Paper

Malawi: Microfinance Policy and Action Plan

An action plan to facilitate the adoption of best practices by the microfinance sector
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This paper details the microfinance policy and action plan, set out by the Government of Malawi. The plan aims to:

  • Create an environment that would facilitate the adoption of universally acknowledged best practices by the microfinance sector;
  • Set up a regulatory framework that ensures that microfinance institutions (MFIs) are operationally and financially sustainable for the long-term benefit of clients.

The plan recognizes the importance of:

  • Accelerating enterprise development as a strategy for attaining fair and equitable distribution of wealth and income;
  • Making credit accessible to all levels of populations through a variety of lending institutions.

The paper discusses:

  • Constraints to the access to finance for micro-enterprises in Malawi;
  • The Government's recognition of the importance of microcredit;
  • The positive impact of government schemes on the lives of the recipients;
  • The multiplicity of institutions and schemes that provide microcredit, and the resulting diversity in lending policies;
  • The disharmony brought about by this diversity;
  • The need to harmonize and promote best practices to ensure sustainability.

The paper concludes that:

  • Microfinance in Malawi needs to be viewed as a business activity and not a social initiative;
  • It is necessary to have an environment that facilitates and encourages the adoption of universally acknowledged best practices;
  • There is a need for a policy framework within which all players operate to ensure sustainability and increased outreach.

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