Linking microfinance institutions to national payment system

Sunday February 10 2019

Fintech Group sales and marketing head Polycup

Fintech Group sales and marketing head Polycup Osero (left) listens to Micro Finance Institutions Malawi Hub CEO Joseph Mayenda on the sidelines of the Tanzania Financial Inclusion summit in Dar es Salaam recently.  

QUESTION: How did you arrive at Fin Financial Systems?

ANSWER: The genesis of this decision was arrived at following a FinScope Survey research whose findings established that the financial inclusion was about 55 per cent of the 17-million population of Malawi. The reason for that exclusion included push-side factors as well as supply-side factors. Banks found it expensive to venture into rural Malawi and their charges were high because of the risks and infrastructure requirements. These were barriers. As it were with maintaining minimum balances.

What was the reason behind wanting to increase financial inclusion in Malawi?

The government wanted to mobilise savings so as to widen the capital base for a country in which over 45 per cent of people were keeping their money away from financial institutions for the reasons stated above.

This capital would be mobilised and made accessible for onward ending by enabling more people come into financial services and contribute to gross savings.

What approaches did the government take?

It had to review the regulatory framework. Regulations of financial and payments systems were all shaken up.

In microfinance, the government saw the need to create a system because most Saccos were using ledge manual cards, passbooks and the inefficiencies were key barriers hence initiating a project to create a shared and inter-operable system. It would work with MNO (Mobile Network Operators and National Payment Systems.

How did you arrive at the product Fin financial Systems?

An initial tender was floated for consultancy relevant for MFI and Saccos and Fintech International won the bid.

Are you satisfied with the Fin Financial System? Is it meeting your expectations?

Initially, the decision was to buy the system outright, all IT team and infrastructure. But because the industry is still small we had to be careful of the over heads. We decided to outsource the software and pay as we use.

Instead of software management company, we created a relationship management company. No matter how small you are it’s a system that has core banking as well as an HR, accounting and procurement module integrated.

What is the way forward for Malawi in terms of financial inclusion? Can Tanzania benefit from it?

Our intention is to connect MFIs & Saccos to the national payment system such that it does not matter which Saccos one is from one can transfer money to any account in any bank and obtain money from any bank branch ATM. Where we are going we are now going to borrow from their Sacco at their fingertips. Thus, the system has expanded financial inclusion in Malawi. Any country including Tanzania can benefit as long as they have MFIs and Saccos.