Finances & Rural Life in Malawi

This post is about how the average rural Malawian can deal with finances. It has a lot to do with the Waterloo chapter’s term theme – micro finance. This is just a broad overview of how people keep money, the banking situation, and the loan situation in Chinteche. Feel free to post, email, or call me with questions! Questions can be anything…from where does your family keep their money, to how is the NGO sector benefiting or hindering the rural poor? Alright, here goes…ChintechePopulation: 4-5 thousandFeatures: the midpoint between Dwangwa and Nkhata Bay (which are almost a day’s drive apart). Basically truck/bus stop. Lots of bars, restaurants and places to sleep. Also a good sized market, but things are pricy, since most things (besides some crops that are locally grown) come from Mzuzu, the nearest big city.Banks in Malawi: NBS, National Bank, and Standard BankNearest banks: There is only one NBS bank between Mzuzu and Salima (which are over 500km apart), and that’s in the town of Nkhata Bay (40km away from Chinteche). Mzuzu and Salima both have all three banks.Cost and time to nearest banks: Mzuzu — 2-3 hours by mini-bus or coach, MK750. Salima — 6 hours by mini-bus or coach, MK800 or so. Nkhata Bay — 1 hour by mini-bus or coach, MK350.This isn’t realistic for most people. That’s a lot of time and money spent just to go get money. Also, banks have a minimum amount that you need to keep in them, usually a few thousand kwacha, which is definitely not something most people have lying around.So who uses these banks? Mainly government and NGO employees. Maybe some businesses that are doing well, but generally small business people don’t use banks.Where do people put their money?Ask the post office to hold their money. I think all trading centers have post offices, and you can ask the post office to keep your money safe. However, they can sometimes be jerks, and if you want to take about more than K2000, you need to write a letter. Ya…a lot of people can’t even write!Ask a trustworthy old person to keep your money. The elderly are very respected in village life, so you can trust that they won’t have your money stolen. However, the problem here is, if they die suddenly…where did they keep your money?Keep it in your house and hope for the best!How do people get loans?Informal lenders, called ‘catapira’ (I may have the spelling wrong here, I’m not sure). They charge usually about 50% interest, which is ridiculous! I would compare them to loan sharks in North America, but maybe involved in less drugs. They’re usually just regular people who have saved up a lot of money, quit their jobs and become catapira. They expect to be paid on a monthly basis, and if you miss a payment, then interest increases. If you miss a lot of payments, they’ll take your furniture and things.If they have a job, many places have it set up that employees can ask for loans that are automatically deducted from their salaries. For example, the Vizara rubber making factory has this set up. For every loan you take, they take K1000 off your salary every month. However there is a cap for some reason, so you can’t take a loan of more than K5000.NGOs in my area making loans? I only know of one, and I haven’t found out very much about it yet. It’s called Thincom, and operates in Nkhata Bay. They do business skills trainings before they give out their loans. They expect 50% interest, and they expect payment on a weekly basis. That’s all I know about this organization…I will try to find out more!Find a friend who has more money than you! This obviously doesn’t work well for large loans…but if you need a bit of cash, find someone who has a job, and if they like you, you’re in luck! Often, this is more of a form of charity, and the ones giving the money call it a loan so that their friends can keep their dignity.Challenges: I’m sure you’ve picked up many, in just reading the above descriptions. It’s really hard for people to get a good chunk of money at a decent interest rate. It’s nearly impossible. More often than not, when people need money, they go to close relatives or good friends. I feel like the only people able to get loans are people with a bit of money already, even from the NGO sector.