The SHADE - Lilongwe

Regina Mwandemange | Women's groupby Regina Mwandemange

INTRODUCTION

Malawi is a landlocked county in the Southern part of Africa, bordered by Tanzania Zambia and Mozambique. The country has a total surface are of approximately 18000 square km of which 20% is under water. The human population is estimated at 11million with an annual population growth rate of 2.0% and 86% of the population resides in rural areas, heavily reliant on agriculture. However, agriculture can no longer generate sufficient income and employment opportunities for a population this is growing at 3.2% per annum.

This is so due to a number of factors.


JUSTIFICATION FOR THE MICRO FINANCE PROJECT FOR WOMEN

Micro finance is generally understood as the provision of financial services to economically active, low-income people to help them grow their businesses. In line with the poverty alleviation Malawi has potential for micro finance development.

Malawi is one of the poorest countries in the world with more than 65% of the population living blow the poverty line that is estimated at MK10.47 per capita per day (Integrated Household Survey (IHS) 1998) The country is ranked 151 out of 165 countries on the Human Development Index (HDI) 74 out of 90 countries on Human Poverty Index and 137 out of 146 on Gender related Development index (GDI) **UNDP 2001

Poverty reduction has been identified as Governments overarching objective. However, the situation of poverty in Malawi is worsening in spite of policy pronouncements and numerous public and private poverty reduction initiatives. It has generally been observed that lack of active participation by intended beneficiaries in the conceptualization and implementation of poverty reduction strategies and poor coordination of agencies involved in these programmes. This initiative aims to address this discrepancy.

Poverty in Malawi has a gender dimension with the incidence being higher among women than men. In part, this is due to cultural norms and practices that discriminate against women in terms of access to resources including land and credit. This is also exacerbated by inequality in paid employment on farms as well as in a number of rural and urban enterprises in which the majority of women are lowly paid if they can find work at all.

Discriminatory customs, traditions and laws regarding acquisition, transfer and inheritance of land and other resources are among the major causes of unequal distribution of resources. Polices of most financial institutions, especially with regard to woman's access to credit tend to reinforce woman's subordination to men and exacerbates inequality. However, it cannot be denied that women are present in all spheres of economic activities.

Success in micro finance initiatives require that local populations exploit their economic opportunities, especially within communities with a high degree of social confidence. Women have generally demonstrated this sort of cohesion.

This approach is further justified in that.

There is generally a significant number of women in business and their capacity is generally stronger than men

OBJECTIVES OF THE PROJECT


The initial project, which initially targets women within a radius of 12-20 km, from Lilongwe city aims at empowering women to engage in small-scale entrepreneurship that will in turn improve their living standards. The project intends to make accessible to women credit services that will catalyze their growth and sustainability of their potential in small-scale entrepreneurship.

METHODOLOGY

The project intends to provide credit for productive purposes through Group lending approaches. The terms of credit and savings of the programme are generally appropriate for women. Loans amounts, which are generally small usually, meet women's need for working capital with low risk and short terms, corresponding to the quick turn around of the petty trading and commerce that women often pursue.

The "Village Banking" this is where a group will borrow on behalf of its members. Lending will be closely related to savings.

The programme will then introduce the ''Solidarity Groups" in this case individuals will be given loans through the guarantee of the group, this will be the next level after village banking.

Thereafter ''Individual lending" will be introduced, in this case the individual will be allowed to borrow after they have gone through three cycles and have proved themselves to be regular savers and prompt loan repayments. The individual loan will be a match to their savings.

PROJECT DESIGN


The programme intends to promote the under listed services.



And basically intends to work on the following guidelines

i) ELIGIBILITY



ii) CONDITIONS




iii) SECURITY




iv) OPERATING PROCEDURES

The following areas shall always be adhered to, followed up and monitored during the implementation of any project under this programme.




Although the programme may offer individual lending the emphasis and concentration is rather on group basis (women 5-10) and the viability of such an approach (group lending) is that:


However, there have been cases of members having to cover up (pay) for dishonest members who could not honor their commitments, thereby sometimes creating resentments in members. In these cases, the member is removed from the group; especially if the members know that she is able to pay but just does not want to. In cases where the member has a disaster, sometime sickness or death, the members can assist and give the member a chance by extending the repayment period.

PILOT PROJECT

As an initial step towards the implementation of the project the programme instituted a preliminary survey of the target area. The target areas covered are Mbeta Trading Center, Chitedze, Nanjiri , Namitete, Nambuma, Sundwe, Kauma and Lumbadzi

OBJECTIVES



OBSERVATIONS



RECOMMENDATIONS:



EVALUATION of MBETA WOMEN's GROUP PROJECT (2 October 2003)


An agricultural specialist, Mr. Jeremy Groome, visited the project. He was very impressed. He encouraged and offered some advice. This visit encouraged the women and caused much excitement among them.

The main objective of this pilot project is to establish and improve a viable rural group of women, oriented toward market, income generation and saving capacity.

Although this project is not intended to solve all immediate problems, the system will later recognize and build a sound micro banking activity (banking and lending)

1. Location and goals

A group of women are running a vegetable growing project in Chitedze (Mbeta area) as a Cooperative activity. The purpose is to improve their lives socially and economically. So far these vegetables are being sold at Shoprite, Hyper stores and Natural Resources College.

2. Rationale for the Income Generation Strategy

MBETA women group is facing many obstacles: means of communication, limited physical and/or marketing infrastructure, insufficient sources of market information, and unavailable or inadequate financial services and resources.

Mrs Regina Mwandemange, from the Rural & Micro Finance Advisory Team (the "Team") of the Ministry of Agriculture, Irrigation and Food Security, MOAIFS, determined, given past experience with some women groups of the country, that support to this Mbeta group expansion should be addressed.

Over a 12-month period, she conducted field visit and meetings with the Mbeta women group, with representatives of private local agricultural produce marketing companies, private banks and financial service institutions.

There are 2 Intermediate Results within the Mbeta pilot project


The results proved that even the smallest productive unit is able to get direct access to the market and to increase and improve the productive yield. More importantly, financial institutions, banks or otherwise, began to consider the group. Savings will be deposited in a bank.

There is still the need of a sustaining funding mechanism which has to be identified.


The recently constituted Opportunity Bank is expected to lend to Mbeta women group. Nevertheless, such credit activity is not yet achieved.

One effort is evidenced by Mbeta women group which is primarily mobilizing savings, within its Mbeta members. Savings are deposited within Opportunity International Bank (OIB)

3. Way forward:


Conclusion:

It is pleasing to note that the women are using their own initiative as to what activity they will do without an outsider dictating to them.

In Chitedze, a group has been formed and they have organized themselves in a group of 10.(ten)

This group of women were not interested in knowing what micro finance was until a brief discussion with them initially the women thought it was just a matter of being organized in a group of 10 and receive the money.

The women after getting a few hints on what micro finance was, it was discovered that most of them had already been dealing with FINCA and SEDOM

The women therefore proposed the following:

Maize Mill

This will be setup at Mbeta Trading, center, to make operations easily, as most of the women live around the area.

The only maize mill around the area is about 30KM from the trading center. This will mean that all the people living around this area and in a radius of 10-15km will be able to access this maize mill. They won't be any competition.

The building in which this maize mill is expected to be is already available.


Problems

In the initial stage, the women thought they would use a diesel engine maize mill, but after consultations, it was discovered that this type of maize mill does not last long, and that spare parts were not readily available. The other option is an electrical maize mill. Unfortunately the trading center has no electricity. The step down transformer, is at a near by Research station and therefore it would be easy.