of Malawi customer for more than a decade.

However, he was not that active, a situation he blames on the unavailability of the bank’s
branch at Limbuli in Mulanje District.

Situated in the deep fields of tea, Limbuli is the last trading center one finds before reaching
Mloza border, where Malawi meets Mozambique.

Mulanje Boma is a hub of activity as major economic activities take place there. Financial
service providers and government offices are also there.

Baluti narrated that when he first opened an account, he was excited that he would be able to
save money using trusted and verified means but this excitement quickly dimmed as he
realised that accessing services would be a toll order.

According to him, even though he had an account, he opted to be keeping money in his house
so that it could be available whenever he needed it.

He also wanted to spare himself from the trouble of banking his money kilometres away.

His situation was, however, saved when, one day, he woke up to the news that his bank had
introduced agent banking services right at Limbuli Trading Centre, where he leant that he
could deposit, withdraw and conduct other banking transactions in the locality.

Baluti said, since then, he has been an active customer of the bank as the availability of
banking services at the door step has eased access to economic activities, at the same time
increasing his levels of productivity as he has enough time to attend to money-generation
activities.

“In the past, people used to keep money in the house and when there was too much money
involved, he had to abandon business and rush to the bank to deposit it before robbers could
pounce on him.

“The coming in of agent banking has helped people like me because the time I would have
used to deposit money is used for doing other business and money-generating activities,” he
said.

His sentiments are echoed by Lyson Phenyengu, who is an FDH Bank customer and was born
and raised at Limbuli Trading Centre, where he also runs a retail business.

Upon our arrival at Limbuli in Mulanje, we found Phenyengu depositing money which, he
claimed, he had made the previous day through his sales.

Phenyengu indicated that being an active bank customer has also helped him with his
savings, unlike when he was keeping money in his house.

“I feel like this has been made for us, people in rural areas, because spending money on
transport takes away disposable income. Transport money, no matter how small the amount
involved, presents a huge cost here in the village, where money is more than just a treasure,”
he said.

Baluti and Phenyengu are but just drops in a pool of people who were cut out of banking
services— their only sin being staying in a rural area such as Limbuli, where banks seem not
to have a huge customer base.

Agent banking is when a bank has engaged other stakeholders to perform the bank’s services
on its behalf, especially in areas where the bank cannot place a full branch for its customers.

A number of authorised dealer banks in Malawi have engaged agent banking services, with
National Bank having Fast Serve and FDH Bank having Banki Pakhomo as means of
reaching out to the unbanked.
It is their way of fostering financial inclusion which the central bank, the Reserve Bank of
Malawi (RBM), touts as a game-changer.

With agent banking, banks partner entities with footprints across the country such as Malawi
Post Corporation to help in serving their marginalised customers.

Apart from fostering financial inclusion through banking the unbanked, agent banking is
helping in uplifting lives of people who are contracted by different banks to conduct the
transactions.

A case in point is Ousmane Fletcher, whose shop, called Ousmane Shopping, at Limbuli
houses almost every bank’s agent banking service.

Fletcher said, in the five years he has been operating as banks’ agent, he has constructed six
houses and bought three vehicles with a capacity of three tonnes each.

“I have achieved what I never thought I could achieve in my life since I started being an
agent here because my business has grown and this business has also helped me source
capital for other businesses,” he explained.

The number of agents continues to grow in the country.

According to RBM’s National Payment Systems report for 2021, the number of registered
mobile money agents rose by 93.2 percent to 155,816 as at end December 2021.

The report rates the increase in the number of mobile money agents as a positive outcome as
it widens the footprint of retail payment services across the country.

The central bank, however, laments that there should be more deliberate moves to widen
agents’ footprints especially in rural areas.

According to the report, geographical distribution of these agents is still skewed towards
urban and semi-urban areas, leaving rural areas with less access points. For instance, 78.0
percent of the agents were located in urban and semi-urban areas, with only 22.0 located in
rural areas by end last year.
“It is, therefore, important for the service providers to create deliberate, targeted incentives
for rural area-based agents to ensure that they remain active and relevant so as to continue
serving the masses,” the report recommends.

It is, therefore, clear that agent banking is a good tool for meeting financial inclusion goals in
Malawi, a country where more than 80 percent of its population stays in rural areas,
according to the World Bank.

Banks, therefore, need to move with speed and aggressiveness in contracting and partnering
more businesses and individuals for agent banking to improve people’s livelihoods while the
banks cover the unbanked.