A delegation of policymakers representing the Reserve Bank of Malawi visited their peers in Kenya, Colombia and Mexico from 3-16 June, with the support of an AFI Knowledge Exchange Grant.

The Reserve Bank of Malawi is currently in the process of developing a new policy and regulatory framework with the goal of implementation by 2012. These new regulations will allow commercial banks to use third party agents as a delivery channel for financial services which will, in turn, provide more efficient and convenient access to the unbanked population in the nation.

Recognizing the value of lessons learned and best practices, the Malawi delegation sought to use these visits as an opportunity to draw on the experiences and insights of nations which have successfully implemented correspondent banking.

Malawi’s financial sector still has a very limited reach within the country. According to World Bank estimates, the formal financial services serve only 26 percent of the adult population. Informal financial services have closed the access gap somewhat; however it is estimated that over 55 percent of Malawi’s population is still excluded from any financial services.

During the AFI Knowledge Exchange visit, the Malawi delegation consulted with their peers on two main types of agency banking, bank based (retail outlets offering services under license) and non-bank based (typically mobile or e-money online systems). Mexico and Colombia have invested in the bank based model, while the Kenyan experience exposed the Malawi policy makers to both bank and non-bank agency systems.

The success of either system depends on creating a set of enabling regulations suitable for the country, as well as ensuring that the appropriate IT and telecommunications support is in place. Discussions about the supervision and approval of agents, product ranges and appropriate business models took place and the importance of financial literacy programs for the population with a realistic view of risks for the financial service providers was also studied. Mexico, Colombia and Kenya each employed unique strategies to implement agent banking, but there were common elements in all three policy agendas and regulatory frameworks.

The Malawi delegation came away from the visits with valuable insights and information which will help in the formulation of a draft regulatory framework that takes the best practices from successful models and adapts them to ensure a successful agent banking program is created in Malawi.

AFI facilitates its members at undertaking knowledge exchange activities to help raise collective awareness of policy solutions, create technical partnerships between countries, and share the experience of countries that have successfully implemented new policy and regulatory solutions. Short term, long term and knowledge exchange grants are available. For more information on grants contact Crispin Bokea.