The continent of Africa was once merely an after-thought, an essential black hole of futile aid, corruption and poverty. Now, the global perception of the potential of Africa is changing. Countries such as the UK, the US and China have been investing considerable time and money to gain a share of some of the fastest growing markets in the world.
However, despite a high level of investment seen in certain African countries, others have largely been ignored as a recipient of Foreign Direct Investment (FDI). This has stalled their economic development and left many remaining in poverty. Malawi is a prime example; the United Nations Development Programme (UNDP) estimates that over 50% of the population live below the poverty line making it one of the poorest countries in the world.
Factors which are limiting growth and investment in Malawi include failing returns of key exports such as tobacco and the rapidly rising level of inflation which means an undervalued currency and high price of imports. Other factors inhibiting investment include a lack of basic healthcare, meaning that average life expectancy at birth is 63, and a lack of education whereby adult literacy rates are at 65.8% as per The World Bank.
What MicroLoan Foundation do
How can business opportunities emerge in a country where there are so many structural issues to overcome?
The answer lies in investing in the poorest of the poor, focussing on clients living below the poverty line. Despite factors which put off many from investing in Malawi, MicroLoan Foundation, have found real success through educating, training and investing in women living in highly impoverished rural areas.
So far we have supported 150,000 entrepreneurial women develop and expand their business. The impact of our work has further reach, with an approximate 600,000 children gaining the opportunity to go to school because of their parents increased financial security. The combination of operating in rural areas with women groups using very small loans – the average loan size in Malawi is £45 – makes MicroLoan Foundation unique and enables us to invest in the poorest of the poor.
Since investing in these women, business opportunities have thrived, which have allowed many to start reinvesting their profit into diversifying and growing their own business. This can generate further employment and thereby spread more income. Many enterprising women do not only earn a basic income and send their children to school, but grow their own businesses and employ more people within the local community.
What makes us different
The commitment to providing training and ongoing support to our clients is something that differentiates MicroLoan to many commercial MFIs. We take no collateral and we require no savings or other eligibility requirements. This means that there are no financial barriers to receiving a loan from us, allowing us to reach some of the poorest women in the world.
As a result of our group dynamics, support and on-going training we have seen many of the businesses our women start expand. Many of our clients have been able to diversify their business opening them up to new income avenues.
Impact on our clients
Margaret took out her loan in 2015 to start up a business selling second-hand clothing. She has now used a further loan to open a grocery stall. Using the money she made from the two enterprises, she started building small houses. She now owns four rental properties which bring about a monthly income on top of the profits she makes from her other businesses.
Margaret has been able to send her children to school and allowed her to equip her house with a TV and a metal roof.
Yatamika was also able to grow her business with the support of MicroLoan. She started a business baking and selling pancakes from locally grown Maize, she has now opened up a bakery in her village.
“What I like most about MicroLoan is their fair interest rates, and the training they offer me. It has given me the knowledge I need to grow my business”
– Yatamika Nkhoma
There is no doubting the beneficial effects the charity has on the thousands of women who are now being given the opportunity to create their own business, an opportunity which they are taking with both hands.
With the creation, growth and diversification of these small scale businesses, this can only be seen as a boon to a Malawian economy in desperate need of stimulation. There are undoubtedly many challenges that still need to be overcome, however one can only feel positively about the long-term potential of the effects of the MicroLoan Foundation.