By Frazer Potani, Lilongwe, Africa News -

Since Catherine Ndoya and her fellow six members of Amayi Aphindu Women Group (AAWG) in Liwonde Township in Machinga District about 50 Km from Zomba started small businesses to improve their livelihoods and their families, their lives have changed.

“We started our small scale poultry business in 2006 with Malawi Rural Development Fund (MARDEF) K100, 000 loan,” said Ndoya also the group’s chairperson.

The women also diversify in their business by producing Malambe Juice as well as produce mushroom and order glycerine from Blantyre all for sale.

“After paying back the K100, 000 to MARDEF we went further to get other loans of K225, 000 and K335, 000 respectively,” said Ndoya.

AAWG members are lucky because while they were honest and united and able to access loans from MARDEF many groups and individuals in Malawi continue to struggle to access loans from money lending institutions.

Just ask 36-year-old widow Neria of Mgona in Lilongwe what she has gone through in her quest to access a loan to start a small scale business.

“I was in a group of 10 women who had borrowed K250, 000 from a money lending institution (K25, 000 each). We got the money after struggles and we had to service the loan by paying a certain amount per week,” she said.

Neria said she was excited after getting the K25, 000 as she thought her dream of opening a small restaurant in Lilongwe would be realized only that vision to vanish in the air.

“Soon after accessing the loan seven members of my group vanished with their money allocations. So the remaining three of us in the group including myself had to pay back the K250, 000 with interest and it was very high. The financial institution nearly grabbed my two bedroom house that my late husband left for me with our five children,” said Neria who was the group’s treasurer.

She disclosed that after paying back the loan with the two other members went to another money lending institution to try to access another loan of K50, 000.

“The institution demanded that my house be used as collateral and I agreed,” said Neria adding that however, she withdrew from the process.

“I had no choice but to withdraw because the financial officer who was facilitating my loan process told me in the face that I had to have sex with him if I was to access the loan. Despite even telling him that my husband died of HIV related infection and that I was even carrying the deadly virus the officer said I was very beautiful and he would not even use a condom if I accepted to sleep with him,” she said adding she could not take such a risk.

Neria said the experiences she went through forced her lose interest in applying for a loan elsewhere.

She disclosed that three months after cancelling the loan application at the said institution where the financial officer demanded sexual favours got a temporary office cleaning job of salary of K3, 000 per month.

“From this temporary job I saved about K5, 000 which I invested as a capital for my mandasi business,” she said.

The widow disclosed that she bakes mandasi and deliver them in two local supermarkets in Lilongwe.

“But I am failing to expand because my capital is too small and the profit I get is even too small because most of the profit goes into our mouths for our upkeep,” said Neria.

Similarly Justin, a Chigwirizano resident also in Lilongwe had also his own story to tell after borrowing K40, 000 from a money lending institution to start his small scale business.

“Using the K40,000 I opened a small shop and filled it with groceries,” he said adding that few months after opening the shop he later closed it to open a big grocery.

“Luck was on my side because goods sold like hot cakes hence I had to close the small shop and open a big grocery to accommodate the high demand and supply,” said Justin adding that however, his success was short lived.

“One night armed robbers came and swept everything including money. I was left empty handed because I used to keep money in the house and not at the bank,” he said.

Justin disclosed that it had to take his elder brother Phillip to pay back the loan plus a high interest to the money lending institution.
“Lucky enough I secured a job as an accounts clerk in government and managed to pay back the money to my brother. Since that incident I have no appetite to borrow money from anywhere,” he said.

Neria and Justin’s experiences are just some of bumpy roads Malawians go through in their quest to get into micro finance highway to be independent financially.

Appreciating that many Malawians are poor and jobless and struggle to access loans from money lending institutions to start small businesses in the country President Bingu wa Mutharika said his government is implementing MARDEF and Youth Enterprise Development Fund (YEDF) to assist people in need of loans to be financially empowered.

“Some financial institutions including banks in this country are crippling social-economic development because their conditions attached to loans deny prospective borrowers from accessing loans for starting small scale businesses,” said Mutharika.

He disclosed that he even knows the pains of such money lending institutions’ unfair attached conditions as he personally experienced them before becoming president while he was building his house at Area 47 in Lilongwe.

However, Mutharika was quick to ask beneficiaries of loans from money lending institutions such as MRDEF AND YEDF to run their businesses efficiently and pay back the Ioans to enable others also to borrow.

Labour Minister Yunus Mussa disclosed that Malawi’s job market is small as only 500,000 (or about 4 per every 100) people are employed in the 13 million plus population hence providing loans to the unemployed could help government reduce the current country’s high unemployment rate.

Trade and Investment Minister Eunice Kazembe said strategies like MARDEF and YEDF if fully exploited would expand Malawi’s business sector through mushrooming of Small and Medium Entreprises (SMEs) that would boost production of goods for domestic and export market.

“The SMEs will rescue the unemployed who are currently struggling to secure jobs and if fully assisted to produce products of high quality they can help the State President Professor Bingu wa Mutharika fulfill his goal of transforming Malawi from a predominantly importing and consuming to a producing and exporting nation,” said Kazembe.

Christine Chilangwa Ng’ambi a member of the Non-Governmental-Organization (NGO) Coordinating Committee in neighbouring Zambia participated in the 1992 International NGO Forum on World Bank and IMF Adjustment Lending.

In her research she reveals that in southern Africa where unemployment is high people desperately look for loans to start small scale businesses to be independent financially but accessing them is difficult.

“The factors that have contributed to limited access to finance in the region are varied and include lack of collateral,” said Ng’ambi adding that women even face more difficulties to access loans than men.

“Getting access to finance in the region has not been easy for women because most financial institutions practice discriminatory administrative practices whereby they demand consent from the spouse or male relative for a woman to borrow,” she said adding,
“The few women who have excelled as entrepreneurs in the region have even invested in areas that one would categorise as ‘feminine’ such as manufacturing of dresses and hand bags.”

According to Malawi Microfinance Network of Malawi (MAMN) a mother body of the country’s micro financing institutions if the country can boost the microfinance sector through enabling people to access loans for starting small scale businesses the economy could grow and eradicate poverty [affecting over 60 per 100 people in the 13 million plus population according to the 2009 United Nations Human Development Report].

“Small scale businesses, if properly nurtured, can grow big and create job opportunities for people. If people with low income can be given the required support and exposure, they can even create a big impact in our economy,” said MAMN Executive Director Stewart Kondowe.

Supporting her director, MAMN Programme Officer Catherine Jamu disclosed that the value of outstanding loans through microfinance services for Malawi reached K12 billion by last year.

“Since the year 2000, the value of loans has been on the increase, from K2 billion to K12 billion by last year. In 2008 the value was at K10 billion,” said Jamu.

She said this was a sign of growth and that people prefer to have loans than saving.

“The number of loans outstanding has increased by 240 percent from 2006 to 2009. It is estimated that currently 800,000 people have got loans as opposed to just only 200,000 in the year 2006,” said Jamu.
She however, quickly pointed out that providers of microfinance services are also facing several challenges in discharging their services.

“These include high cost of transactions, lack of loan capital and technical assistance, weak management information systems in microfinance institutions and sustainability of support institutions,” said Jamu.

MAMN however, also observes that people accessing loans from some money lending institutions in Malawi are also stuck in exploitative terms because are ignorant of monetary information and available remedies.

Government also bemoans that some micro financing institutions exploit employed Malawians by among other things, deducting more than half of their salaries in repayment of loans; a thing contravening Section 52 (2ab) of the Employment Act as Finance Minister Ken Kandodo explained during the presentation of the 2010/2011 National Budget.

“Government has noted with concern that some money lenders have left borrowers with a take home pay falling below what is legally acceptable under the Employment Act,” said Kandodo.

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