The National Bank of Malawi (NBM) Plc has managed to disburse about 9 billion kwacha in Village Bank loans across the country, through its Kasupe Finance package in just two years.
NBM Head of Retail Banking Division Oswin Kasunda disclosed this on Friday in Mzuzu during a customer interaction with representatives of Village Banks, as part of the second anniversary of the Kasupe Finance product.
The Kasupe Finance Product, which the bank introduced in June 2021 is a package designed to assist Village Banks to access financial products and services as part of NBM financial inclusion drive.
Speaking during the interaction, Kasunda said the facility has been doing extremely well since its introduction.
“There have been overwhelming support and there has been overwhelming interest among the Village Bank Groups. Two years has clocked this year and this is our second anniversary but already we have disbursed over nine billion kwacha in loans among the Village Bank groups. We have also opened accounts over 600 that are now in the banks,” Kasunda said.
Kasunda said despite the success, they have been facing some challenges in terms of repayment of loans.
“The challenges have been many. First as a country, we are all aware that over the past two years the country has faced serious disasters. The Covid-19, the cyclones. These have disrupted business activities in the country and obviously, Village Banks are not exceptional,” Kasunda said.
They are operating in the same environment and we have seen that in some cases businesses have failed not because of their fault but because of the environment that they are operating in. In other cases, the challenges are their own making. Some members within the groups have not behaved well and therefore, as a group they have come out as failures just because of some elements within their group,” he said.
Kasunda said they are constantly engaging and equipping the village banks with tips on how to successfully run their businesses.
“Just as in every group in terms of performance, you will still have some that are performing well they will be others that are not performing well. It’s normal in business sometimes things work sometimes it does not work but largely the Village Banks have performed well,” he said.
He added; “We have had a few hiccups where some have not done extremely well and that is why we have come here, because as part of the package in our customer interaction programme we have also included a workshop.”
“This is because we have realized that those groups that were lagging behind in terms of performance there were certain business skills that they were lacking. We had to come to them orient them teach them give them tips on how to mage business because as you know these groups are composed of members who are carrying out various businesses in their localities. Therefore, it is important that they manage their businesses well so that as a group they can perform well and pay back their loans to the bank,” Kasunda said.
Kasunda advised the groups to grow their financial activities and exercise financial discipline for the success of their businesses as well as that of the Kasupe Finance Service.
“The financial discipline is very important,” Kasunda said. “You see especially small business operators there are always challenges of managing their finances. First is discipline of separating business transactions from personal transactions. You know when you are operating your own business you are your own master.”
“Sometimes you lack the discipline sometimes you dip your hand into the capital, which is supposed to be used for business, so we are telling them that they need financial discipline if they are to run their businesses smoothly. The moment you start mixing and disturbing the capital obviously the business is going to fail,” he said.
On his part, Pa Clinic Village Bank representative Samuel Soko hailed the bank for introducing the initiative saying it has helped their 30-member group from Ekwendeni to grow.
“Our relationship with the bank has been going on very well since they introduced this facility. Now we have that chance of borrowing money from the bank through this facility. We are doing very well since last year. Now I can say that we are at 45 million borrowing from the bank last year it was 22 million kwacha,” Soko said.
Soko added,’ “Once we get that loan we lend to members of the Village Bank not outside. First you have to plan for your business before you borrow that money if you got that plan wherever you are going you will be successful.”
“We have a loan committee whereby before we give a loan to a member we first visit the applicant and the business then if the loan committee is satisfied then we proceed and give him or her a loan. At the end he or she will be successful,” Soko said.