Monday, December 23, 2019

Malawi Financial Scoping Survey On Micro, Small, And...

CHAPTER ONE: INTRODUCTION 1.1 Problem Background The Malawi financial scoping survey on micro, small, and medium enterprises (2012) shows that Malawi has close to 760, 000 small business owners generating annual revenue of about US$2billion, but 60 per cent of whom do not use financial services. The small business owners in Malawi are relatively young with an average age of 31 years, with 70 per cent of them having just primary education. The MSME sector creates employment for just over a million people. The 2012 MSME survey established that 59% of MSMEs were excluded from financial services, as opposed to 31% that are formally served by some sort of financial system, with the balance relying on informal services. Only 22% are banked. Over three quarters do not borrow funds, primarily because they doubt their ability to repay loans. Of those who borrow, informal credit systems tend to be the primary source of credit. The survey establishes that the smaller the business in terms of number of employees the less likely that the owner has or uses banking services to manage the finances of their business. In recognition of the role that SMEs play in the economy, the Government of Malawi has made the development of SMEs a priority MSME policy (2007). Small and medium enterprises play an important role in providing employment, improving people’s livelihood and in the overall economy. It is therefore imperative that the MSMEs explore other cheaper means of finance e.g. equity,

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