The Technical, Entrepreneurial and Vocational Education and Training (Tevet)Authority has engaged the Bankers Association of Malawi (BAM)to help in lobbying for start-up capital in form of loans.
Speaking during the signing of a memorandum of understanding (MoU) between Teveta and BAM in Blantyre on Monday, Tevet Authority board chairperson Don Whayo observed that their trainees, despite having knowledge in entrepreneurship, face multiple challenges when it comes to enterprising, chief among them being lack of capital.
He said it is challenging to get a loan from the bank because, as a standard procedure, financial institutions require surety before giving loans.
Said Whayo: “We envisage that through this partnership, banks will develop tailor-made products and services for Tevet beneficiaries; that at least 500 Tevet beneficiaries will access bank loans within the next three years and that at least 70 percent of them will establish sustainable
“Knowing that people get destroyed for lack of knowledge, we also want at least 3000 Tevet beneficiaries to be trained in financial literacy over the same period.”
From its inception in 1999, one of the objectives of the Tevet system has been to promote managerial and business skills and in spirit of entrepreneurial culture with regard to both wage and self-employment.
Over the years, the authority has implemented programmes to ensure achievement of this objective by, among others, including entrepreneurship as a fundamental module across all trades of the Tevet curricula pursed by apprentices.
What this means is that every Tevet trainee learns entrepreneurship, regardless of the occupation they are being trained in.
However, in Malawi, the majority of micro, small and medium enterprises (MSMEs) are still failing to access finance despite the sector being a significant source of employment, providing jobs to 1.6 million people
In its July 2020 Malawi Economic Monitor, the World Bank said only 10 percent of medium enterprises, five percent of small enterprises and three percent of micro enterprises have credit from commercial banks.
This is despite the country having 60 percent of businesses as micro-enterprises (employing one to four people), 32 percent being small enterprises (employing five to 20 people) while only eight percent of businesses are medium enterprises (employing 21 to 99 people).
Speaking in an interview after signing the MoU, BAM chief executive officer Lyness Nkungula said following the partnership, where Teveta will be the guarantor, Tevet beneficiaries will get tailor made loans depending on the bank’s assessments after the trainees have undergone financial literacy training.
She said: “After the training, we will assess them and link them with the banks so that they have start up capital. I don’t have the specific figure because it’s up to us now to lobby banks after training them and seeing their individual needs on the starterpacks.
“As we give them financial literacy, wewill emphasise on the need to repay the loans as it is a gift and others need to benefitfrom it too.”