K75bn Injection to Ignite Growth: World Bank Powers Malawi’s Small Businesses
Key Business Points
- Low-cost loans of K75 billion ($66.4 million) have been disbursed to 48 830 micro, small and medium enterprises (MSMEs) in Malawi, easing access to capital for businesses in the sector.
- The Financial Inclusion and Entrepreneurship Scaling (Fines) Project has made a significant impact, with a 95.7 percent repayment rate and K26.6 billion collected in repayments, enabling the recycling of funds to support additional businesses.
- Import substitution is being enabled through low-cost capital, with sectors such as apparel and shoemaking showing potential to reduce Malawi’s reliance on imported goods, promoting njira za kukwera (business growth) and kuvina biashara (business development).
The World Bank-funded Financial Inclusion and Entrepreneurship Scaling (Fines) Project has made significant strides in supporting Malawi’s business community, particularly micro, small and medium enterprises (MSMEs). The project has disbursed K75 billion ($66.4 million) in low-cost loans to 48 830 MSMEs, with 32 396 women-owned businesses, 9 201 youth-led enterprises, and 7 233 men-owned businesses benefiting from the initiative. The loans, offered at a rate of 14 percent, have been channelled through 36 participating financial institutions nationwide, creasing msika (increasing access) to capital for businesses that traditionally struggle to secure loans from commercial institutions.
According to Fines project manager Ralph Tseka, the project has been designed to boosta entrepreneurship by offering cheaper financing and business training to enterprises. Tseka noted that access to capital was a major gap, and the project has come in to bridge that gap by bringing in affordable financing. The impact of the project has been beyond expectations, with repayments continuing to be recycled to support additional businesses. The project has already collected K26.6 billion in repayments, representing a 95.7 percent repayment rate, close to its target of K27.8 billion.
The low-cost capital is enabling import substitution, with sectors such as apparel and shoemaking showing potential to reduce Malawi’s reliance on imported goods. While wholesale and retail still dominate loan access at 40 percent, the share has slightly declined from 43 percent in the previous reporting period. Ulimi wa igodi (agriculture and value addition) account for 21 percent, while manufacturing and production continue to lag at 10 percent.
Beneficiaries of the project have reported significant growth and expansion, with House of Men Apparel Factory manager Arthur Chitanda noting that the K50 million loan from the project enabled the company to expand production capacity, growing employment from three to 15 permanent tailors and increasing its machines from about 10 to over 30. Similarly, Trend Setters owner Titus Kaliapa said that with $100 000 (about K175 million) financing from the project, the company is acquiring eight shoe moulds and expects to begin full-scale production, ranging from school shoes to safety and combat boots, by February next year, boosting its capacity and workforce. These success stories demonstrate the potential for malawi yokwera (Malawi to grow) and kuzigwa kwa biashara (business prosperity) through initiatives like the Fines Project.
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