Project Everest

Social Consulting

Microfinance (Social Consulting) - Malawi

84 Ideas
161 Votes
242 Comments
135 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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  1. Courtney Dudgeon
    386 pts
  2. cojitey joy
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  3. Ella Walburn
    235 pts
  4. Lachie Haddow
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  5. Kurt Michl
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Lean Phase: Solution   Assumption:  That an unsecured loan model built around disincentives rather than collateral can achieve sufficiently low default rates to generate sustainable returns. Banks want to continue relationship with PEV. There is a large degree of trust between VBs and PEV. The risk assessment model is valid and the individual loans are being repaid to the VBs.  We are also assuming a default rate of 25% on the unsecured loans. Using a risk assessment...

Nicholas Gell
by Nicholas Gell
0 Votes
Comments 0
Nicholas Gell
Adopted Experiment

Lean Phase: Solution Purpose: To develop a loan progression system that can: 1) allow for scalability of loans by mapping out the progression of subsequent loans 2) incentive's collaboration with the village banks through a transparent outline of future inflows 3) be sustainable and mitigate risk through carefully defined loan progressions which align with the lean canvas model and accounts for risk factors and the individual characteristics of banks Assumption: As each...

Alacoque Tunny
by Alacoque Tunny
0 Votes
Comments 2
Alacoque Tunny
Adopted Experiment

Lean Phase: Solution    Proposal: Risk Assessment Proposal   Assumption:  The key assumptions are as follows: That the risk of repayment can be adequately captured through a single model Risk is able to be quantified and compared across banks Paying on time reflects VB’s ability to recover funds effectively, which is reflective of VB risk. Time Box:  February 2020 - February 2021 (12 months) Key Metrics: The success of this experiment is defined as the...

Alacoque Tunny
by Alacoque Tunny
0 Votes
Comments 2
Alacoque Tunny
Adopted Experiment

Lean Phase: Solution    Assumption:  That an unsecured loan model built around disincentives rather than collateral can achieve sufficiently low default rates to generate sustainable returns Banks want to continue relationship with PEV There is a large degree of trust between VBs and PEV The risk assessment model is valid and the individual loans are being repaid to the VBs   We are also assuming a default rate of 25% on the unsecured loans. Using the risk assessment...

Alacoque Tunny
by Alacoque Tunny
0 Votes
Comments 1
Alacoque Tunny

The January Microfinance II Team aimed to provide capital to communities within Malawi that would otherwise be excluded from the traditional banking system. This capital enables them to improve their financial security, grow their individual businesses and improve their quality of life. To achieve this objective, our team targeted village banks to provide capital to them and their members.   The January team took many steps to work towards this objective. We handed out eight- nano loans of...

Alacoque Tunny
by Alacoque Tunny
0 Votes
Comments 0
Alacoque Tunny

Reference to Experiment Post  The experiment sought to assess whether village banks targeted as potential recipients of PEV loans had sufficient sources of collateral that could be borrowed against and seized in the event of a default without causing excessive negative social impacts. The experiment had a main focus on the use of emergency funds of collateral, this being the primary source of collateral offered on loans given to this date, and the only collective assets held by banks....

Alacoque Tunny
by Alacoque Tunny
0 Votes
Comments 0
Alacoque Tunny

Reference to Experiment Post  The experiment sought to assess whether village banks targeted as potential recipients of PEV loans had sufficient sources of collateral that could be borrowed against and seized in the event of a default without causing excessive negative social impacts. The experiment had a main focus on the use of emergency funds of collateral, this being the primary source of collateral offered on loans given to this date, and the only collective assets held by banks....

Alacoque Tunny
by Alacoque Tunny
0 Votes
Comments 0
Alacoque Tunny

Reference to Experiment Post  The experiment sought to assess whether the 60 000 MWK loans given to village banks had a positive social impact in that village banks were able to repay the loans instead of being trapped in a debt cycle, and loans were used not to fuel consumption but rather to grow and develop the small businesses of village bank members.  191211 [Proposed Experiment] Nanoloan Utility Test SY SE SG   Lean Phase:  Solution   Assumption: The Nano-loans...

Alacoque Tunny
by Alacoque Tunny
0 Votes
Comments 0
Alacoque Tunny

Reference to Experiment Post This experiment was to provide nano-loans to village banks and to test whether they can meet the repayment amount on time. The goal is to provide these banks with a greater loan for a longer period of time. Furthermore, to see if they are willing and able to move up a loan ladder solution while providing positive, social impact.  See proposed experiment: 191217 [Proposed Experiment] Nano-loan Ladder SY SG Assumption: The key assumption of this test...

Alacoque Tunny
by Alacoque Tunny
0 Votes
Comments 0
Alacoque Tunny
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
1 Votes
Comments 1
Benjamin Gibson-Perry