RBM woos SMEs to cheaper loans
Reserve Bank of Malawi (RBM) says it wants more micro, small and medium enterprises (MSMEs) to access cheaper loans offered under its Financial Inclusion and Entrepreneurship Scaling (FinEs) project.
The five-year $86 million (about K87 billion) loan facility, a credit obtained by the Government of Malawi from the International Development Association, is offered at 11 percent per annum when accessed through commercial banks and between 36 percent and 48 percent when obtained through microfinance institutions and savings and credit cooperatives (Saccos).
Commmercial banks offer 27 percent per annum while microfinance institutions and Saccos offer an average of six percent per month, translating to 72 percent per annum, according to RBM.
Speaking during a FinEs Southern Region media orientation organised in partnership with the Association of Business Journalists (ABJ) in Blantyre on Wednesday, FinEs project manager Mark Lungu said while there is no minimum amount for the loan, MSMEs can get a maximum of $250 000 (about K259 million).
He said: “This was considered adequate considering that most MSMEs are in trading and not into production.
“The medium enterprises, though few, have come up with requests closer to the maximum and mostly through NBM Development Bank and other banks.”
On his part, FinEs business development specialist Richard Zidana said while the project seeks to build capacity for at least 2 000 MSMEs, it hopes to reach out to many small businesses with loans.
“The resources are out there with the banks and various microfinance institutions, but we need more small businesses to be aware of these finance opportunities,” he said.
The FinEs project objective is to increase access to financial services, promote entrepreneurship and capabilities of MSMEs,.
It seeks to achieve this through four components, namely liquidity enhancement to MSMEs, scaling entrepreneurship and building firm capabilities, enhancing the enabling environment for supporting the financial inclusion and growth of entrepreneurs as well as project implementation support.
In Malawi, access to loans remains a challenge with World Bank figures showing that majority of MSMEs fail to access finance despite the sector being a significant source of employment to 1.6 million people.
The figures further show that only 10 percent of medium enterprises, five percent of small enterprises and three percent of micro enterprises have access to credit from commercial banks.
