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ondi Chimtokoma, a mother of four, from Mbela Village, Traditional Authority (T/A) Kaphuka in Dedza has seen her business grow from a capital of K3 000 when she started in 2002.

She started with a K3 000 loan she got Cumo Microfinance Company 20 years ago when she was only 21 years old. At that time, she was making some fritters, but now the business has grown.

 “I had no source of capital at the time and when I heard that Cumo Microfinance Company was disbursing loans, I joined the queue to get my own.

“After some time, I started getting K5 000 and the loan amount has been rising over the years to now K500 000,” explains Chimtokoma.

She now sells fried chips to students at Alice Gwengwe Foundation and buys and sells wrappers (zitenje).

Phiri speaks to Cumo Microfinance Company beneficiaries

Chimtokoma is proud that her business has seen her building a house with iron sheets from the grass-thatched one that they previously had. The house is also well furnished.

Apart from that, the business has empowered her to send her four children to school. Her first-born child has just sat the Malawi School Certificate of Education (MSCE) examinations while the last born is going into Standard Seven.

The family also managed to buy land where they cultivate maize and soya beans and sell to supplement their income and support their needs.

Thus far, Cumo Microfinance Company members such as her are appreciative of the graduation initiative. Those that have been with the organisation for over 15 years can now get up to K5 million loan and repay over a two-year period.

Thokozani Saladi from Dedza is one of such customer. She joined Cumo Microfinance Company in 2003 as part of a group.

“I have done a lot with loans from Cumo. For instance, I bought a plot and built two houses which I rent out. I also have a two-tonne lorry for hires. The loans also help me in farming. I harvested about 500 bags maize this year, a rise from 360 bags last year. I have seen a lot of benefits in Cumo and I encourage others who have no source of livelihood to join Cumo or other groupings for business initiatives,” she says.

Cumo Microfinance Company works with Village Savings and Loans (VSL) groups, which put together shares which vary from K500 to K2 500 or K1 000 to K5 000 depending on the season.

These groups meet every fortnight and they are advised to share the savings at the end of the year. But most of the groups prefer to share every four months when they are getting new loans from Cumo Microfinance Company.

Once they start getting K500 000, they can graduate into small and medium enterprises and get loans of up to K5 million, which are repaid in two years.

A member of Kanthu n’khama Group Alex Malenga explains that when their group members meet, they contribute a minimum share value of K1 000 and they share after four months as they receive loans from Cumo.

“We get the loans from Cumo as a group. Members can now get a minimum of K100 000 to be repaid in four months after which we get a fresh loan,” he says.

Malenga attests that the loans have been beneficial, saying that the members have progressed from extreme poverty, living in grass-thatched houses to iron- roofed houses.

He says: “It was also difficult for most of them to send their children to school, but that too has changed. Even single mothers who had a hard time taking care of their families are now independent and running their businesses.

“People are also building good houses with iron sheets while others have bought livestock from the proceeds of their businesses.”

Cumo Microfinance Company chief executive officer Ezekiel Phiri attests that many rural families have achieved economic transformation.

He says that the micro-finance company has moved from group lending only to supporting those who want to borrow as individuals.

“We can now lend individuals up to K5 million. We are also looking at other services in collaboration with the other players such as insurance companies to ensure that customers remain resilient to the shocks they face as they do their businesses,” says Phiri.

Although the journey in microfinance might be difficult at times when people default repayments, Phiri said the microfinance institution is driven by the passion of helping the rural poor to be economically empowered.

He says: “We know that if one does it right and the services they offer make a difference to people’s lives, they will buy from them and they will be able to service their loans.

“Some might struggle for different reasons, but the percentage is manageable and within reasonable limits.”

Businessperson, Ellina Makwilimba, fears that with the rising cost of goods in the country, it can be hard for them to manage finances properly.

Chamber for Small and Medium Businesses Association executive secretary James Chiutsi bemoans the type of loan products available on the market, arguing that they are not meant to ensure SMEs growth.

He observes that most of the loans available are not developmental, saying: “They are too commercial in that once one gets a loan, they are expected to start repaying 30 days later, which is not conducive to developing SMEs.

“What we are looking for as SMEs are developmental loans, which give a good grace period before you start repayments.”

 Chiutsi said it is important for SMEs to access finance for purchasing capital equipment and goods.

“Normally, we import machinery from India and China, so it would be nice if lending institutions accepted the same capital equipment bought to be used as collateral as most of the times financiers are looking for other forms of collateral, including houses, buildings and other movable forms of collateral which most of SMEs do not have,” he explains.

Chiutsi advises that proper and deliberate methods should be developed to ensure that SMEs access loans that are sustainable and helpful.

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