The Transparent Pricing Initiative in Malawi has published standardized pricing data from ten microfinance providers, representing an estimated 90% of Malawi’s microloan borrowers. Launched in 2011 the Initiative is delivered in partnership with Planet Rating and MAMN (the Malawi Microfinance Network), and is funded by the MasterCard Foundation.Microfinance in Malawi
The price graph presented below shows the prices of all the microloan products in the Malawi dataset. Each data-point represents a real loan given to a real borrower, calculated using original loan documentation from the institution. The size of the data-point correlates with the number of borrowers that have a loan of that product at that loan amount. The color of the data-point correlates with the Transparency Index of the sample – the lighter the colour the more transparently priced the loan product. The interactive legend beneath the graph can be used to change the graph axis and labels. Try the custom feature to see price correlations with attributes such as loan purpose, institution type, loan term and percent of gross national income.
Over 75% of the loan products in Malawi are directed to business activities and a range of different lending methodologies are employed. The Price Graph shows that smaller loans are higher in price than larger loans. The data indicates that products with higher prices are being advertised in a less transparent way.
The interest rate calculation method used for microloans in Malawi is predominantly the flat interest rate, observed in 60% of the products analysed Additional charges in the form of fees and insurance are common, yet disclosure of these charges on repayment schedules are rare – the availability of individual repayment schedules designed for clients is limited, highlighting the difficulty faced by many microloan borrowers in understanding and comparing cost of loans. Microloan prices seen in Malawi varied by the type of institution, the purpose of the loan and geographic location of the microloan borrowers.
In this graph, the y-axis indicates the “Full APR”, defined by MFTransparency as the price including interest and all required fees, insurance, taxes and security deposits. This full price is then annualized with a nominal compounding procedure. For additional price calculations please click on the institution name in the table below.
|Institution||# Borrowers||Portfolio (US$)||Products||Transp. Index||Participating Since||Age of Data|
|MLF MWI||24,364||1,698,128||3||41||2012-Feb||80 mos.|