Image of Amir Rizwan

Amir Rizwan

Investment Manager

Charities Aid Foundation

MICROLOAN FOUNDATION: GIVING HOPE, NOT HANDOUTS

6 November 2017

MicroLoan Foundation (“MicroLoan”) is a microfinance institution that operates in Malawi, Zambia and Zimbabwe providing microloans to women in rural locations. MicroLoan Foundation offers small loans, training, mentoring and ongoing support to some of the most vulnerable women in sub-Saharan Africa, allowing them to start small businesses to lift themselves and their families out of poverty.

Client with child - Zambia

Since 2002 Microloan has supported over 150,000 women entrepreneurs looking to setup their own businesses through its 26 branches. Furthermore, MicroLoan has a strong local presence, employing 158 people in Africa, with all 98% of them recruited locally.

Their mission is to provide loans to women who live below the poverty line ($1.25 per day) supporting them to become female entrepreneur. Loan groups are formed, on average each group will consist of 15 women, each member has to complete eight initial training sessions before loans are provided.

Through a joint liability repayment model, the scheme provides security for repayment at the individual level. The support that MicroLoan provides is complemented by ongoing business and group cohesion training. In Zambia and Zimbabwe women also gain training in the use of mobile banking technology so they can access the services they need to help manage their finances. The work that the charity is doing in sub-Saharan Africa is aimed at supporting female entrepreneurs develop self-sustainable lives and to improve the lives of the communities they live in.

Malawi - clients during a training session delivered through dance

MicroLoan has recently expanded its microfinance service into Zimbabwe. Zimbabwe is one of the poorest countries in the world, currently ranked 154 out of 188 countries in the UN Development Programme’s Human Development Index for 2016. There is currently little in the way of rural microfinance services, and in a country where three quarters of the population who live below the poverty line live in rural areas MicroLoan identified a need for their services.

MicroLoan is piloting their lending model, which has proved successful in Malawi and Zambia, with smaller groups as they look to slowly grow their operations in the country and to better understand the needs of female entrepreneurs living in rural areas across the country. Since the launch of their branch in Zimbabwe, MicroLoan has expanded its operations to now cover six centres in two wards of the Goromonzi District, while the number of women participating has increased to 250, with an average loan size of up to £125.20 and a 100% repayment rate.

Malawi - clients during a training session delivered through dance 2
Venturesome provided a £150k loan to support the development of their new branch of its activity in Zimbabwe. This loan provided MicroLoan with access to funds to support its UK operations, which has enabled it to successfully fundraise for its Zimbabwe expansion.
Yamikani Group - Malawi

Over the next few years MicroLoan want to grow their operations in the existing countries, and to increase the number of women they help in sub-Saharan Africa. They have three key challenges:

  1. Growing in Malawi, Zambia and Zimbabwe: These countries face a number of challenges such as environmental disasters, grossly fluctuating exchange rate, volatile economic and political climate. Part of this challenge will be around how it can best use technology and new approaches to micro-lending to improve the efficiency of its service.
  2. Expanding their reach: MicroLoan works in challenging rural environments where reaching its client base can be difficult. Furthermore, as it looks to grow its lending there will be challenges around how it can manage its cost base while having to invest in its capacity.
  3. Developing the range of services: the world of microfinance is forever evolving as shown by the development of mobile banking. With new ideas around digital currency and blockchain there is an on-going challenge in ensuring that its product offering remains effective for its beneficiary group.

“We (MicroLoan) value our relationship with CAF Venturesome highly, they took the time to understand our needs and challenges and as a result we have a good in depth working relationship. Without their support we would not have been able to expand into Zimbabwe and we are looking forward to working with them in the years ahead.”

Peter Ryan - CEO and Founder of MicroLoan Foundation

Want to know more about CAF Venturesome?

Talk to our team on 03000 123 300 or email us at venturesome@cafonline.org and we’ll be happy to help.

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