Malawi is one of the world's poorest countries. More than half of its 18 million citizens live below the poverty line. The vast majority of people subsist on agriculture, living in rural areas where services of any kind are scarce.
FINCA Malawi is a regulated, deposit taking microfinance institution. In operation since 1994, FINCA serves around 50,000 clients in 24 locations around the country. Our products include group and individual loans, savings and insurance. Given the country's demographics, FINCA's strategy features a strong focus on non-traditional banking channels, such as rural bank agents, in order to reach the most people at the lowest cost.
Reaching the Financially Excluded
Financial exclusion in Malawi is the second highest in the region, just a few points behind DRC. More than four-fifths of the adult population is unable to access even a basic banking account.
While filling this pervasive gap, FINCA Malawi has also been successful at reaching some of the most systematically-excluded populations. Women make-up almost two-thirds of its borrowers, the second-highest in the region. FINCA Malawi also has a strong participation of rural borrowers, who comprise 56% of our total clients in the country.
Given the dispersal of Malawi's population in rural areas, FINCA's growth strategy emphasizes the development of low-cost delivery channels, such as banking agents and mobile banking. Adopting these technologies will allow us to reach even deeper into the excluded regions, and provide all our clients with more services at a lower cost.
Quality of Life
Our clients in Malawi struggle with some of the harshest living conditions in the FINCA network; they are even hard by regional standards. Over half of borrowers live in homes with no electricity -- the highest among our African subsidiaries -- and the same percentage have no running water. Lacking these basic services, clients must resort to costly, hazardous sources of light, such as kerosene lanterns and candles, while they struggle to maintain basic standards of sanitation. These conditions directly undermine the health of children, while making it difficult for them to study after sundown.
Very low educational levels also prevail among our borrowers in Malawi. Less than half of the breadwinners have higher than a primary education. This indicator is generally low throughout the sub-Saharan subsidiaries as well as Latin America. Having a poor education places hard constraints on the family's ability to earn a decent income and to work their way out of poverty over time.
Income & Employment
Income & Employment
Considering their harsh living conditions, we are encouraged to find that FINCA clients in Malawi earn an average annual profit of $2,727. They are also successful at generating jobs, employing 2.9 people per enterprise, the highest in the region. Total employment in our clients' enterprises is nearly 134,000 people country-wide. Our clients estimate that about 20% of this employment is directly due to the FINCA loan. Wage quality is also surprisingly good — two thirds of workers are earning wages that are above the national poverty line.
Women are the backbone of society in Malawi, responsible for growing the family's food as well as running the household and caring for children. In addition to these responsibilities, the majority of FINCA's female borrowers are their family's main breadwinner. Almost 20% our clients are single mothers, bearing the full weight of their family's well-being.
Our data show that FINCA's women borrowers are business-owners, which demonstrates their economic independence. They own 57% of the businesses we finance and are responsible for creating 78,000 jobs, or 58% of the total employment. This puts their job creation on a par with men, showing that women are distributed across a range of economic activities.
Attaining Business and Personal Goals
The most frequent goal of our customers in Malawi — cited by 41% — is to expand an existing business. This is a common finding all over the FINCA network. Interestingly, however, Malawi has the highest share (11%) of borrowers who aim to start a brand new business.
After business-related goals, home improvements are high on the list of reasons why people come to FINCA. This objective is cited by a third of customers. The frequency of this goal is well above the regional average and, in fact, more than any other country we have surveyed.