Success of microfinance project sees women benefiting as Malawi economy stabilises reported by Cecilia Kumpukwe Banda

The women of the Tikondane and Mulindiyani savings and loans group burst into song as our vehicle pulls into their village, a collection of huts and mud brick buildings about an hour outside of Malawi’s capital Lilongwe.

The welcoming party of 25 women has good reason to be happy: a year ago they started their microfinance group with the help of development agency Concern Worldwide, and last week the first round of dividends was allocated to its shareholders. Members can now access loans on a regular basis, a new development for the community as there are no local banks in the area.
Those institutions that do have branches in nearby towns rarely, if ever, provide micro-
financing loans to people without collateral.
Group member Christina Geoffrey took a loan of 7,000 kwacha (about €18 ) so she could buy fish to sell at the local market. She had to pay the money back within three months before another loan could be accessed. “I sold the fish for 13,500 kwacha and paid back 8,200 after only one month, so I made 5,300 for my family,” she said.

Stewart Gee, who co-ordinates Concern’s Food, Income and Markets Programme, says the scheme has been extremely successful nationwide, and there are now thousands of women involved in hundreds of groups, far more than they had anticipated.
“We saw the need for microfinance structures in rural Malawi because of the absence of local banks, so we train people here how to set up and manage the groups. They now have access to money for things like paying school fees or investing in their farms,” he said.

Under threat
Numerous development agencies are running various programmes such as this across Malawi, one of southern Africa’s poorest countries, but they came under threat during the time of Malawi’s last president Bingu wa Mutharika.

Before he died of a heart attack in April 2012, wa Mutharika had fallen out with Malawi’s western donors – who fund up to 40 per cent of the country’s annual budget – over what they saw as his increasingly dictatorial tendencies.

That coupled with the global economic downturn hit the country hard. The kwacha went into freefall, which drove inflation and interest rates through the roof.

Commodities such as petrol and medicines, essential to development programmes, became hard to come by.

In addition, taxpayers’ euros used to fund this work were losing value daily. The money had to be changed through the official exchange rate, while a burgeoning foreign currency black market made everything more expensive.