MicroLoan moves to mobile money in Malawi

Mobile money is efficient, time-saving and COVID-19 safe.

What is mobile money?

Mobile money is the process of using a mobile account to access capital. This allows people to transfer and deposit funds and pay bills without having to use hard cash. MicroLoan can distribute and collect repayments from loans using mobile services and devices.

Why do we use mobile money?

We work in some of the most rural and remote locations across Malawi, Zambia and Zimbabwe to help those who live in extreme poverty and are most likely to be financially excluded. Using mobile money has numerous benefits for our clients and Loan & Training Officers (LTOs) as it helps make our operations smoother so that our clients can concentrate on developing their business into a success.

The lack of nearby banks and financial services in the communities we support, means that MicroLoan Foundation’s clients have to spend a lot of time and expense travelling to more urban areas to make savings, deposits and repayments. Using a mobile money service helps our clients save time and money so that they can focus on their business.

By reducing the amount of cash handling that takes place, mobile money makes it safer and easier for our clients to run their business and access and repay loans. To gain access to loans, clients need their own mobile money sim card that is registered in their own name. This gives the women ownership and full control over their finances, something which many of them won’t have had before. It gives them full decision making power over how and when the money is used.

As loan disbursements and repayments are logged on a client’s mobile money account it allows us to obtain better and more frequent data about their loaning process. This helps us monitor clients’ progress and identify if and when they may be struggling so that we advise as required.

Where do we use mobile money?

In 2017 we started using mobile money services in our operations in Zambia. As of December 2020, almost 100% of our operations in Zambia now use mobile money.

Since 2017, our whole operation in Zimbabwe has used a mobile money system. Because of a cash crisis, getting hold of hard cash in Zimbabwe is very difficult; people can queue for hours or even days at bank branches to get amounts as small as $20. Mobile money gives our women an alternative so they can still run their businesses.

Using mobile money has proven successful in both Zambia and Zimbabwe and in light of the access challenges experienced by our beneficiaries during 2020, we decided to accelerate this part of our digitalisation strategy in Malawi in September 2020. As of December 2020, we are conducting a pilot study in Lilongwe to train staff and beneficiaries on a mobile money banking application. After our pilot, we plan to roll out mobile money in Malawi throughout 2021.

How does it work?

MicroLoan mobile money

  • In their first initial training sessions with our Loan & Training Officers clients are informed that in order to receive loans through mobile money they will need an EcoCash/MTN account and sim card registered in their name. Our LTOs will assist in the set up if required.
  • Each client will then be issued an EcoCash/MTN account identification number.
  • MicroLoan will move the relevant funds from their regular account into their EcoCash/MTN distributor account.
  • After clients have received all their initial training sessions, they are ready to receive their loans.
  • Using the clients’ individual identification numbers MicroLoan will send the appropriate loans into clients’ accounts.
  • Repayments are expected every 2 weeks – clients can make these payments into the MicroLoan biller account. They have a code to use to send their money.

Whilst a mobile device is required to make repayments clients do not have to have their own. As long as they have their mobile money identification account number they will be able to use the service by using someone else’s mobile device. Many of clients share phones and use them when needed.