Afrique Global, a local non-profit making organisation, is issuing free loans to increase access to finance among small and medium enterprises (SMEs).
The loans are being issued under a multi-donor funded window dubbed Promoting Economic Excellence through the Sustainable Approach (Pesa) programme.
The loans range from K20 000 to K1 million.
Afrique Global head of programmes Osegical Katantha Banda said in an interview on Wednesday the loans are targeting small businesses because they lack access to finance.
“These loans are intended to benefit SMEs across the country, but now we have started with those in Blantyre. The only requirement is that they should be in groups of 40, but they can access the loans in groups of five people,” he said.
Banda said the loans have no interest or collateral because the groups serve as collateral and guarantee.
He said the fund also seeks to empower local communities in reclaiming their position in the business arena.
So far, about 500 SMEs have benefited from the programme by borrowing K10 million which has a repayment period of between six to 24 months, depending on the amount accessed.
Banda said SMEs in agri-business have the opportunity to access farm inputs and equipment on loan.
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) Business Climate Survey 2015 noted that access to finance remains one of the barriers to doing business in the country.
In an earlier interview, Small and Medium Enterprises Association (Smea) president James Chiutsi said access to finance has always been a challenge to the sector worsened by commercial bank’s high interest rates and their reluctance to issue loans to SMEs.