LIKOMA'S UNMET BANKING NEEDS

 

A LIFELINE FOR LIKOMA RESIDENTS

Waiting for a vessel departing Likoma on a sunny Saturday morning, Asa Sasali rues spending on transport almost what he is going to withdraw from his bank account on the mainland.

LIKOMA PEOPLE ARE ENTERPRISING BUT CUT AWAY FROM BANKS

Like most residents at the port, characterised by businesspeople loading bags of usipa fish and other goods into Ilala and other boats, the Department of Fisheries employee has to carry auto-teller machine (ATM) cards for his workmates, friends and relatives who expect him to cash on their behalf—as they always do for him when he cannot make the trip.

The experience can be costly not only because the cost-cutting measure endangers his ties with ATM cards’ owners and the security of their money, but the district's unique geography and financial exclusion accounts for enormous costs of accessing savings and lending facilities in Nkhata Bay and beyond.

"It's painful," said Sasali. "What I spend to access my salary since government started paying us through banks is making me poorer and poorer.”

To get to the bank on the mainland, the public servant would spend K2 500 on boats that have been plying as stop-gaps in the absence of Malawi Shipping Company’s most reliable passenger ship, MV Ilala.

This means that a two-way ticket is worth the allowance teachers in hard-to-reach localities receive to offset their hardships, according St Peter's head teacher Isaiah Mlongola.

A BOATLOAD OF THE UNBANKED

"Our rural allowance is K5 000, but the cost of banking often rises to K10 000 if you include the cost of accommodation and meals on the mainland as we usually spend days waiting for another vessel to take us back to Likoma," said Mlongola.

Three in every four interviewees who have bank accounts said they prefer withdrawing all their earnings at one go, something that threatens a culture of savings and exposes their income to theft and wasteful, impulsive spending.

Welcome to life on a wailing island, sometimes sanitised as Half London.

Surrounded by Mozambican waters of Lake Malawi, Likoma offers vivid insight into the dilemmas faced by about 80 percent of the population as banks and financial institutions face increasing calls to extend their reach beyond urban areas where they are concentrated.

According to National Statistical Office projections based on the 2008 population and housing census, the islands of Likoma and Chizumulu are home to 10 433 people.

For years, the population has been relying on the defunct Post Office Savings Bank (POSB) which was incorporated as Malawi Savings Bank.

However, the bank's stand-alone status has reduced Likoma Post Office to a mere money transfer set-up—like Western Union.

Account holders now access their services through Nkhata Bay MSB branch while the unbanked many who still rely on the postal facility have to book appointments and wait for days to receive sums over K20 000.

The effects to the island—a cut-off cell in a country where only 19 percent of the population have access to banking services, according to Finscope study of 2008—show up in numerous ways that threaten various aspects of lives from education and health to business and tourism.

"We are paying a big fine to get our salaries," bemoaned Mbungo Primary School head teacher Joseph Chirwa.

To the former district chairperson of Teachers Union of Malawi (TUM), the bank-based way of remitting civil servants' pay has left teachers expending almost half of their salaries on transport to Nkhata Bay. In other words, government has transferred to the cost of paying civil servants’ salaries to the already underpaid workers.

The remote teachers save K1 000 from their 'hardship allowance' if they use Ilala, whose cheapest ticket costs K2 000 per head.

While the government-owned ship was undergoing year-long maintenance at Monkey Bay, some of the public servants were trapped on the waters for 24 hours after a privately owned boat they boarded from the coastal banking town was rocked by a storm.

Likoma residents may be relieved to see the safer and cheaper ship back on duty after a year-long break, but its revised schedule presents a new challenge: Increasing absenteeism among teachers and other government employees.

Unlike in the past when it used to dock at Likoma on Saturdays and Mondays, the comeback vessel departs the island on Sunday afternoon and returns on Wednesday.

This forces teachers to miss their classes for three days, said district education office (DEO) desk officer Steins Kumwenda.

"When teachers leave on Sunday, it means they will be away until Wednesday. Oftentimes, they return too tired to resume classes immediately. In the end, it is students' right to quality education is being violated due to the absence of banks," said Kumwenda.

According to the education office, the island district has 80 teachers spread in eight primary schools and three secondary schools.

Having resorted to taking turns to lessen the impact of their bank trips on teaching and learning, the public servants strongly feel there is need to revise Ilala's itinerary.

"Most civil servants refuse to be posted here and others quit just months on the island," said village head Mwasi.

Such apathy places extra pressure on various service-providers, including St Peters Anglican Hospital.

The facility's administrator Francis Vuma called for radical intervention to end "sudden resignations and refusal of deployment by skilled health workers due to lack of banks, among overwhelming hardships.”

While civil servants and other employees complain about paying a punitive price to access their accounts, businesspeople and locals are predominantly unbanked.

"What will be the benefit of opening a bank account if accessing my savings, loans  and other services surpasses my profits and threatens my capital?" wondered a vendor who operates a shop on the island.

TRADERS PREFER KEEPING CASH AT HOME

Typical of the unmet demand for convenient banking services closer to the people, many others endure the risks of keeping their income at home.

Traditional leaders say they have been craving for banks for years, but their hopes are always battered by security concerns.

"For about decade, we have been crying for a bank, but decision-makers seem allergic to Likoma," said T/A Nkumpha.

Agreeing with the chief, district commissioner Charles Mwawembe said their negotiations with bank executives often hit a blank due to poor security of cash in transit, intermittent electricity supply and unreliable telecommunications network.

“Until we address those worries, our only hope is MSB who have shown some interest to help us out,” said the DC.

WARY OF CASH IN TRANSIT: CHIMPHEPO

Likoma police officer in-charge Grey Chimphepo said security is tight on the islands of Likoma and Chizumulu, but not when it comes to transporting money chests across the 60-km water stretch from Likoma.

"Likoma normally has low crime rates despite an influx of people from elsewhere. We have enough police officers and a Malawi Defence Force camp in our midst. [But] maybe it would be hard to travel on water with money," said Chimphepo.

The fears reflect security agents’ concerns in a fast-changing world with reports of pirates hijacking boats and ships in Somalia and other unguarded waters. Malawi has never witnessed a ship hijack.

But as financial inclusion is becoming a global buzzword, poor phone networks are hindering efforts by banks and other financial firms to harness technological advancement to ease the plight of the unbanked populations where the cost and risks of establishing brick-and-mortar banks could be huge.

NKUMPHA'S PEOPLE ONLY ENCOUNTER MOBILE BANKING ON RADIO

As expected, Likoma is sidelined from mobile phone-based money transfer schemes—Airtel Money and TNM Mpamba. Neither posters nor agents of the phone firms were spotted.
The islands might be having more handheld phones than bank accounts, but the islanders only hear about mobile money facilities on radio.

The absence of mobile money technologies mirror what National Bank of Malawi marketing manager Wilkins Mijiga once rated the worst setback to electronic banking: Unpredictable and unreliable telecommunications.

While Malawi Communication Regulatory Authority (Macra) figures show that 95 percent of the country is covered by mobile phone networks, most villages on Likoma remain unreached.

The connected few have to make do with intermittent network due to scheduled and sometimes sudden disruptions of diesel-powered electricity systems.