FSVC’s technical assistance work in Malawi centered on a Global Development Alliance (GDA) with USAID/Malawi to improve the banking sector in the country. Under the GDA, FSVC worked with multiple counterparts in Malawi, including public and private sector financial institutions, the central bank (RBM) and other key government agencies.
· FSVC’s program objectives were to improve the Reserve Bank of Malawi (RBM)’s ability to address problem banks, build capacity within the RBM for robust banking supervision and help it develop a framework for deposit insurance.
· Additional objectives were to help strengthen the capacity of banks to comply with Malawi’s new anti-money laundering (AML) regulations, and help banks increase their ability to lend to small and medium-sized enterprises (SMEs) in a prudent and profitable manner.
· The overall goal was to improve financial sector regulation by the RBM, and support greater compliance and intermediation by banks. Ultimately, the program would result in deeper financial markets and increased private capital inflows into Malawi.
· Bolstered capacity of RBM in financial sector regulation: FSVC helped the RBM with its conceptual framework for problem bank management and resolution; trained RBM examiners in best practices in on- and off-site banking supervision; and helped assess whether Malawi had met the conditions necessary to implement a Deposit Insurance Scheme.
· Promoted banking sector compliance and intermediation: FSVC trained banks on best practices in AML compliance; provided an overview of Basel II to banks and the RBM; and trained member banks of the Bankers Association of Malawi on how to establish an SME lending unit, and on interest rate risk and stress testing.
· Built capacity of Malawi’s Financial Intelligence Unit (FIU) in AML and non-bank financial institution (NBFI) supervision: FSVC helped FIU and RBM examiners conduct the first ever on-site exams of two banks, three capital market institutions and six foreign exchange bureaus, and facilitated the participation of one FIU and one RBM examiner in the actual AML examination of a bank in Nebraska with the U.S. Federal Deposit Insurance Corporation (FDIC).