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Transparent Pricing In Malawi

Please note that MFTransparency is no longer collecting new pricing data. The data displayed for this country is for historical purposes only and does not represent current products or prices in the country. Note that the age of the information for each MFI is indicated in the table below.

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
According to the 2009 Malawi Financial Demand-side Report, 55% of Malawians are financially excluded, using neither formal financial institutions nor informal mechanisms. Efforts to improve access to finance have been around since the beginning of the 1990s. These initiatives were advanced mainly by the government of Malawi and various other national and international market players. Malawi has 21 microfinance service providers, consisting of non-governmental organizations (NGOs), savings and credit cooperatives (SACCOs) and other money lending companies. Combined these institutions serve an estimated 323,000 active borrowers and manage a gross loan portfolio of USD 28 million.

Truth-in-Lending Legislation
The Reserve Bank of Malawi is the regulatory body responsible for overseeing the microfinance sector. The legal and regulatory framework for the sector was formalized through the Financial Service Act, 2010, the Microfinance Act, 2010 and the Cooperative Act, of 2010. Subsequent guidelines and directives were issued aiming to complement and strengthen the regulatory and supervisory framework of the sector. This includes the new Malawi Microfinance Bill which will help ensure that microfinance institutions clearly communicate their pricing to clients prior to disbursing loans.

Malawi Price Graph

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.

Malawi Institutions

Institution # Borrowers Portfolio (US$) ProductsTransp. IndexParticipating SinceAge of Data
CCODE2,351642,43741132011-Jan58 mos.
CUMO48,013593,9572442011-Jan58 mos.
FINCA29,9273,752,1033852011-Jan58 mos.
FINCOOP4,221273,9046472011-Jan58 mos.
FITSE8,790649,4084442011-Jan58 mos.
MARDEF166,5752,550,58211002011-Jan58 mos.
MLF MWI24,3641,698,1283412012-Feb58 mos.
MRFC1,77200N/A2011-Jan58 mos.
NBS1,000974,3591632011-Jan83 mos.
OIBM52,6499,227,4884652011-Jan58 mos.
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Key Statistics
# Samples:
# Products
# Institutions
# Countries
# Borrowers
Loan Portfolio (USD)
% Products using declining balance
% Products with one or more fee
% Products with one or more insurances
% Products with compulsory deposits
Filter table:
Country InstAbbrev SampleCode Loan Amount USD Loan Term (Months) SampClients FullAPR DateApproved
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