Towards an effective model for small-scale enterprise financing in a developing economy: a Malawian perspective

Richard Zidana

Development in Practice, 2025, vol. 35, issue 7, 1177-1184

Abstract: For decades, providing access to credit has been regarded as a powerful intervention for advancing the economic empowerment of the poor in developing countries. Notwithstanding, a growing body of evidence argues that these credit initiatives have reverse impoverishing outcomes for poor beneficiaries because, rather than promoting financial inclusion and microentrepreneurship, the loans impose debt burdens on them. Drawing on published empirical sources from across space, this viewpoint discusses the flaws of microcredit and joins the growing discourse which argues for the propagation of voluntary and member-owned savings and loans schemes as a more effective form of microfinance relevant for the rural poor and low-income economies like Malawi, due to their proven capabilities to promote economic empowerment and inclusivity. While Bateman argued that the dismantling of these localised models was bad for East Asia, this paper suggests his proposition is relevant regardless of geography.

Date: 2025
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DOI: 10.1080/09614524.2025.2481516

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