The African Development Fund approves a $14.2 million grant to promote a financial digitalization initiative
Malawi’s government and the African Development Fund (ADF) have agreed to a $14.2 million grant to improve infrastructure and create a more efficient and transparent digital payment system.
The Bank Group’s concessional financing window, ADF, will provide funding for the December-approved Support for Digitalization, Financial Inclusion, and Competitiveness (DFIC) project.
“The DFIC project is aligned with the Malawi Digital Economy Strategy (2021-2026) and the Third National Strategy for Financial Inclusion (2022-2026); both contribute to Malawi’s long-term goal of inclusive wealth creation supported by an inclusive financial system and digital economy,” Malawi’s Minister of Finance and Economic Affairs, Sosten Alfred Gwengwe, said during a signing ceremony.
The project will increase financial inclusion in the country, particularly for women, youth, and rural residents. It will also make commercial transactions more efficient, allowing small businesses to enter new national and international markets.
As a result of the project, Malawi’s domestic financial inclusion rate is expected to rise from 58 percent in 2019 to at least 65 percent in 2025. Over the same time period, the GDP contribution of the ICT sector is expected to rise from 5.7 percent to 7 percent. Export volumes are expected to rise to 35% of GDP from 31%, in line with the goals of the national export strategy. The African Development Bank’s active portfolio in Malawi now totals $327 million in commitments.
According to Macmillan Anyanwu, the African Development Bank’s Country Manager for Malawi, the signing of the DFIC project grant agreement today was an important step toward promoting the use of electronic transactions in Malawi to increase access and use of affordable financial services, particularly among women, youth, and rural dwellers. “The project will also enable more efficient commercial transactions, allowing small businesses to gain access to new markets,” he added.
