Economics Association of Malawi (Ecama) says the move by the Community Savings and Investment Promotion (Comsip) to launch its microfinance company, Comsiv Limited, raises hope for the attainment of financial inclusion among its member cooperatives.
Ecama president Chikumbutso Kalilombe said in a country where 71 percent of its population has no access to financial services, the microfinance firm becomes relevant because the banks cannot completely capture the whole financial market, especially in the rural areas.
“This is relevant to achieving financial inclusion because first, it helps to identify who is left out so if you have initiatives that are actually including those who are left out, then that is good. Finance is a risky business and people want to be comfortable with whom they are dealing with, that is why maybe they are going the way of starting with their primary cooperative members first as a peer mechanism that protects you first before you go full throttle dealing with outside individuals so yes it does help,” he said.
He, however, noted that there are challenges to micro financing because microfinance institutions are mostly concentrated on lending, observing that it could also be important to be taking deposits that brings in the saving culture as financial inclusion also includes saving and borrowing.
Earlier, Comsip board chairperson Givemore Chipanga said cooperatives have been struggling to get loans from commercial banks due to cumbersome lending conditions like collateral demands, hence, they came up with members own bank for ease access to loans.
“There has been demand from our members who have been facing challenges to access loans from the banks. Members will benefit in terms of soft loans on farm inputs and materials, general loans, life insurance scheme among others,” he said.
Deputy registrar of cooperatives in the Ministry of Industry, Trade and Tourism, Susan Safakaoh, said the coming in of Comsiv Limited as a financial player responds well to the government intiative of reacting over 70 percent of Malawians to access financial services by 2021 from the current 34 percent, according to the 2016-20 Financial Sector Development Strategy II by the Ministry of Finance, Economic Planning and Development.
Comsiv Limited is a subsidiary company of Comsip Cooperative Union Limited which has footprints nationwide with over 164 000 members and a savings protifolio of about K6.1 billion.
Comsiv has already set up its offices in Lilongwe, Dedza and Kasunguu and will roll out to other districts gradually. Staff Reporter