Project Everest

Social Consulting

Microfinance (Social Consulting) - Malawi

75 Ideas
159 Votes
201 Comments
129 Subscribers

Access to socially beneficial assets through access to capital
Vision: Decentralised bridge of capital between the developed and developing world

PROBLEM
Financial inclusion is a severe limitation for the Malawian economy, as only 18% of adults have access to a bank account, with only 6% of the nation’s population having access to formal lending. Savings is also a major issue: 54% of Malawians don’t have savings, with the major cause due to lack of money after expenses (Lee, Research Summary).

Malawians are alienated from formal financial services with the major issues being:
- Lack of collateral
- High-interest rates
- Fear of indebtedness
- Low/irregular income

Formal financial institutions provide some capital, but this is usually limited to those with a strong history of financial information. If consumers do not have an adequate financial history, they are either rejected or are charged high interest rates. Organisations external to the commercial banking system, such as FINCA (for-profit business) and Umunthu Microfinance (charitable organisation) have tried to provide access to finance to these communities, however it remains difficult for individuals to obtain loans through these organisations.

Without the opportunity to expand their businesses or pursue economic opportunities, Malawians are hampered in their capability to improve their financial situation and increase their income. Whilst some ingenious solutions have been created locally such as village banks (a collaborative effort by a community to distribute loans to their community), these organisations often cannot meet the demand among their communities, nor issue large-scale loans.

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Project Summary

The December Microfinance II Team aimed to provide capital to business owners which will enable them to grow their enterprises, improve their financial security and ultimately lead better lives. To achieve this objective, our team targeted village banks to provide capital to their members.    The December team took the necessary steps to fulfil our aim. Firstly, a streamlined risk assessment criteria was developed. This new, more comprehensive risk assessment criteria consists of a...

Benjamin Gibson-Perry
by Benjamin Gibson-Perry
0 Votes
Comments 1
Benjamin Gibson-Perry
Experiment Results

[Results] Loan Utility Test   Reference to Experiment Post The experiment sought to determine if the loans PEV gave to Tithandizani and Titukulane 2 village banks were used to grow and scale the businesses of village bank members. The key intention of the utility test was to identify if the increase in capital was invested into individual businesses in order to increase efficiency, cash flow, profitability and overall stability of the village bank rather than that of  paying off...

by Sophie Eland
0 Votes
Comments 1
Sophie Eland
Experiment Results

  Reference to Experiment Post The experiment sought to validate the assumption that village banks are willing and able to use the digital system in exchange for a low interest rate loan.   191205 [Proposed Experiment] Digital System Utility Test EC, SG, BR   Lean Phase: Solution Assumption: Village banks are able to operate the digital system in exchange for a loan. The digital system is intuitive and easy to operate for the village banks. The system also provides value to...

by Jongho (Scott) Yun
0 Votes
Comments 2
Jongho (Scott) Yun
Proposed Experiment

Lean Phase: Solution  Assumption:  Village banks have sufficient collateral that PEV can access in the case of default without incurring significant negative social impacts. Time Period/ Time Box: January- February (1 month) Success Metric: The success of this experiment is determined by the extent to which village banks have a source of collateral sufficient for the village bank to borrow against, which can hypothetically be repossessed without an excessive negative social...

by Jongho (Scott) Yun
0 Votes
Comments 1
Jongho (Scott) Yun