Strengthening Systems for Financial Inclusion in Rural Malawi
Summary
Between 2021-2024, the Strengthening Systems for Financial Inclusion in Rural Malawi project worked to expand financial access and economic opportunities for 24,000 smallholder farmers across four of Malawi’s poorest districts: Mulanje, Zomba, Dedza and Nkhotakota The project was funded by Jersey Overseas Aid, The Patrick and Helena Frost Foundation and private donors, and was implemented by Opportunity International UK (OIUK) in partnership with Opportunity International Malawi (OIM), the Opportunity International Digital Innovation Group (DIG), and Opportunity International Agricultural Finance (OI AgFin)
By strengthening the capacity of four Financial Service Providers (FSPs) to deliver tailored digital financial products, in conjunction with training farmers in agricultural best practices, financial literacy, and digital skills, the project enabled increased financial participation, economic resilience, and improved livelihoods for rural communities.
The Warm Heart of Africa Malawi
Malawi remains one of the poorest nations in Southern Africa, with 70% of its population living in poverty and a GDP per capita of $602 . Within Malawi rural communities have borne the greatest burden, with 95% of those in poverty living rurally, despite only accounting for 84% of the population Women, in particular, face systemic barriers to financial independence only 3% of girls who start primary school reach secondary education, and many end up in unpaid labour or subsistence farming with little to no financial autonomy
The four districts: Mulanje, Zomba, Dedza and Nkhotakota, are all characterised by high rural populations and extreme poverty. Combined, the districts had 1.3 million people living below the poverty line
Malawi is affectionately known as the ‘warm heart of Africa’ for its friendly and kind people
Mulanje
Zomba
Dedza
Nkhotakota
About the Project
A unique aspect of this project was our dual approach, collaborating with both the demand and supply sides of the financial system to maximise financial inclusion.
Supplying Success
We partnered with four FSPs: CUMO Microfinance Ltd, First Capital Bank (FCB), FINCA and Micro Loans Foundation These partners helped to provide training and support in digital financial services, gender inclusion and agricultural finance. Additionally, we trained 114 Farmer Support Agents (FSAs) in financial literacy, digital literacy, business and life skills. This not only strengthened their ability to facilitate connections between Village Savings and Loans Associations (VSLAs) and FSPs, but also empowered them to conduct their own training sessions
At the project outset the FSPs were hesitant to lend to farmers, seeing them as high-risk individuals. However, through working with the FSPs this soon changed. By the project end, the FSPs had introduced new portfolios which were better value for smallholder farmers and small entrepreneurs
Strengthening Rural Clients
Rural clients were provided with training in Good Agricultural Practices (GAP), financial literacy and business management Following the GAP training, over a third of participants initiated new nonfarming ventures, adopted innovative agricultural practices or planted a more diverse range of crops. Over half stated that this has contributed to increased crop yields.
We also strengthened the capacity of 1,549 VSLAs, including forming 623 VSLAs We supported VSLA members with their use of financial services, especially those requiring digital skills, via training sessions. The training supported members to access loans, as well as improve their financial literacy and management.
Challenges
Upon start up, the project was instantly faced with a country still reeling off of the back of a global pandemic, hindering the impact of the VSLAs at the start. We also faced technical issues at the start, which prolonged onboarding for the FSPs and delayed disbursements of loans.
However, the most severe challenges that the project faced were weather-related. Cyclone Ana hit the south of Malawi in 2021, heavily impacting three of the four regions we worked in It affected over 940,000 people, destroying more than 115,000 hectares of crops and displacing 67,800 households . 5
While Malawi was still recovering and national relief efforts still ongoing, the country was hit by another, far stronger, storm. Cyclone Freddy (2024) was one of the worst tropical cyclones recorded in the southern hemisphere, lasting 36 days, making it the longestlasting cyclone ever. It brought six months-worth of rainfall in just six days, affecting over 2.2 million people, over 659,000 of whom were displaced5
Whilst weather issues are considered when designing a project, the rapid succession and unprecedented intensity of these two cyclones could not have been prepared for In response, Jersey Overseas Aid generously provided us with a further £30,000 to support those affected
Finally, whilst not an unexpected challenge, the project also had to navigate the structural imbalance in Malawi’s economic growth Whilst the country does often see marginal growth, its unequal distribution has resulted in a declining per capita consumption for the majority of the rural population This meant that Opportunity was not just working to accelerate economic growth for the participants but also reverse what would otherwise have been a trend of negative growth 6
Image: NOAA
26,244 people trained in finance
83% of which were women Training included vision building, financial literacy and business management
30,000 family members benefitting
With the added income from farming and business activities, the lives of client’s families are also improving
6,000 loans dispersed
Four FSPs increased their outreach and provided tailored loans and savings to rural smallholder farmers
While all regions had strong results, the outcomes within Dedza and Nkhotakota consistently outperformed the other regions due to the effects of Cyclone Freddy on southern Malawi and the setbacks it caused.
42% reported an increased income
40% reported increased food security
79% in Nkhotakota and 54% in Dedza increased their income
67%
participants now feel more resilient
80% are now optimistic about improving their livelihoods.
66%
report their wellbeing has increased
Gender Equality and Women’s Empowerment
of women reported increased confidence, surpassing our 60% target 75% 28% of women noted a shift in control of household finances
88% of farmers reached through digital platforms
Agricultural Training and Technology Adoption
Digitisation and Financial Literacy
of all beneficiaries attended financial literacy training 85%
95%
participants felt confident in using financial services after training
10,000
individuals opened savings accounts with the FSPs.
Mentoring
93 mentors graduated our mentorship programme and mentored 1,620 women & youth.
who benefitted from the mentorship scheme of surveyed households attended training in agriculture. 83% of those trained adopted new technology 60%
Mary, a
mentee
Dorka learnt how to protect her farm from climate shocks
Lessons Learnt
Supporting FSPs was crucial
By not only supporting FSPs in addition to farmers and entrepreneurs, we were able to promote inclusion for marginalised groups and develop new, rurally-focussed loan portfolios. We were able to help change the views of the banks that they could lend securely to farmers and VSLAs .
Value of digitisation
Thanks to the piloting of group digitisation, we were able to gain valuable insight into best practices for digital adoption, including:
Involving FSAs in group training ensured challenges could be addressed promptly at field level
Appointing a ‘digital lead’ within communities who were trained to disseminate knowledge back to the community was more successful than training the group leader who did not always have the technical expertise required Introducing refresher sessions enabled small issues to be resolved quickly and also provided FSAs and group members with an opportunity to give feedback
VSLAs were vital
For some of our project participants, joining a VSLA enhanced their financial literacy and provided access to loans and savings, whilst others viewed VSLAs as a critical means of accessing loans VSLAs proved to be a trusted means of accessing finance for these rural communities. However, despite the comparatively low-cost and accessible loans that were provided by VSLAs, some felt hindered by their low incomes and believed the loans were inaccessible for them. This is an important consideration for future projects in order to ensure that the gap between the poorest percentiles and the rest does not increase.
“I have learned about money management, budgeting and how to achieve my goals In terms of agriculture, I learned how to grow vegetables using irrigation on my farm near the river”
Atupele, Malawi (Pictured above)
Climate resilience is key
Smallholder farmers adopted several new agricultural techniques during the project, including switching from local maize varieties to hybrid varieties, reducing the number of seeds per planting hole and using organic manure. However, some were reluctant to adopt the new techniques and preferred to continue using traditional methods, either due to financial constraints or scepticism of the new techniques
Furthermore, as demonstrated by the extreme weather events during the project, climate change is going to play an increasingly large role in the success or failure of any similar future projects. As such, these future projects should priorities climate resilient crops and techniques, in order to mitigate hardships as much as possible
Importance of NGOs
NGOs, especially Opportunity, were highlighted by participants as being an important link between VLSAs and FSPs The training and external support provided was crucial to establishing, managing and improving the efficiency of VSLAs As a result, they felt more confident in connecting with FSPs and were able to manage these relationships effectively
Shifting attitudes on gender
Over the course of the programme there was a shift in the attitude towards the role that women could play in financial decision-making. Whilst men were still seen as the primary decision maker, there was an emergent trend towards shared financial responsibility
Conclusion and Looking Ahead
The Strengthening Systems for Financial Inclusion in Rural Malawi project made significant strides in bridging the financial gap for smallholder farmers and microentrepreneurs across Mulanje, Zomba, Dedza, and Nkhotakota. By strengthening both the supply and demand-side financial systems, the project enabled over 26,000 individuals to improve their financial literacy, with thousands gaining access to formal financial services for the first time Through the partnerships with four Financial Service Providers (FSPs), the initiative facilitated over £424,500 in loans, demonstrating the viability of extending financial products to previously underserved rural populations.
The project further enhanced financial inclusion by training 144 Farmer Support Agents and 638 group leaders, who then went and disseminated the information to their respective communities. This inclusion all came with a strong emphasis on gender equity evidenced by the fact that 83% of our clients trained were women. Additionally, the integration of digital tools such as IVR campaigns and WhatsApp channels strengthened financial awareness, fraud prevention, and climate resilience.
Despite external challenges including delayed FSP onboarding and two devastating cyclones the project achieved notable success A significant portion of beneficiaries reported increased incomes, improved confidence in financial decision-making, and enhanced resilience to economic shocks. The digitisation of VSLAs also led to greater financial efficiency, while agricultural training enabled farmers to diversify crops and adopt improved techniques, boosting productivity.
Future Plans for Sustainability
Whilst the project’s duration has ended, continued support is essential to ensure that the positive changes are sustained As such several key strategies have been put in place:
Farmer Support Agents (FSAs): Throughout the project, FSAs played a vital role at community level Being member of the communities, the FSAs have a vested interest in the long-term success of the community, and so shall continue to utilise the training that they received through the project, even once Opportunity’s direct involvement ends. Their presence should act as a long-term resource for local VSLAs With their support and dissemination, enabling an exponential number of people trained in the best practices as time goes on
Community Development Assistants (CDAs): By corroborating with CDAs from the local district councils, the project leveraged existing government support into long term continuity. CDAs are government officials who are permanently based in the communities and will continue to work with the VSLAs and FSAs Their continual oversight and guidance, should ensure the sustained operational capacity of VSLAs beyond the project’s conclusion. Through these methods, Opportunity has fostered an environment in which continued growth and success can flourish without reliance on external support This robust exit strategy, ensures lasting economic empowerment and agricultural success for rural communities in Malawi
Financial Service Providers (FSPs): By linking VSLAs to FSPs within the project’s duration, Opportunity enabled access to a broader range of financial services including savings accounts, loans, and digital finance options. The successful nature of this linkage, has meant that FSPs shall continue to serve the VSLAs beyond the life of the project, meaning VSLAs will continue to have access to formal financial banking, enabling growth and security. This sustainable outcome highlights the importance of the supply-side capacity support that we have provided As a result, we have fostered an environment for continued growth and enabled us to have a robust exit strategy that ensures lasting financial inclusion and economic empowerment for the communities we serve in Malawi
