Project Everest

Social Consulting

Microfinance (Social Consulting) - Malawi

69 Ideas
167 Votes
97 Comments
98 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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Top Contributors

  1. Courtney Dudgeon
    364 pts
  2. Lachie Haddow
    209 pts
  3. Kurt Michl
    181 pts
  4. olivedippie
    113 pts
  5. Emma Snow
    99 pts

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Project Summary

The July Microfinance II Team focused on determining the viability of PEV loaning to village banks in Malawi. To achieve this, we focused on three key goals: profiling, diversifying risk and transactions. Our profiling goal involved meeting with village banks to discuss their operational procedures, which includes collateral requirements, interest rates and capacity to loan. The team developed interview questions that focused on understanding how the village bank operates, the systems they...

by Emma Snow
1 Votes
Comments 1
Emma Snow
Proposed Experiment

Lean Phase: Solution Assumption: Village banks who do not have adequate accounting procedures based on our profiling and risk metric criteria are willing to repay a small, short-term loan and submit their accounting information using the digital system. This will help PEV ensure that the village bank is suitable to receive a larger loan.  Time Period: 3 weeks Success Metric: The success metric is the number of village banks that are able to repay a small, short-term loan whilst...

Courtney Dudgeon
by Courtney Dudgeon
3 Votes
Comments 1
Courtney Dudgeon
Proposed Experiment

Lean Phase: Solution Assumption: Village banks able to operate the digital system in exchange for a low interest loan. The digital system is intuitive and easy to operate for the village banks. The system also provides value to both PEV and the village banks in the form of simple and efficient accounting.   Time Period: July - December   Success Metric: The success metric is the number of village banks that are able to successfully operate the digital system. PEV will test...

Lachie Haddow
by Lachie Haddow
6 Votes
Comments 1
Lachie Haddow
Revenue Stream

Background information The Microfinance II Team aims to offer loans to village banks that have been assessed to be at a safe or acceptable risk level for PEV to invest in. In July 2019, we successfully provided loans to two village banks - Titukalane 2 and Thandazani. Titukalane 2 received a loan for 300,000MWK, with a 15% interest rate and a leasing cost for the Google Pixel of 20,000MWK. Additionally, Tithandizani received a loan for 500,000MWK, with a 20% interest rate and a leasing...

Courtney Dudgeon
by Courtney Dudgeon
9 Votes
Comments 1
Courtney Dudgeon
Solution

Lean Phase: Solution Aim: The aim of the Microfinance II project is to provide tailored flexible loan solutions to village banks (VB) in and around Blantyre to increase the liquidity of the VBs allowing them to provide more loans to their members to stimulate local economic growth within the communities they live and operate. The long turn vision is to scale the project beyond Blantyre.   Solution:  VBs were identified as an opportunity for investment over loaning to individuals as...

Lachie Haddow
by Lachie Haddow
9 Votes
Comments 1
Lachie Haddow
Experiment Results

Experiment Design Post: https://projecteverest.crowdicity.com/post/2052790 Lean Phase: Solution Assumption: Village banks are willing to share their accounting information and customer data with PEV, in exchange for a low interest loan to be used as increased capital for the village bank, therefore allowing them access to larger loans and more frequent loans for their customers. The end goal for this currency test would be to get village banks to use a digital tracking system...

Courtney Dudgeon
by Courtney Dudgeon
7 Votes
Comments 1
Courtney Dudgeon