The evidence is clear: smaller businesses drive job creation in emerging economies. But tough local conditions often hold them back, leaving them too big for microfinance but too small for conventional banks, and unable to get the management advice they need to boost performance.
IFC is helping smaller businesses in Malawi – and across Africa -- escape this trap and reach their full potential by providing investments and advisory services, in the form of training and guidance.
In Malawi, IFC’s Africa Micro Small and Medium Sized Enterprises (AMSME) Program is working with the country’s NBS Bank to support the growth of small businesses, a powerful engine of job creation and economic growth.
Thanks to IFC’s help, NBS Bank is becoming a leading small business lender. IFC has invested $3 million in the bank, a loan that is helping it build its small business loan portfolio. An extensive IFC training and guidance program is supporting NBS’s efforts to serve more small business clients.
In the last two years, the bank has lent successfully to more than 500 smaller clients, helping create employment and build businesses in a country where millions have trouble finding steady work.
Three NBS clients with successful businesses are profiled below:
Ruth Thindwa: Restaurant Owner
Ruth Thindwa may serve the tastiest chicken lunches in all of Malawi. Just ask her satisfied customers.
In 2007, Ruth and her husband used their entire savings to open a small restaurant in the country’s business hub, Blantyre. It was a risk, but soon her delicious roast chicken, stewed beans, and other local favorites had built a steady following.
By 2008 she was looking to expand, increase the restaurant’s workforce, and boost her income.
Ruth turned to NBS Bank, which lent her 350,000 kwacha (about $2,300) so she could raise her own chickens, giving her “Friends Restaurant” a reliable and cost-effective supply.
But as a 23-year-old, first-time entrepreneur with little formal business training, Ruth needed more than just loans. She entered IFC’s Gender Entrepreneurship Markets (GEM) program that supports women entrepreneurs across Africa and the Middle East.
“The GEM training was wonderful,” Ruth said. “I learned about better bookkeeping, accounting, and many ways to improve my business. I also met other women who were running successful businesses, and now am ready to go back for another loan so we can decorate the restaurant and buy new kitchen equipment.”
Today Ruth is well on the way to doubling her number of daily customers. Helping promising small business owners like her break through is central to IFC’s strategy in
low-income regions, especially in places where they have trouble accessing finance and business advice.
Cliff Matola: Dairy Farmer and Veterinary Shop Owner
A sick cow inspired 65-year-old Cliff Matola to start a new career.
In 2006, a cow on Matola’s small dairy farm in Blantyre was struck by a particularly serious fever. In a desperate search for the drugs that would save his animal, Matola rushed to the local veterinary shop, only to find it shut.
He dashed from farm to farm, calling on friends and neighbors for help, at last finding the drugs he needed. The cow survived.
“If this happened to me, it must happen to lots of other farmers as well,” Matola said. “The experience made me wonder about opening my own veterinary shop.”
Cliff did open a shop, and today sells a variety of drugs, wound cleaners, and feed mixes for cows, chickens, pigs, dogs, and other animals.
He invested most of his own capital in the business, but soon needed a fresh injection of funds to expand his stock and satisfy a growing number of customers.
In 2008, Cliff borrowed 500,000 kwacha from NBS bank.
“Without this loan, it would have been impossible to grow my business,” Matola said. “Now we have all the stock we need and we aren’t running out…I don’t want another farmer to suffer the way I did when I almost lost an animal.”
Rose Magola: Tailor and Children’s Clothing Shop Owner
Rose Magola, a talented seamstress, sells school uniforms, sports kits, hats, book bags, socks, and other clothing at her “Please Mum” clothing shop in Blantyre.
The former bank employee opened the shop in 1998, naming it after the phrase she constantly heard young boys and girls repeat to their mothers as they browsed for clothing.
The shop built a regular clientele, but Ruth soon became a victim of her own success. She was sourcing a growing amount of material in cash, and feeling pressured by the tight deadline demanded by parents who need their children to be fully kitted for the first day of school.
I didn’t have the capital to buy all the material I needed,” Rose said. “I was making more than 350 uniforms and couldn’t disappoint even one child…What would that child do without a uniform for school?”
In 2008, Rose read an NBS Bank brochure about banking for smaller businesses. A few months later she received a 750,000 kwacha loan from the bank, the money she needed to keep her young clients well dressed.
Rose, who today employs five tailors and three sales assistants, has recently taken a second loan from NBS for one million kwacha. She hopes to open a second shop in Malawi and increase the number of schools she supplies.
For more information contact:
Johannesburg, South Africa
Phone: +27 11 731 3120