Access to finance remains a major constraint for replication of successful business models particularly for small and medium enterprises (SMEs). Through the Innovative Finance Window, MICF will help absorb some of the commercial risks in triggering innovation, thereby speeding up the implementation of new business models and / or technologies that have the potential to positively impact on SMEs in Malawi. MICF is looking for big positive impacts both on the numbers of SMEs reached with new financing products and the number of new SME clients which financial institutions in the country have not previously dealt with.
NBS Bank aims to set up an SME Credit Scoring Model to score SMEs who apply to the bank for business loans. The SME credit scoring model will specifically score both qualitative information about the client (behavioural aspects - character, credit record, experience in business, how long with bank, market share, governance structure and experience of management) and quantitative information (financial aspects- financial statements). In a banking environment that traditionally relies on collateral-based lending to SMEs, a scoring model such as this represents a major shift in attitude to risk by the bank.
Currently in Malawi, Mobile Money agents are facing liquidity challenges due to access to rebalancing points as well as low operating capital. TNM through the project aims to set up an overdraft facility which can be instantly accessed by agents (typically small retail-based businesses) to address this challenge. This facility will allow agents to access loans through digital platforms and will also allow them to acquire loans which they cannot otherwise access from the banks or micro finance institutions due to the smaller size of their businesses. Increased access to capital will expand the ability of agents to provide basic financial services to the agent’s customers.