Strengthening Systems for Financial Inclusion in Malawi - Final Project Evaluation Report
Final Report for JOA November 2024
Project Contact information
Name: Lydia Baffour Awuah
Title: Senior Programme Manager
Email: lbaffour@opportunity.org
1. Executive Summary.
This report marks the conclusion of the Strengthen Systems for Financial Inclusion in Rural Malawi project implemented by Opportunity International with the financial support from Jersey Oversees Aid(JOA). The project, spanning the three-year period from 2021-2024, aimed to strengthen both the supply and demand of formal financial services for marginalised and previously excluded rural populations in four districts of Malawi, Mulanje and Zomba in the Southern Region, and Dedza and Nkhotakota in the Central Region.
The project was implemented across four financial service providers (FSPS) , namely CUMO Microfinance Ltd, First Capital Bank (FCB), FINCA and Micro Loans Foundation. The project worked at two different levels to increase both the capacity of FSPs to offer financial services and products that could meet the needs of rural communities and the capacity of smallholders to apply for loans and manage new investments and income-generating activities. FSPs’ capacity was built through the provision of training and tailored support on digital financial services, gender mainstreaming and agricultural finance. Farmer Support Agents (FSA) were also trained in financial literacy, digital literacy, business and life-skills among other topics to be able to support the linkages between Village Savings and Loans Associations (VSLAs) and FSPs, as well as carry out training to farmers and digital profiling.
On the demand side, rural communities’ capacity was built through training in Good Agricultural Practices (GAP), financial literacy and business management. Two IVR (Integrated Voice Response) campaigns were also piloted to further develop farmers’ knowledge and awareness on a variety of topics such as digital fraud prevention, disability awareness and information and concerns on FSPs, loans and loan repayment. Lastly, existing WhatsApp channels were piloted to provide regular weather forecast messages to FSAs who will then inform members of VSLAs.
Despite the significant challenges over the life of the project such as severe weather patterns (Cyclone Ana and Freddy) that adversely impacted agriculture and rural livelihood, COVID-19 global pandemic and economic recessions in Malawi, the project has made great progress against all of our outcomes, achieving or overachieving against the majority of our indicators. The potential for ongoing and increased impact is very significant. Key achievements include:
Key Achievement– Supply-side
• Technical Assistance has led to four Financial Service Providers(FSP), CUMO Microfinance, First Capital Bank , FINCA and Micro Loan Foundation significantly improving their performance in terms of improved efficiencies and increased outreach and portfolio values for smallholder farmers and rural entrepreneurs. As a result, partner FSPs have disbursed a total of £424,570 in loans to over 6,000 smallholder farmers and rural entrepreneurs and continue to create sustainable and impactful change in the target rural communities. Building the business case for FSPs was key in demonstrating that serving VSLAs can offer cost reductions, improve operational efficiencies and lower the cost of new market penetration.
• Over 300 FSP staff members trained in gender, new products, services, and channels
The endline evaluation concluded that : “The programme's effectiveness in achieving its objectives stemmed from collaborating with local FSPs, enhancingtheircapacitytoserverural communities, and providing tailored financial products”
We can draw from this that, the multipronged, simultaneous approach created momentum for systemic change; showing that the project's holistic approach combining technical and financial support, could be replicated in similar contexts that foster strong partnerships with FSPs and promote the establishment of VSLAs. Sustainable outcomes are tied to the ongoing development of local capacities and financial literacy among farmers, ensuring that the knowledge gained translates into long-term benefits.
(BathSDR 2024 Endline Evaluation Report) .
Key Achievement– Demand Outcome
• 144 FSAs are equipped with bicycles and smart phones to deliver training to over 26,000 smallholder farmers and rural entrepreneurs in financial literacy and digital financial training, Good Agronomic Practices (GAP) training as well as getting them bank ready and linking them up to partner FSPs.
• Strengthen the Capacity of 1,549 VSLAs (against a target of 1,200 VSLA) , of which 623 were newly formed , has led to improved financial and VSLA management resulting in improved confidence among VLSA members in using financial services, including digital financial services.
• 26,244 people (83% women) trained in vision building to foster aspirations and long -term financial goals, financial literacy to improve understanding of budgeting, savings and managing finances as well as entrepreneurship and business management training to equip them with the skills needed to manage and grow their businesses. These trainings have cumulatively helped to improve the financial resilience of target participants.
• 6,080 linked to the four FSPs to receive Agricultural and Business loans to grow their farming and business activities.
• Over 30,0001 family members are benefitting from the extra income from the farming and business activities as a result of these loans.
• 1,620 women and youth mentees and 93 mentors graduated from the mentorship programme.
Overall, we are delighted with the project. We are hugely grateful for the support that JOA has given. The impact in Malawi has been significant and its effects will be very long lasting. The need for financial services especially in the rural communities however remains acute, and we will continue to reach out to the poor offering them a hand up out of poverty. Our overall aim is to strengthen more FSPs and VSLAs to serve tens of thousands more smallholder farmers and rural entrepreneurs in Malawi–directly addressing financial inclusion, food insecurity and vulnerability and this project has undoubtedly stimulated, inspired and invigorated that vision.
Key Outcomes:
The endline findings demonstrate that on average the project made significant and distinctive contribution toimprove the lives of rural household amid on-going challenges:
- 42% increased income and yield of poor farmers and small rural enterprises
- Over a third initiated new non-farming ventures, adopted innovative agricultural practices, and planted more diverse crops, with more than half citing these changes as key contributors to increased crop yields
- 40% reported increased in household food security
- 75% reported greater confidence to participate in decision making and better relationships in their household in last 3years.
- About 77% are currently using mobile money.
- Overall, most respondents also reported being confident in using financial services and digital financial services.
Source : Endline 2024 Evaluation Report ( n=434)
Details of what has been achieved and challenges faced are detailed in the next sessions.
1 Based on estimated average of 5 family members per loan client - From the endline survey the average household size was 5
2. Project Background:
The Jersey Oversees Aid Strengthen Systems for Financial Inclusion for Rural Malawi (SSFIRM) project was implemented in Malawi in partnership with Opportunity International UK(OIUK) and Opportunity International Malawi (OIM), Opportunity’s Ag Finance and Digital Innovation Group (DIG). The partnership was focused on the provision of:
• Technical Assistance to four Financial Service Providers (FSPs) to address the supply gaps in providing tailored financial services to smallholder farmers and rural entrepreneurs via CBFOs;
• Bridging the Capacity Gap of Community Based Financial Organisations (CBFOs) including 1,200 Village Savings and Loans Association (VSLAs) to strengthen their readiness and ability to access and use formal financial services to build a sustainable livelihood through the provision of financial literacy training, digital literacy, business and life-skills training and Climate-Smart Agriculture training via a network of Farmer Support Agents (FSAs). This will create pathways for 24,000 rural entrepreneurs and smallholder farmers (60% women, 20% youth and 5% persons with disabilities (PWD)) to have access to appropriate formal financial services, products and training leading to increased productivity and incomes to move out of poverty and create sustainable livelihoods for themselves, their families and the community.
The key milestones and theory of change of the project are included below:
• Milestone 1: 4 FSPs have increased ability to deliver demand-driven services in rural areas including loan facilities to 6326 rural people
• Milestone 2: 14,400 smallholder farmers and rural entrepreneurs will benefit from increased access to formal financial services.
• Milestone 3: 14,400 smallholder farmers will benefit from access to training and market information to increase productivity and incomes
• Milestone 4: 24,000 ruralpeople trained in financial literacy and business management, strengthening their ability to access formal financial services and manage their money.
Figure 1: Project Theory of Change
This project was completed August 31st, 2024 and operated in four districts of Zomba and Mulanje in the southern region, Dedza and Nkhotakota in the central region, covering 11 Traditional Authorities. In Zomba, the project focused on Kumtumanji, Mlumbe, Ngwelero, and Ntholowa; in Mulanje, it targeted Juma, Mabuka, and Mkanda; in Dedza, Kachere and Chilikumwendo; and in Nkhotakota, Kanyenda and Kafuzira.
As Year 1 began in September 2021, Malawi was still cautious about COVID-19, however, businesses, travel and group meetings were starting up again, albeit carefully, and with smaller audiences. International travel began again; OIUK resumed its in-person monitoring and the project was officially launched in March 2022 after the virtual kick off meeting due to the Covid restrictions. This was attended by over 150 dignitaries from the government, Traditional Authorities and other key stakeholders. Year 1 of implementation mostly focused on providing financial and agricultural training to VSLA members and onboarding FSPs willing to link and provide loans to small-scale farmers. However, as Year One ended, the war in Eastern Europe had broken out and the economic ramifications felt around the world, began to impact the project’s clients alongside Cyclone Ana in 2022 that hit the south of the country, causing devastating flooding that destroyed crops, cut electricity supplies, washed away roads and cut off communities from outside assistance, resulting in tens of thousands to seek shelter away from their homes. Three of the four districts this project was working in were among the worst affected.
Lessons learned and corresponding recommendations were incorporated into Year Two. Year Two saw strong performance and progress on many of the projects deliverables. Many of the project’s component also received the benefits of technical assistance and training. Also during Year 2 of implementation, three partner FSPs, namely CUMO, FCB and FINCA, started linking with small-scale farmers to offer loans through their Village Savings and Loans Associations (VSLAs). During the third and last year of implementation, the project continued linking VSLAs to FSPs, providing training and onboarding the fourth FSP, Micro Loan Foundation. In March 2023, Cyclone Freddy hit Malawi and affected over 1,000 of the project participants especially in Mulanje and Zomba. JOA generously offered additional £30,000 to support those affected by the Cyclone to meet their immediate needs and to rebuild their lives. Fast Forward to end of Year 2 and into Year Three, we made good progress towards the project’s outcomes. The sections below provide a detailed review of key accomplishments, challenges, and lessons learned under each of the key objectives and activities for the project
3.0 Performance Against Outcome – Supply Side
Output 1: 4 FSPs have increased ability to deliver demand-driven services in rural areas:
The project sought to strengthen systems that hinder access to financial services within the rural population The activities included onboarding of partner FSPs to provide financial solutions that will effectively build a more inclusive and resilient future for them, linkage of saving groups to formal financial institutions and access to financial services: savings, agricultural loans and business loans.
Result: Over 300 staff have been trained in new products and services, gender and digital financial services
Table 1: FSP staff training and capacity building
Over the course of the project a lot of technical assistance was invested into the areas of Output 1 for the purpose of staff training and capacity building. Over the three years, Opportunity’s Agriculture Finance team has provided ongoing training, capacity building, portfolio monitoring, and value chain support for the four FSPs, namely CUMO Microfinance Ltd, FINCA, First Capital Bank and later Micro Loans Foundation. Trainings have coveredrisk management, crop profiling, farm budgeting, gender inclusion, farmer process mapping, value chain financing, and managing the agribusiness lending cycle. As the underserved rural household face unique obstacles and have unique financial needs, AgFinance also worked closely with these partner FSPs to innovate and develop and/or promote financial service products that overcomes behavioural barriers and increases utility of target VSLAs
Client Journey Mapping was also facilitated for all four partner FSPs. The exercise revealed bottlenecks in clients' processes to access financial services and perceived risks. Product awareness meetings for clients were jointly done with the banks and Opportunity to build trust and help the VSLAs make informed decisions as summarised by a VSLA member in Dedza:
In 2023, Opportunity International linked us up with First Capital Bank to be able to get large loans. The loan that I took from the bank, was used to buy fertiliser, seed and paying for farm labour in the 2023/24 farming season. Some of the money was invested in my business. I am very grateful because I managed to produce enough food for the household despite the drought. I am also able to buy more merchandise for my business and invest in other business like buying maize to sell in the lean season. E4 - Woman from Dedza, aged 20-45 years
We also engaged Digital Frontiers Institute (DFI) to provide digital financial services training to staff from FCB, CUMO and MLF. In total 16 staff ( 5 women and 11 men) passed training courses in 7 courses: Certificate in Digital Money (CIDM); Mobile Money Operations; Digital MSME; Digitizing Agriculture; Digital Finance for All; Blindspots: Gender in DFS; and Cybersecurity. These training has equipped staff with the skills needed to support the target clients as proudly explained by some of the trainees:
“l deal with farmers and the course helped me to improve the way we look at credit cases and offer digital solutions for clients, especially those that have limited physical access to the bank.”
“As a sales consultant, I intend to encourage women through special trainings and sensitizing the community during sales campaigns on how all genders need access to digital platforms/devices and how digitization is important in our modern world”
# of rural clients accessing loans from FSPs (cumulative) 6,320 6,080
800
Unlike individuals, rural clients preferred savings accounts at the group (VSLA) level, hence the focus on strengthening the VSLA group savings and opening of group savings with partner FSPs.
The target was slightly missed due to seasonality and the delays in onboarding partner FSPs at the beginning of the project, thus delaying the disbursement of loans which only started during Year 2 of implementation.
The target on capital released by FSPs was off-track. This was attributed to the delays in the commencement of loans under the project because of delays in onboarding the banks vs seasonality of loans and project timelines. The average loan size of £70 was also too low compared with the projected target.
Although achieved target, the PAR relatively declined in Year 3 compared to Year 2
Nearly 10,000 rural clients benefiting from VSLAs opening formal savings account with partner FSPs
Promotion of savings and financial discipline: Over the course of the project, Opportunity linked 665 VSLA to partner FSPs to open savings account, ending at 92.4% of the project target. As previously reported, one of the main unexpected challenges was the lack of commitment among individuals to open personal savings accounts with formal financial institutions. Both the qualitative study and household survey show that most respondents were able to save more regularly because of being part of a VSLA, and, for a minority of people, also through formal bank accounts. Thus, VSLAs play an important role in promoting a culture of savings and financial discipline among members. Indeed, survey respondents mentioned how the structured environment of VSLAs encouraged them to regularly save small amounts, which accumulate over time and contribute to financial security. This regular saving behaviour, combined with responsible borrowing, suggests there may be longer term behaviour change around financial practices that may support longerterm financial stability. The household survey show that most of the sample (92%) were members of a VSLA, with Mulanje registering the highest (97%) and Dedza the lowest (87%). Overall, 51 percent of respondents reported having some savings, the highest proportion of people with savings was in Nkhotakota (77%) and the lowest was in Mulanje (41%). Almost half of the respondents to the household survey also indicated having increased their savings over the project’s period, with the highest proportions being from Dedza and Nkhotakota. Access to formal financial services & Impact
Over 6,000 rural clients accessing loans (84% women) across the four Financial Service Providers
Last year, when I saw that my tomato business was stagnating, I had to borrow money to boost it. I borrowed 500,000 MK from FINCA, which was the highest figure that I had taken as compared to 3 years ago. At least the business picked up after I injected part of that money into it. This gave me a relief, as I was afraid that my business would come to an end.
Woman from Nkhotakota, aged 20-45 years
While agriculture is still perceived as inherently risky, the technical assistance provided to the FSPs has resulted in increased lending to smallholder farmers and rural entrepreneurs. Rural clients were linked to four partner financial institutions: First Capital Bank (FCB), CUMO Microfinance, FINCA and Micro Loan Foundation, thereby improving rural access to tailored financial services. However, delays in onboarding certain FSPs, affected the pace of loan disbursements. Moreover, the partnership with Standard Bank did not progress as expected, thus further delaying the process of onboarding four FSPs and having an impact on the number and timing of loans that were disbursed. Despitethese setbacks, by Year 3, loans had reached 96% percent of the project target, demonstrating a strong demand for rural financial services.
As seen in Table 2, loans outstanding across the FSP partnership grew from 2,215 loans in Year 2 to 6,080 by the end of Year 3, an increase of 175% but achieved 96.3% of the overall project target. Loan facilities were issued at the group level for further allocation to individual VSLA members. About 45% of household survey respondents reported having borrowed more in the last three years and while most people borrowed from their VSLAs, some also borrowed from the FSPs that the project linked to groups. Loans were mostly accessed for business investments, however at times people accessed loans to purchase household needs, especially when their income reduced. It is also worth noting that new farmers are screened by FSAs before they can begin receiving financial services from the FSPs. Once approved, the FSAs continue to monitor farmers’ performance throughout the farming season and to put in place appropriate mitigation measures for any issues that are identified.
During this period, the capital release grew from £86,957 in Year 2 to £424,570, achieving just 50% of the project target. From the endline evaluation, Dedza participants commonly sourced loans from FCB (70%) while in Mulanje and Zomba, CUMO was the common source of loans (52% and 30% respectively). Participants in Nkhotakota commonly obtain loans from Micro-Loan Foundation (63%). The endline evaluation revealed that borrowing from FSPs allowed access to larger funds and increased capacity to invest in businesses or start-up new businesses. Investment was the biggest driver of successful businesses, creating a feedback loop as this allowed some respondents to buy further inputs to improve their business as depicted by the QuIP study( 2024) :
Fig.2 Improved income generating activities (QuIP respondents)
Furthermore, a higher proportion of respondents who took loans from FSPs linked improved access to VSLAs and improved income to their ability to invest and reinvest in business, compared to respondents who did not take an FSP loan.
It is however worth noting that while other respondents were aware that borrowing through FSPs allowed them to access larger sums of money without being reliant on the economic situation of friends or other members of the VSLA group, there was anxiety around the implications of borrowing from an institution and the stress of having outstanding payments as explained by one client in Mulanje:
This year, after the increase in yields and an improvement in food security, [as a family] we decided not to borrow from big financial institutions like CUMO again, but rather borrow less from the VSL. I am happy now because I have the peace of mind because I am not threatened of seizure of my property for failing to meet the deadlines of repaying a loan. The money that I borrow from the VSL is used to buy farm inputs like seeds, pesticides and fertilizer for winter cropping. Woman from Mulanje, aged 20-45
Challenges in borrowing from the endline survey included tough loan conditions (12%), lack of cash disbursements (12%), and high interest rates (11%). Opportunity International is currently looking into the possibility of testing injecting capital directly into the VSLA to increase their liquidity to enable participants who do not want to borrow from FSPs to have timely access to financial services to grow their business.
In terms of the loan repayment, the portfolio quality declined in Year 3 mainly due to dry spells which disrupted the farmers and consequently, FSPs. Despite commodity market prices for farmers, the low supply due to dry spells during the season resulted in lower harvest and sales, thus delaying repayments. However, there was hope for recovery as low supply resulted in high prices, especially for the maize product. In June, the FSAs conducted loan follow-ups on client groups that received loans from various FSPs (FCB, CUMO, and FINCA). These efforts were to monitor loan utilisation by clients as well as emphasize the importance of loan repayment and are envisaged to improve portfolio quality. Key factors for managing risk in the AgFinance space include the availability of a loan guarantee mechanism, diversification of crops, strong private sector driven value chain linkages, good extension service provision and quality loan processing and monitoring.
Nearly 4,800 VSLA members digitalised and actively using the VSLA Digitalisation App
Over the course of the project, Opportunity’s Digital Innovation Group(DIG) introduced and expanded digital innovations across all the four project districts : partnered with Viamo to complete an Interactive Voice Response (IVR) pilot targeted at digitally excluded populations, including women and less-literate clients in Malawi; as reported in Year 2, VSLA digitalisation and weather and pricing information via WhatApp as summarised in the Table 3
Table 3: Digital Innovation
Number of farmers reached digitally via SMS/voice data to improve decision making. e.g. market data on crop prices, weather information etc (gender, disability and age disaggregated)
(8783 W, 1219 M) Achieved
Output indicator 2.3: Number of VSLAs and group members whose records have been digitalised and actively using the VSLA ledger App to manage and improve their operational efficiency
b) Percentage of sampled VSLAs /individuals who reported actively using digital channels (mobile wallet, agency banking etc) to receive or make digital payments within the last 90 days as a result of the project (disaggregated)
300 groups (approx.5,00 0 members
264 groups digitised which totals 4,703 individual members digitised (87.4% female / 12.6% male
Halfway through digitisation the average group membership was above 20. If the group averages had stayed at this level then the additional 155 groups digitised in the third phase of digitisation would have achieved a membership total of 5,000+digitised. However, the average membership dropped slightly to 17.
77 % currently using mobile money(2024 End of project survey)
Exceeded
The strategic objectives for introducing digitalisation to saving groups are: in the short term, to enhance trust in and satisfaction with financial management of these groups, improve operation efficiency specifically by reducing time to keep records and therefor reducing meeting time, and boost group relations by reducing member conflicts over financial records. In the longer term, the goal is to facilitate their connection with financial service providers (FSPs) in order to have a safe place to keep savings and in order to access loans to boost capital available for member to borrow.
DIG identified that group meetings/records were characterized by inadequate bookkeeping practices, inefficient time management, arduous transaction entries, and the potential for calculation errors and manipulation, resulting in conflicts among members. After a review of the market and available group digitisation apps available, DIG worked to develop Opportunity’s own group record digitisation app called Thrive Save in partnership with CredalTech. For the phase I, we provided smart phones and digitised 20 groups as part of a pilot of the app.
The results of this initial pilot revealed positive results with a significant increase in participants' confidence in their group's financial management which was attributed to better loan interest and share-out calculations, increased transparency, improved conduct of leaders, and better record-keeping practices. Furthermore, there was a significant decrease in the number of participants who experienced long meeting times, from 38% to 8%. This was due to faster and more accurate calculations and financial record entry, which led to improved meeting efficiency and effectiveness as well as reduction in the number of VSLA groups hiring an accountant and the average amount spent on hiring accountants or bookkeepers decreased by a third. This was attributed to the digitization of the ledger, which improved record-keeping and reduced the need for manual accounting services
“The app has necessitated that our weekly meeting is conducted within the shortest possible time frame. We have ample time to discuss important matters that affects our group. At the same time, we have room to attend to other issues, and this is contrary to what we used to do previously. Previously, we used to spend a lot of time discussing issues and recording data manually with which we could spend a lot time, letting other equally important matters that need our attention as well suffocate in the process. Now, with this app, there is great improvement on how we manage time.” – Malawi
Further developments of Thrive Save were however proving costly and taking a long time. In the meantime, DreamStart Labs had developed an updated version of their DreamSave app which it was agreed would suit our needs as it also comes with in-country support. We therefore agreed in February 2024 to pivot from the use of Thrive Save to DreamSave. Subsequently we have digitised a total of 264 groups using DreamSave in three phases (providing smart phones and power banks) with full support from the FSAs in the provision of training to groups and in-country training support from the DreamStart Labs representative.
Opportunity provides training and ongoing support to enable the groups to effectively utilize the app for tracking attendance and recording financial transactions within the groups. Digitization is achieved when the groups integrate the app into their regular meetings, enabling electronic capture of attendance, savings, loans, repayments, fees, and contributions to the group’s social fund, thus replacing the group’s paper ledger book. (Note that individuals still maintain their paper passbooks at this point, although digitization is possible for members with a smartphone and notifications of transactions can be delivered to any type of phone.) Over the course of the 3 years a total of 638 group leaders (536 women/102 men; 2 disabled) in 264 groups have been trained and 1 set of refresher training sessions have taken place across Mulanje, Zomba and Dedza. In addition, a total of 73 FSAs were trained (33 women/40 men) and 2 refresher training sessions have taken place.
Although we have not made formal linkages with FSPs, via digitalisation, we have digitised 173 groups belonging to 4 FSPs: 21 FINCA, 135 FCB, 16 CUMO and 1 MLF. The endline findings of the pilot support the further exploration of the DreamSave app for savings group ledger digitization, and, ultimately, for facilitating linkages to formal finance. DIG is working to give these FSPs access to the data via DreamStart Labs’ Insights platform for the purpose of making group loans. However, there remain challenges with member willingness to pay for phones and operational costs of accessing DreamSave as well as the need to test the applicability of DreamSave for linking savings groups to formal financial institutions for safer savings and access to loans in future exploration. The next step following the introduction of the digital ledger, is to improve the accuracy and quality of the raw data and test the use of back-end data for credit scoring. Data output needs to also be cleaned and accurate, and a critical volume of data will be required to make data analytics possible.
Output 3: 14,400 smallholder farmers benefit from access to training and market information to increase productivity and incomes.
Excellent progress was made with this indicator with over 26,000 farmers and rural entrepreneurs participating in financial literacy and GAP trainings between 2021 -2024; exceeding this output by 175%.
Key highlights:
144 Farmer Support Agent ( FSAs) trained and equipped to support smallholder farmers
Over the past three years, thanks to JOA support, Opportunity has significantly expanded the FSA network to 144 active Farmer Support Agents. We select local community leaders to serve as FSAs and leverage local knowledge and existing social capital to provide effective training andmonitoring ofmany geographically dispersed smallholder farmer groups.
Opportunity provided FSAs with smartphones and trained them in the use of Impact Atlas and later ComCare, a digital farmer management system. These FSAs were also provided with bicycles to assist with logistical challenges and power banks to overcome challenges with intermittent power supply in rural areas. With the support of this project, Opportunity has also developed several digitally-enhanced training curricula, which allows FSAs to provide efficient, low-cost training to farmer groups. These training videos have been very well received by farmers and have ensured that a consistent message is delivered to all farmer groups. The FSAs have also opened new opportunities for financing to farmers. In particular, FSA support to rural communities has resulted in reduced perceived risk from FSP partners. As a result, partner FSPs agreed to finance new smallholder farmer groups for the first time.
Client Profiling: Opportunity through its network of 144 FSAs profiled prospective and current smallholder farmer clients. In total, over 26,000 clients have been profiled. Basic socio-demographic data is collected from participating farmers and is used to build digital credit profiles based on several quantitative (land size, productive assets, yield, commodity sales & other income) and qualitative (group and individual character assessments) variables. Farmer profiling and credit scoring ensure that loans are suitable for each farmer's needs.
To effectively train the target rural households, the FSAs received various training throughout the project including group dynamics, savings group methodologies and mobilisation of members into savings group using visual aids, storytelling , group discussions etc . Opportunity also takes a gendered approach to serving smallholders, including recruiting a higher portion of female FSAs and training all FSAs in gendersensitive outreach and facilitation methods. Opportunity facilitates incentive payments to FSAs for the successful completion of agreed data collation and farmer training activities. Certificates were presented to these FSA at the maiden graduation ceremony in September 2024.
Weather and Pricing Alerts: Opportunity through the FSAs are also testing a new model, which attempts to convert the information from the Department of Climate Change & Meteorological Services and the Agricultural Commodity Exchange (ACE) into voice notes in Chichewa. These are then sent to a centralized WhatsApp group from which the Project Officers disseminate the messages to the FSA WhatsApp Groups. The FSAs then share these messages when they meet the groups for training or monitoring visits.
Over 23,000 small-holder farmers trained in Good Agricultural Practice (GAP) to improve their productivity and resilience.
As noted in the Year 2 annual report and the Y3 Year mid-year reports, the project was ahead of the overall training goals. The majority (82%) of household survey respondents reported receiving or attending training on good agricultural practices
With farming as the primary source of income for majority of the target rural household, Opportunity’s FSA provided best practices training to smallholder farmers and link them up to markets where possible; individuals may attend more than one training per month.
Over the course of the project, a total of 23,202 smallholder farmers (18,462 females and 4,740 males) against an end of project target of 14,400 attended the comprehensive agricultural training sessions. The training covered a wide range of critical topics, including land preparation, the production of green manure, locally called Mbeya manure (photo above : An FSA demonstrating how to make Mbeya manure), post-harvest handling, storage, and other related subjects essential for improving agricultural practices. These sessions aimed to equip participants with practical skills and knowledge to enhance their farming productivity and sustainability to move out of poverty and create sustainable livelihoods for themselves, their families, and the community.
Furthermore, as extreme weather events pose significant risks to smallholder farmers' livelihoods and counter Opportunity's work to increase rural prosperity, the project also focused on strengthen resilience. Smallholder farmers were encouraged to diversify crops so that they have a backup if one crop fails, to use irrigation, and to plant drought-resistant seeds. Good Agricultural Practices (GAP) training, including climate-smart agricultural techniques, also thought the farmers how to manage natural resources carefully, to build resilience to climate change and other crises.
Farmer Success Story
Blino Nkhoma, a 24-year-old entrepreneur from Kabiza VSL in Malenga Village, Traditional Authority Kanyenda, has significantly improved his farming practices after learning sustainable agricultural techniques.
Blino, a businessman primarily engaged in buying and reselling groundnuts, had limited experience in growing crops until March 2023, when he attended training on the production of Mbeya manure, facilitated by an FSA in his community,
Determined to put his new skills to the test, Blino producedfour bags ofMbeyamanure,acost-effective organic fertilizer. He applied this to his 1-acre maize field during the 2023/2024 growing season. The results exceeded his expectations: Blino harvested 33 bags of maize, a substantial increase compared to previous seasons when he relied on expensive commercial fertilizers.
Among members who reported receiving or attending training on good agricultural practices, approximately 60% adopted a new technology Among those trained, adoption of new technologies was highest in Nkhotakota (77.3%), Zomba (62.5) and Mulanje (62%). In Dedza, less than half of those who reported receiving the training adopted a new technology (42.5%).
Despite these improvements in agricultural practices, overall crop yields have generally decreased or remained stagnant. This decline is largely attributed to adverse climatic conditions such as droughts, erratic rainfall, heavy flooding, and other weather-related challenges. While some farmers have reported temporary improvements in yields from new practices, the broader trend remains negative, impacting overall agricultural productivity and household income To address this, some respondents mentioned receiving advice from Opportunity International on not relying on a single type of business. Onerespondent noted, "In 2021, through the VSL, I received advice not to rely on one type of business. I got the advice from Opportunity International officials" (A1). These interventions have helped VSLA members to better navigate the financial difficulties they faced.
26,000 Rural People trained in financial literacy and business management strengthening their ability to access formal financial services and manage their money.
Over the period of three years, Opportunity International Malawi (OIM) in partnership with the FSA network provided training to over 26,000 rural household exceeding its target of 24,000 participants. In all, 1,624 VSLAs were strengthen to enhance their financial resilience, empowering members, and fostering economic development within these communities. Training modules include:
a) Group Dynamics: This training focuses on the structured process of forming a VSLA group. Here, participants learn how to identify suitable members, set objectives, and establish a sustainable group model. Emphasis is placed on fostering trust and cooperation among members to ensure the longterm success of the association.
b) Leadership: Effective leadership is critical to the success of any VSLA. Hence, members learnt about the different leadership roles within the group (e.g., chairperson, treasurer, secretary) and the responsibilities of each role. It also emphasizes qualities such as transparency, accountability, decision-making, and how to foster a participatory approach to managing the group’s activities.
c) Conflict Resolution: As with any group, conflicts may arise within VSLAs. This training equipped members with techniques to manage and resolve disputes in a constructive manner. Participants learn about negotiation, mediation, and communication skills to ensure conflicts do not disrupt group activities. The focus is on maintaining harmony and ensuring that conflicts are resolved in a way that benefits the group.
d) Constitution Development: Each VSLA needs a well-defined constitution to guide its operations and decision-making. This training helps members draft and agree on a constitution that outlines the group’s objectives, rules, roles, meeting schedules, and savings/lending terms. It ensures that all members understand and commit to the group’s guidelines, promoting accountability and uniformity.
e) Record Keeping: Accurate and transparent record-keeping is essential for the effective management of VSLAs. Members are trained in maintaining financial records, such as savings, loans, and repayments, as well as minutes of meetings and attendance records. This helps in tracking the group’s financial health as well as ensuring trust among members by providing clarity on the group’s financial standing.
f)Financial literacy training
The financial literacy training module covered several crucial topics,each designed to strengthen the financial inclusion of participants by equipping them with essential skills and knowledge:
- The module began with vision building, where participants were guided to define their financial goals and understand the importance of having a clear, long-term financial plan. This empowered them to align their financial decisions with their aspirations, improving their ability to make informed choice.
- Next, the training focused on budgeting, teaching participants how to track their income and expenditures effectively. This helped them prioritize essential expenses, identify unnecessary costs, and make better financial decisions, enabling them to live within their means and save for future investments. Budgeting is a critical step in ensuring that households and small businesses can better manage cash flow and plan for growth whilst the saving segment educated participants on the importance of setting aside funds for future needs and emergencies. They were introduced to various saving techniques and tools that can help them build a financial cushion, enhancing their resilience to economic shocks and reducing reliance on informal or predatory lending practices.
- Finally, the module on debt management provided valuable strategies for managing and repaying loans responsibly. Participants learned how to differentiate between good and bad debt, the risks associated with over-indebtedness, and ways to avoid falling into debt traps. By improving their understanding of debt management, participants were equipped to access formal financial services, This allowed them to engage more confidently with formal financial institutions, enhancing their access to credit, savings etc.
Follow on trainings continued after the initial trainings. The endline evaluation confirms that majority of the survey respondents have received training. 85 percent of household survey respondents mentioned attending a training in financial literacy and about 24 percent a training in digital literacy. Financial literacy training was attended by a highest proportion of respondents in Nkhotakota (98.5%) and lowest in Dedza (75.5%). Digital literacy training on the other hand was attended by the highest proportion in Zomba (50.5%) and lowest in Mulanje (7.4%). Indeed, when looking at confidence to access financial services, the quantitative findings indicated that 67% reported being very confident in using financial services, and more than half reported being very confident in using digital financial services as a result of the training
Opportunity know that impactful and systemic change happens in families and communities when working with and empowering women. Therefore, the project, designed, developed, integrated and prioritized programming that advanced the economic empowerment of women. In particular, Opportunity International Malawi provided Farming as a Family Business (FaFB) training to smallholder farmers, modelled after the Gender Action Learning (GALS) methodology The first module focused on business idea generation, where participants were taught how to identify and evaluate viable business opportunities within their local environment. This foundational knowledge broadened their perspective on income-generating activities, leading to increased entrepreneurial initiatives, which play a critical role in improving financial inclusion and diversified income streams , thus reducing dependency on a single source of livelihood.
It also covered how to start a business, providing a step-by-step guide on the processes involved in launching a business. Participants learned about creating business plans, registering a business, and understanding legal and regulatory requirements. This knowledge demystified the often complex process of starting a business, enabling participants to navigate formal systems more effectively. As a result, they became better positioned to engage with formal financial institutions, which often require business documentation for access to credit and other financial services.
The growing a business module also focused on strategies for scaling up operations, including marketing, customer retention, and financial management. Participants were introduced to the importance of reinvesting profits, improving efficiency, and leveraging underlying purpose is to empower women and youth to have a stronger voice in farm management and family spending decisions, while still respecting rural and cultural values.
The Financial Action Learning System (FALS) Approach: OIM introduced the Financial Action Learning System (FALS), a participatory methodology that uses visual tools to help individuals and groups plan, monitor, and evaluate their financial goals and activities. FALS empowers community members to take control of their financial planning by simplifying complex financial concepts into accessible visuals. It promotes inclusivity by involving all group members in decision-making processes. Training sessions on FALS were conducted for FSAs, CDAs, and VSLA members. Materials and toolkits were developed and distributed to facilitate wider adoption. Overall, “the empowerment effects of the VSLAs are noted through reports of women gaining confidence in managing their finances independently. This extends beyond individual financial management to broader household decision-making, with some women gaining more control over finances and involving family members in financial decisions” ( 2024 Endline Evaluation Report)
VSLA attending business management training
Peer to Peer Mentorship Programme
This programme has been presented in detail in previous reports, thus presented here are key highlights from the final cohort which launched in late May and graduated in September. The mentorship programme was designed to empower women and youth by connecting them with experienced mentors who provided guidance and support. Women participants were paired with successful women entrepreneurs who had established businesses, creating a coaching relationship where one mentor guided three women mentees. This allowed mentees to gain practical insights, learn business strategies, and build confidence under the leadership of someone who understood their unique challenges. Similarly, youth participants were attached to experienced young entrepreneurs, with one mentor supporting two youth mentees. This structure fostered peer learning and encouraged both women and youth to leverage their mentors’ experiences to develop their business skills and grow their enterprises.
OIM expanded the programme to include more VSLAs and more participants following Cyclone Freddy to help with the business diversification efforts. This last cohort were successful, and the graduation event took place in September in Mulanje. Mentors and Mentees came from all over the target districts, the programme included speeches, awards, and certificates. Photos from the graduation are included on the following page.
Over the life of the project, Opportunity expanded to include 93 mentors against a target of 84. These mentors provided coaching to 1,104 female mentees (against a target of 1,000) and 516 youth mentees (490 females, 26 males), exceeding the target of 350 youth mentees.
We began with an event held in the shadow of Mount Mulanje, the majestic backdrop to one of our four project districts, to mark the close of the project. As speeches were made by guests including Traditional Leaders, the District Commissioner, the District Community Development Officer and project participants it became clear to me that Opportunity’s work had played a meaningful role in helping rural households to strengthen and diversify their livelihoods, improve their prospects, and build both financial and social resources to withstand unexpected setbacks.
The District Commissioner noted the remarkable achievement of the project, which had surpassed its targets to reach 26,000 households and had contributed to building a more inclusive financial society. He also highlighted the work done to empower women and youth through a peer-to-peer mentoring programme which he remarked, had equipped them to contribute more fully to society.
Many of the speeches mentioned the ongoing challenges faced by small-scale farming households due to the unpredictable effects of climate change. The region was particularly hard hit in March 2023 by Cyclone Freddy, which caused devastating damage throughout Mulanje and other southern districts washing away homes, crops, livestock and destroying livelihoods.
The District Community Development Officer noted that if it were not for the project building resilience in rural populations they would not be where they are today. OI and JOA had been, ‘a friend in need in the aftermath of Cyclone Freddy, helping people in their time of challenge.’ This was echoed by the Traditional Authority representative who said that ‘access to finance, training and agricultural inputs had helped people become more resilient and financially sustainable.’
Violet, representing the project participants gave an impassioned speech sharing how the training and support she received had helped her transition from doing business on a small-scale to having a more focused approach. She told us how she used to rely on Government handouts but now with the increased income from her business she can send her children to school and purchase agricultural inputs. She has also started a new business venture with fellow members of her Village Savings and Loans Association (VSLA). Like many of our clients Violet has learnt to diversify her revenue streams and spread risk – no longer relying solely on the unpredictable returns of farming.
4. Performance Against Outcome
In the past three years, we have made great progress against all of our outcomes, achieving or overachieving against the majority of our indicators. The potential for ongoing and increased impact is very significant.
Outcome Indicator
Percentage of individuals who reported to have experienced an increase in income (gender, disability and age disaggregated) (SDG1.5 – Resilience)
Percentage of women reporting greater confidence to participate in decision making (e.g. in household, finances, running enterprises/farms) (SDG5 – Women’s Empowerment)
Percentage of households who report increased food security as a result of project initiatives (disaggregated by female/PWD household heads )
End of Project Target Achieved
(2024 Endline survey n=435)
increased confidence in the last three years (same indicator indicates 81% increased confidence among men in the last three years)
b) Percentage of sampled VSLAs /individuals who reported actively using digital channels (mobile wallet, agency banking etc) to receive or make digital payments within the last 90 days as a result of the project (disaggregated) 30%
About 77% are currently using mobile money
33.6% - female respondents are using mobile money “often”
21.6% - PWD are using mobile money “often”
Outcome 1: Percentage of individuals who reported to have experienced an increase in income
The survey results estimate that 42% of sampled respondent to the household survey reported experiencing an increase in income: There were a mix of reported changes to income over the last three years, both positive and negative. Qualitative findings show that farmers’ income fluctuated based on cash crop success. However, adverse weather and rising agricultural input costs limited gains, reducing crop yields and negatively impacting household income stability. This study found most smallholder farmers are still very dependent on income from cash crops, despite also having other income sources, especially from nonfarming businesses and piecework. The quantitative findings show that approximately half of the participants reported that their overall household income had increased in the last three years. When looking at the QuIP closed questions, a smaller proportion of respondents reported an increase in their income from farming and other sources. However, we can see a similar trend when looking at the locations with more respondents from Dedza and Nkhotakota reporting an increase in income compared to Zomba and Mulanje.
Many respondents reported that borrowing from VSLAs and FSPs allowed them to maintain or start-up new businesses, by investing their loans into income generating activities. Investment was the biggest driver of successful businesses, creating a feedback loop as this allowed some respondents to buy further inputs to improve their business.
Change in household income in the past 3 years, by district: Household survey
Fig4. Improved income generating activities (QuIP respondents)
Showing links two up and one down from factors in yellow. Showing links made by four or more respondents. Excluding links before ‘Improved crop sales’. .
Fig3:
Findings from the household survey show that just over a quarter of respondents reported a reduction in their income. Similarly to the qualitative findings, common reasons for households that experienced a decline in household income were poor crop harvest (72%) and low crop prices (8%). Increased market price of goods, often attributed to the devaluation of the Kwacha, meant that farmers reported increased profits when selling their farm produce and other goods. However, as this increase also affected household necessities such as food, clothes and soap, some respondents’ ability to meet household needs was reduced despite the increase in income. Overall, changes in income were linked to wellbeing, food security and ability to prepare for the future by many respondents. Farmers were also more likely to save money, purchase assets and join VSLAs if they felt they had the disposable income to contribute to the group and the ability to repay loans. Unsurprisingly, future income prospects for smallholder farmers are generally pessimistic. The continued adverse climate conditions and high costs of agricultural inputs have led to reduced expectations for stable or improved future earnings. Many farmers have had to adjust by purchasing food rather than producing surplus for sale, which further diminishes their income potential. However, some farmers have demonstrated resilience by diversifying their income sources. Activities such as small-scale businesses and livestock farming have provided alternative revenue streams, somewhat alleviating the financial pressure from declining agricultural productivity.
Figure 4b: Impact of changes in income from all sources
Outcome 2: Amount of capital released from FSPs to the designated rural area
Though VSLAs emerged as a crucial platform for members, offering them access to loans and savings mechanisms that were previously less accessible, a higher proportion of respondents who took loans from FSPs (using OI monitoring data) linked improved access to VSLAs and improved income to their ability to invest and reinvest in business, compared to respondents who did not take an FSP loan. Many respondents also report improved financial resilience and now feel more prepared to handle financial emergencies, invest in small businesses, and manage household expenses. The increased returns from savings at the end of the year have also contributed to greater financial stability for many.
"Because I am a member of the VSL, and I can borrow money and buy fertiliser, I feel that I am more prepared for any challenges that may arise" (P3).
The endline data also reveal how the evolving financial practices among respondents have been influenced by external factors such as drought, increased agricultural costs, and income fluctuations, "The main reason for this change is low crop production due to lack of fertilizer and drought," resulting in financial difficulties and reduced earnings from farm produce. These challenges have led to changes in financial behaviours, with a shift towards smaller, essential loans and a focus on meeting immediate needs rather than pursuing long-term growth strategies. This adaptation reflects the broader impact of environmental and economic challenges on the financial practices of rural households, which VSLAs may be helping to mitigate through their services
Indeed, the endline evaluation revealed that many respondents have started borrowing more frequently and in larger amounts, reflecting a growing trust in the reliability of loans through VSLAs as noted by the following respondent: "I borrow more than I used to borrow last year... At least the VSL group is offering me the confidence that should I decide to borrow money, I have somewhere where I can get it" (M4). This confidence is not just limited to internal borrowing within VSLAs but extends to interactions with formal financial institutions. For example, some members have transitioned to using formal banking services, such as opening accounts with First Capital Bank, indicating that VSLAs are also acting as a gateway to formal financial systems. Opportunity International has played a key role in these developments, providing support that has strengthened the operational capacity of FSPs and VSLAs. Respondents highlighted training activities, financial advice, and capacity-building initiatives provided by Opportunity International. These interventions have not only helped in the formation and operation of some VSLAs but have also encouraged diversification of business activities, thereby enhancing the financial resilience of VSLA members.
Outcome 3: Percentage of women reporting greater confidence to participate in decision making (e.g. in household, finances, running enterprises/farms)
From the endline evaluation, limited changes in household decision-making dynamics were reported across the study Most QuIP respondents reported that they made decisions jointly within the home. 16 respondents reported that the male partner was the primary decision-maker. In these cases, while women were often consulted, men typically made the final decisions regarding farming, business, and how money was spent or invested. This was viewed by many participants as positive for household harmony and quality of decisions. Of the 12 female QuIP respondents who identified themselves as main decision-makers, most were widowed or separated, only two were married. Women who managed decisions alone often expressed mixed emotions, describing a sense of burden and wished for greater support in decision-making alongside financial independence.
Shifts in decision-making often followed changes in family structure, such as divorce or children reaching decision-making age. Some women reported increased influence over financial matters since joining VSLAs, where they managed contributions independently or in consultation with husbands. For several
women, income from their businesses also enhanced their financial independence and decision-making autonomy.
“Being a member of the VSL has opened up my eyes that I can also be in control of the money that I earn, other than just leaving it to my husband” Woman from Mulanje, aged 20-45 years
Data from the household survey also shows that 28 percent of respondents reported an increase in control over the money they earn in the last three years. This result is similar for both male-headed and femaleheaded households.
Outcome 4: Percentage of households who report increased food security because of the project initiatives.
“The money that I got from this VSL last year after we shared out helped me to buy food for my household, which was a relief because the household had no food”
F4 - Woman from Dedza, aged 20-45 years
From the endline evaluation, the findings on food consumption and food security are split, with more than half of respondents reporting feeling less food secure compared to before the intervention. Notably, however, quantitative analysis showed that attendance at training courses (including new agricultural practices and financial literacy) almost doubled the ability of members to report being food secure. Respondents reported increased farming skills and the adoption of new agricultural practices as a result of receiving new advice and information, either from other people in the community, or from training. Some respondents attributed this to the programme training delivered jointly with government extension officers.
Respondents frequently distinguished between food consumption and overall food security. Food consumption, centred on short-term daily needs and what they would eat that day, and was closely tied to immediate income. In contrast, food security was concerned with having enough food on a longer-term basis until the next harvest and relied more on crop yields. However, since income and farming are closely linked, most respondents associated the success of their harvests to both daily consumption and future food security as depicted in the diagram below.
5: Reduced household food consumption
The most mentioned driver of reduced household consumption was reduced crop yield (32/72). Reduced income also meant farmers could not purchase as much food or in some cases the variety they previously enjoyed. This led to reduced wellbeing as respondents felt stressed about how to improve their situation and worsened some farmers’ confidence in the future.
Related to this, 54 percent of the sample reported decreased yields, 32.6 percent increased yield, and 11.5 percent indicated that there had been no change in their yield in the last three years. Districts reporting the highest decrease in yields are Mulanje (73.5%) and Zomba (64.2%). The highest proportion of households reporting an increase are in Dedza (46.3%) and Nkhotakota (43.6%). Zomba (21.7) and Mulanje (18.6%) have the lowest proportions reporting an increase Overall, participants indicated that fertiliser/manure usage (65.2%) and adoption of new technologies (52.5%) combined with good rains (30.5%) catharised increased in yield On the other hand, poor rains or flooding (88.9%) and lack of fertiliser or inputs (59.8%) . .
Figure
Figure 6: Improved household food consumption
were commonly cited as reasons for a decline in yield and this was consistent across the districts, with Mulanje and Zomba particularly affected by the poor rains and flooding ( see details in the attached endline evaluation report)
5. Knowledge Sharing
Bankers Association of Malawi AgFinance Conference : In July 2024, Opportunity International sponsored and hosted a panel discussion during the 4th AgFinance Conference for the Bankers Association of Malawi in Partnership with Farmers Union of Malawi plans at BICC, Lilongwe to sharing some of the learnings from the project. The theme for the conference was “Collaborative Efforts to Propel Agricultural Sustainability Forward”. This conference which had the Minister of Agriculture as the guest of honour aim to facilitate knowledge sharing and learning among stakeholders in the banking and agricultural sectors, focused on best practices, innovative solutions, and successful models for agricultural sustainability in Malawi. Lessons were shared and learnings are being replicated in other countries where OI AgFinance operates. In testament to the progress made two more commercial banks in Malawi have expressed interest in working with OI to improve their agricultural financing and to reach deeper into rural areas
Stakeholder Learning Event : Opportunity International organised a learning event back in September to share the learnings from the project with other stakeholders as part of the project’s closure and learning and dissemination activities. The learning event was held with project stakeholders including representatives from The Ministry of Gender, Community Development and Social Welfare, The Ministry of Agriculture, Traditional Authorities, The District Commissioner, The District Community Development Officer, CEOs of partner Financial Institutions, as well as senior staff from Opportunity UK , Malawi, Opportunity Agricultural Finance and Opportunity’s Digital Innovation Group Malawi’s Principal Secretary of Gender, Community Development and Social Welfare, Dr. Nertha Semphere Mgala( Photo) , endorsed Opportunity’s approach praising it for contributing towards the Government of Malawi’s strategy for financial inclusion. She noted that the project interventions had reduced inequalities and empowered women to contribute to economic activities.
‘Women are at the centre of it all as farmers, business owners and through caring for members of their households. Women have the welfare of everyone at their hearts. I commend the project for supporting women to become decision makers in their homes, communities and enterprises.’
She went on to thank Opportunity’s partner Financial Service Providers for opening their doors and welcoming rural people who are not often considered by lending institutions. She urged the Financial
Institutions to continue adapting their financial products and services for rural populations, and particularly to consider the needs of women whose access to finance is low. There was also a fireside conversation with the partner FSPs to share their motivation, experience and learnings in participating in this project with the participants.
The overriding sentiment of the learning event was the recognition that the project had been a success due to its multi-stakeholder approach. Participants acknowledged that there are many challenges facing rural communities in Malawi. However, by layering interventions in regenerative agriculture, income diversification, business mentoring and financial literacy, alongside access to financial services it is possible to build sustainable livelihoods and increase resilience in poor rural communities. By joining together, working through existing community and government structures and drawing on local knowledge as well as external expertise we can achieve more.
Opportunity International also had the privilege of speaking at the “Women Leading the Way Out of Poverty”event hosted by JOA in September to showcase how the project is enabling women in Malawi overcome hunger, poverty and the challenges of an unpredictable climate with the Jersey public. It was also a joy to visit some schools to share how fundings from JOA is supporting rural Malawi to work their way out of poverty.
6. Challenges & Action Taken
The following feedback was obtained during a workshop in the closing stages of OIUK’s JOA-IDG-2021 Malawi grant, at which there was representation from OI Agricultural Finance, OI Malawi, OI Digtial Innovations Group, and OIUK:
1. Impact of Climate Change: The effects of climate change, particularly cyclones Anne and Freddy as well as prolonged dry spells, significantly impacted clients’ businesses. This situation affected their ability to repay loans, leading Opportunity to use its guarantee with the bank to mitigate potential losses.
2. Location, Logistics & Relationships at District-level: The OIM team experienced challenges working in some remote areas of Nkhotakota district where there is poor infrastructure and villages, and thus VSLAs, are widely dispersed. FSAs in Nkhotakota had to cover a wider area than other districts and reaching some groups by bicycle was difficult. It was also more challenging for the Project Officer to provide adequate oversight. Although OI selected the districts for the project implementation, the District Community Development Office (CDO) dictated which Traditional Authorities (TAs) would participate. OIM is subject to a strict Memorandum of Understanding with the District Authorities and cannot work in areas which are not authorised. A key strength of OIM however is that it develops strong relationships at district and TA level ensuring that activities are aligned with district and national development plans and meet the needs of local communities. Opportunity will continue to facilitate discussions between the FSPs and District Assemblies to decide on target TAs as well as negotiate with CDOs to select TAs to work in which are closer in proximity to each other to ease the logistics for implementation for future programming. Additionally, the distances from the communities to the banks were excessive, leading to higher costs for accessing formal financing.
3. FSP On-boarding and Risk Aversion: The project aimed to on-board 4 FSPs in Year 1. This proved to be over-ambitious which impact on the VSLA/FSP linkages and loan disbursement. More time was needed to sensitise the FSPs and to work on mindset change. Tier 1 commercial banks had not previously lent to VSLAs and were naturally risk adverse. The senior management wanted to see a proven business case before lending at VSLA-level. There was also a high level of bureaucracy to get senior management to sign off on activities, which slowed progress. Opportunity will engaged FSPs at project design stage to get their early input and buy-in in future programming.
4. VSLA Liquidity: The project started with the assumption that VSLA members wanted to save, and that VSLA deposits could be transferred to formal savings accounts. However, account opening was
lower than expected as the groups maintained low levels of liquidity. It was observed that groups saved in order to share out the proceeds amongst members, therefore most groups maintained a low level of liquidity and did not have sufficient funds to deposit in formal savings accounts. VSLAs were more interested in accessing loans than saving. This posed a key question going forward – how can we increase VSLA liquidity to facilitate further lending and savings activity? In partnership with Christian Aid Opportunity is proposing to test a variety of methodologies for boosting VSLA liquidity including bank linkages (VSLA loans), direct capital investment and a blended approach .
5. Challenges with Digital Innovations and Inclusion:
- Access to and ownership of mobile phones: Mobile continue to be a challenge with the VSLA digitalisation initiative. We have worked to develop a phone loan product with CUMO during the period , but due to groups prioritizing agricultural loans and Opportunity wishing to avoid over-indebting groups with multiple loans, this was not brought to market. We tested the groups’ willingness to contribute to a ‘phone fund’ as part of DreamSave roll out, but there remain challenges with member willingness to pay for phones and operational costs of accessing DreamSave. Mobile phones were provided to groups to enable them to access and engage with the digital ledger. This is not sustainable going forward. The pilot evaluation found that the vast majority of participants expressed willingness to pay for phones and expenses required to operate the digital ledger, and some groups are already contributing to a common “phone” fund. Other participants, however, saw the high cost of a smartphone as a substantial barrier. In Malawi, Opportunity is also investigating options for mobile phone distribution including developing a partnership with TelCos and piloting a mobile phone loan with CUMO. Related to this, groups were initially struggling to charge their phones often enough so subsequently all groups provided with phones were also provided with power banks. Challenges for groups included the cost of data/airtime, connectivity to sync data on the phone with the platform, technical glitches and not enough training. From the evaluation, most participants felt optimistic about using the App, but there were also some concerns. Original concerns regarding the cost, identity theft and security of savings were replaced with a concern about whether the App would be available in the long run.
- Internet connectivity. Although most groups have sufficient cell phone service for the app to send confirmation messages to their members, updating their account data requires stronger bandwidth than is present in many locations where groups meet. As a result, backing-up often requires leaders to “move around” or travel to obtain strong enough internet. This generates the expense of bus fares or other travel costs, and extra time for the leaders. Because service is unreliable, there is no guarantee that, having spent time and money to get to a better spot, the internet will be strong enough at the new location. Thus, some groups either wait for stronger service in their location, which happens sometimes, or they give up on backing-up.
- Data Quality: The digital App includes multiple levels of data quality control, especially at the point of data entry. In general, the data in the system is accurate, more accurate than the paper records previously used. There is at least one gap, however, that enabled groups to inadvertently enter the value of the shares rather than the quantity of shares. This number is then multiplied by the value of the shares exponentially exaggerating the group’s savings value. (One group is reporting $175,000.) This kind of error throws the aggregate data analysis and reporting off.
6. Malawi had unstable economies, with significant currency devaluations and high inflation VSLAs have improved access to financial services, diversified financial practices, and strengthened linkages with formal FSPs. However, while VSLAs have made strides in improving financial management and supporting income-generating activities, challenges such as economic instability and climate-related impacts continue to pose risks as already highlighted
7. Lessons Learned
The project set out to strengthen systems for financial inclusion for rural households. Beyond the key findings and lessons learned throughout the project’s monitoring for adaptive project management as highlighted in previous reports, the results from the endline evaluation reports have highlighted a number of lessons that should serve to inform future programmes that adopt a similar approach:
• Technical Assistance and FSP support was crucial for the project’s success: The project was a test case for working with a range of FSPs to increase financial inclusion for excluded and marginalised groups. The initial perception was that banks could not lend to CBFOs/VSLAs and get repayments. Perceptions changed towards the end of the project as with the right support in place, the repayment rate for the VSLA were as good and if not better than the FSPs other loan portfolio.
• VSLA Digitisation (digital ledger technology): Malawi was chosen by OI DIG as a test case for piloting group digitisation (user testing, identifying and resolving challenges, roll-out) and thus offers the first learnings to cascade to other markets. It proved essential to integrate FSAs in group training to ensure that challenges could be quickly dealt with at field level. We learned that training group leaders is not always the best way to proceed: instead, the groups’ ‘Digital Leads’ should be trained as they are better able to take on board the training and then trickle those trainings down at group level. Refresher trainings were also key to ensure that issues that arose (e.g. errors in inputting figures at key points, errors at share-out) could be addressed. It also gave the opportunity for FSAs and group members to share key insights and recommendations including e.g. longer training periods for groups to ensure more practice on the app itself can be done, choosing group leaders with higher literacy/digital literacy to attend trainings, identifying one group member up front who will keep the phone to prevent potential internal conflict, agreeing that members can be registered without them present to prevent delays to group registration etc. All the key learnings, resources, costs of digitization (OI and group level) and best practice documentation (across all countries where DIG has been digitizing groups including Malawi, Uganda, Rwanda, Ghana, DRC, Nigeria and Colombia) are being collated by Knowledge Management in a report which will be provided as a resource as Opportunity continue digitizing groups. We are also considering creating an externally focused version of this report to share with external stakeholders.
• Diversification of financial practices: Respondents highlighted the use of multiple financial channels, such as combining VSLAs withmobile money services like Airtel Money. This diversification reflects an increasing sophistication in managing finances and a recognition of the various options available beyond traditional VSLAs. The willingness to explore and use different financial services indicates an improved linkage between VSLAs and formal financial providers and the guidance provided within VSLAs on effective financial management, such as investing savings wisely, may also further prepare members for more formal financial engagements.
• Rates of take-up and use of formal financial services: Target rural households reported an observable increase in the take-up and use of formal financial services, particularly through VSLAs. For example , some respondents reported that joining VSLAs and participating in this project has improved financial literacy and access to structured borrowing and saving opportunities. VSLAs were also recognised by some respondents as important channels for accessing loans that support immediate needs and business ventures. The increased membership and engagement with VSLAs indicate a shift towards more strategic financial management and a broader acceptance of formal financial mechanisms within these rural communities. However, challenges were noted, especially regarding the ability to access and repay loans, which is often hindered by reduced income and economic instability. One respondent stated, “I am now borrowing less than before because I am uncertain about repaying since the business is slow” (M3). Such financial pressures have led
some respondents to borrow less and focus on managing their existing financial commitments
• Role of external support and capacity building: Respondents discussed the role of NGOs, particularly Opportunity International, in facilitating improved linkages between VSLAs and FSPs. They acknowledged the training and support provided by external organisations, which have been crucial in establishing and managing VSLAs. This external support has enhanced the operational efficiency of VSLAs, making them more capable of linking with FSPs and providing members with the skills necessary to manage these relationships effectively.
• Perceptions around women’s roles in financial decision-making : There has been some shift in attitudes toward women’s roles in financial decision-making. Men are often seen as the primary financial decision-makers, "When it comes to managing household finances, my husband makes the first decision, and we come together and talk about it" (N4). However, there is also an emergent trend toward more inclusive decision-making processes and that, while traditional roles persist, there may be a gradual shift toward shared financial responsibilities within households. In some cases, women have assumed sole responsibility for financial decisions, however this is most frequent in situations where they are separated or divorced.
• Changes in agricultural practices Smallholder farmers have progressively adopted improved agricultural practices to address environmental and economic challenges. This includes the use of hybrid seeds, such as switching from local maize varieties to hybrid varieties in the hope that they will yield better harvests. Additionally, techniques like reducing the number of seeds per planting hole and using organic manures were also cited as being influenced by agricultural extension services. Respondents noted these practices aimed to enhance crop growth and soil fertility; however, the implementation of these practices has been inconsistent. Some farmers continue to use traditional methods due to financial constraints or scepticism about the new techniques. The mixed adoption rates reflect varying levels of resource availability and perhaps also a willingness to change farming practices.
• Support for income-generating activities: Another key insight from the project is the role of VSLAs in supporting income-generating activities. Respondents highlighted how the mentorship and business development trainings combined with loans from VSLAs have enabled them to invest in small businesses, leading to increased capital and improved household income. This has allowed households to diversify income sources and reduce economic vulnerability. The ability to reinvest in businesses and improve economic outcomes underscores the role of VSLAs in fostering economic empowerment within communities.
8. Conclusions and Implications:
The programme was designed to address constraints of both the demand and supply side of finance. The final project evaluation shows that the project has made substantial progress in addressing the key priorities of FSP concerns: limited institutional experience, lack of a proven business case in serving smallholder farmers and VSLAs, and risk and profitability concerns. The evaluation findings also demonstrate that the project clients have made substantial progress in improving their VSLA management and income generating activities since the programme began in 2021, weathering the COVID-19 storm, devasting cyclones and deteriorating macro-economic downturn with resilience. Respondents clearly credit these changes in large part to the financial, training and mentorship support delivered through the programme. Going forward, Opportunity will need to continue to provide services – training, mentorship, - catering to the substantial minority of clients whose businesses are not growing, in addition to those that are sustaining growth.
Furthermore, to ensure that the positive changes achieved through the project will be sustained after the project ends, several key strategies were put in place:
a) Capacity Building of Field Support Agencies (FSAs): FSAs played a crucial role in working closely with the VSLAs) at the community level. Since the FSAs are members of the same communities, they have a vested interest in the ongoing success of the VSLAs. Throughout the project, FSAs received training on financial management, group dynamics, and technical support to ensure they are equipped to continue supporting the VSLAs even after the project ends. Their continued presence in the community serves as a long-term resource for the VSLAs. Equally important is the objective to build scalability and sustainability into the training and mentorship aspects of the project.
b) Partnership with Community Development Assistants (CDAs): By engaging CDAs from the district council, the project leveraged the existing government supported structures to ensure continuity. CDAs are government officials who are permanently based in the communities and will continue to work with the VSLAs and FSAs. Their role in monitoring, offering guidance, and supporting the community-based financial inclusion efforts ensures that the VSLAs will remain operational and stable after the project’s conclusion.
a. Sustainability through Linkages to Financial Service Providers (FSPs): A major sustainability approach involved linking VSLAs with formal Financial Service Providers (FSPs). These linkages provided VSLAs with access to a broader range of financial services, including savings accounts, loans, and digital finance options. FSPs will continue to serve the VSLAs beyond the life of the project, ensuring that these groups have access to formal financial systems that support their growth and stability. In fact, the endline evaluation findings suggests that the programme’s approach to work with and through local FSPs, both banks and MFIs, was entirely appropriate. In particular, providing support to FSPs to develop their capacity to serve rural clients and supporting them in the development of tailored financial products for rural clients who are members of VSLAs was an effective strategy to build a sustainable solution for this targeted group of people.
b. Community Ownership and Empowerment: Throughout the project, efforts were made to foster a sense of ownership among VSLA members. The training provided to VSLAs on governance, savings, and loan management encouraged the groups to take charge of their own financial activities. This coupled with continued support from FSAs and CDAs, ensures that the VSLAs have the capacity to operate independently and sustain their activities over the long term.
c. Ongoing Monitoring and Support Networks: To support the long-term success of the VSLAs, a network of ongoing monitoring and mentorship was established, involving both FSAs and CDAs. This network will continue to function after the project ends, providing necessary support and intervention when challenges arise.
By embedding support within the local community structures, creating strong linkages to financial institutions, and building the capacity of local actors, the project has set up a robust exit strategy that ensures continued financial inclusion and economic empowerment for the rural communities in Malawi,
Client Spotlight / Case study
Seeing Her Dream come true …..
Patricia Molosoni, a 37-year-old woman from Kazembe Village, Traditional Authority Nkanda in Mulanje District, is a shining example of how financial inclusion and empowerment can transform lives. Married with three children, two of whom are in primary school and one in secondary school, Patricia's journey began in 2021 when she joined the Tiyanjane Village Savings and Loan (VSL) group.
As a member of the VSL group, Patricia started saving K3,000 (£1.40) every week. Over 11 months, she managed to save K132,000(£60) During the share-out ceremony, she received K228,650 (£103), a significant amount that marked a turning point in her financial independence.
With her savings, Patricia made a practical investment by purchasing a bicycle for K40,000. (£18) This bicycle has become a vital asset for her, enabling easy transportation to the market, church, and other essential places. Furthermore, she used K25,000(£11) from her share to pay for her child's secondary school fees, ensuring her child’s continued education. But Patricia didn’t stop there. With the remaining money, she invested in two small pigs, which cost K17,000 (£7.60) each, totaling K34,000 (£15). Her goal is to start a pig-rearing business and sell the pigs once they grow, setting her on the path to becoming a small-scale entrepreneur.
Patricia is immensely grateful to Opportunity International (OI) for the valuable training offered to the VSL group members. These trainings have equipped her with crucial skills in financial management, business development, savings discipline, and entrepreneurship. Before joining the group, Patricia admits that saving money was a challenge. However, thanks to the training she has received through Financial Service Agents (FSAs), she has not only embraced saving but is also planning to make meaningful investments for her family’s future.
So far, Patricia has completed training in group dynamics, financial literacy, micro-enterprise development, market research, and entrepreneurship. She has also emerged as a mentor to other women in her community, sharing her knowledge and inspiring them to achieve financial independence.
Patricia’s story is a testament to the power of financial literacy and inclusion, demonstrating how the right support and opportunities can uplift individuals and entire communities. Through her efforts and the guidance provided by Opportunity International, Patricia is steadily building a brighter future for herself and her family.
