Standing inside his wholesale shop in Blantyre, Malawi, Asuman Mbalaga is busy checking his stock. His wife, Jocelyne, greets customers as she moves between towering stacks of water bottles and laundry detergent.
Mbalaga, who is originally from Burundi, set up Alipo Wholesale eight years ago in a container space nearby, using money borrowed from a friend. “I saw that it was profitable, so I thought to set up a shop in town,” he says. He and his wife decided to move the business to Blantyre’s busy Limbe neighborhood.
Mbalaga’s business is one of over 1 million small- and medium-sized businesses that provide jobs in Malawi. As with most of the entrepreneurs behind these ventures, he doesn’t have land or real estate to use as collateral for a bank loan. That requirement has kept many of them from realizing their potential. But Mbalaga was able to secure an overdraft facility by using his company’s truck as collateral, thanks to an initiative by FMB Bank. An overdraft facility allows clients to withdraw cash from their account up to a limit approved by the bank.
The use of moveable assets as collateral is new in Malawi: in 2015, with support from IFC, the country’s government launched the collateral registry, an online system to register moveable collateral used for loans. The collateral registry makes it possible for banks to lend to a whole new customer base, including clients like Mbalaga, who were previously excluded from formal credit.
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