Malawi: Microfinance Policy and Action Plan

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.