By Yamikani Kachaje:
Microfinance institutions in the country flourished in 2020 witnessed by increases in profits registered in the year.
This is coming against a background of criticism towards financial institution, especially commercial banks, that made huge profits last year.
Critics claim that the huge profits are evidence that such institutions did not cushion their clients in the thick of the Covid pandemic.
However, published financial statements by some microfinance institutions show that they, too, made substantial profits.
For example Select Financial Services has posted a profit after tax of K947.6 million from K746.6 million in 2019 representing a 27 percent increase in profit.
A published statement signed by its Board Chairman Terrence Augustine Nsamala shows that the profit was as a result of a total revenue growth of 17 percent to K5.1 billion from K4.4 billion in 2019.
“We have put in place appropriate measures to deal with the pandemic and are of the opinion that the continuity and viability of the business can be maintained despite the likely challenges ahead,” reads the statement.
A separate statement published by CUMO Microfinance Limited signed by its Board Chairperson Dye Mawindo further indicates that CUMO has recorded a K36.3 million surplus before non-operating income, during the period, up from K11 million in 2019.
This represents a 230 percent increase on the surplus.
“The loans dispersed in the year amounted to K4.6 billion, with an increase of 24 percent from K4 billion in 2019. However, despite this increase in loan uptake, Covid negatively affected the loan repayments,” the statement reads.
However, Executive Director of the Malawi Microfinance Network Duncan Phulusa described 2020 as a mixed bag owing to the Covid pandemic.
“Select Finance works quite a lot with civil servants so even if there was Covid or not their clients were getting paid and servicing their loans but CUMO works with micro, small and medium entrepreneurs and they have done quite well because they got a grant from Financial Access for Rural Markets, Smallholders and Enterprises (Farmse) which helped them increase their outreach,” Phulusa said.
He added that the outlook for MFIs in 2021 is promising as the economy is opening up from earlier imposed Covid restrictions.