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Malawi Microfinance Network championing early fraud detection

The Malawi Microfinance Network has trained over 20 officers and senior managers from various microfinance institutions in managing risk of fraud.

Many microfinance institutions have been hit by fraud and other fraud-related cases. This necessitated the training to equip officers with skills to detect fraud before it takes place.

Village banking initiatives are part of the micro-finance concept
Village banking initiatives are part of the micro-finance concept

Speaking on the sidelines of the two-day training, which was facilitated by anti-fraud consultant Elwin Sichiola, executive director for Malawi Microfinance Network Duncan Phulusa said the training followed a needs assessment his body conducted which showed that there were cases of fraud in many microfinance institutions.

“Following feedback and events that are happening in the microfinance sector, we felt that it was important to conduct training in fraud detection.

“It is our expectation that the trained officers will help detect and stop fraud before it takes place. This will in turn reduce loss of money by various institutions and, in the end, the reputation of the country’s microfinance institutions will remain intact,” said Phulusa.

Phulusa said when the image of an institution has been dented, it becomes difficult for investors to pump resources into it because most MFI’s depend on capital from investors.

Credit manager for Get Bucks Limited, Owen Banda, said the training was beneficial because MFI’s are operating in an environment where risk is prevalent.

“As players in this sector, we need to be on top of our game so that we detect fraud before it even takes place. This training has helped us learn possible causes of fraud, key factors to detect fraud and we hope we will make a huge difference in our various establishments,” said Banda.

Acting chief executive officer for Microloan Foundation, Siegfried Gbadabo,  said most MFI’s experience fraud due to the environment they work in.

During the training, it was discovered that Microfinance institutions are also suffering because they deal with clients with no proper identification, which sometimes gives the companies problems in collecting loans.

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