Project Everest

Solution

[Solution]: Microfinance II Malawi July 2019

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 it creates a group liability, creating social pressure to repay among the members of the VB.

Since this project has been in operation it has focused heavily on villages in the Nancholi region.  This is primarily due to accessibility, as most VBs in Nancholi are part of the organisation NAYO it makes it convenient for arranging meetings/interviews.

Microfinance II will offer loans to VBs that are assessed as a safe or acceptably risky investment opportunity for PEV. This will be determined using the credit scoring system developed for offer test 1 and the financial model built in excel. The credit score system should be deployed at the earliest appropriate interview with a VB and can be discreetly calculated during the meeting to give an indication as to whether the VB meets the minimum requirements to move onto to offer test 2. The financial model is a more in depth look into the financial health and cash flows of the VB and requires access to the VB accounting books.

When a VB is approved for a loan, the conditions (interest rate, amount, term etc.) are written into the contract template created by the July 2019 team. The funds are then transferred to the VB via Airtel Money, at this point the VB must begin using a smartphone to answer a series of weekly questions designed to collect cashflow data. This data feeds into a CRM developed so PEV can monitor the health of the bank from Australia as repayments will be made in lump sums toward the end of the VB banking cycle. Should  a VB not have access to a smartphone PEV will lease them a Google Pixel for the loan period at a cost 20 000MWK. The repayments, including the interest amount are to be repaid via to Airtel Money. 

 

edited on 25th July 2019, 07:07 by Lachie Haddow

Grace Blackford 6 months ago

Status label added: Solution

Reply 0