Back Ground to FINES Project
The Financial Inclusion and Entrepreneurship Scaling (FInES) Project is the project of International Development Association (IDA) of the World Bank that aims to increase access to financial services and promote the entrepreneurship and capabilities of micro, small, and medium enterprises (MSMEs) in Malawi, including addressing the negative economic effects of COVID-19.
The Government of Malawi obtained a loan amounting to US$86 million from the project through a Financing Agreement signed on 5 November 2020.
The National Economic Empowerment Fund Limited expressed interest to participate in the line of credit under the project.
An approval of K10 billion facility was obtained and following the approval, NEEF signed a subsidiary financing agreement (SFA) with the Reserve Bank of Malawi where the Project Implementation Unit (PIU) is housed.
Objectives OF FInES Project
- Increase access to financial services.
- Promote entrepreneurship and capabilities of Micro, Small and Medium Enterprises (MSMEs) in Malawi.
Qualification Criteria for Participating Financial Intermediaries
The facility requires participating financial institution (NEEF) to:
- Have an Environmental and Social Management System, which NEEF has developed and put in place.
- Have an established Monitoring and Evaluation system as the loans under the project requires effective pre- and post-disbursement monitoring.
- Have a Grievance Handling Mechanism.
- Establish appropriate Management Information System adequate to generate the required information for performance monitoring, loan tracking and for timely preparation and submission of prescribed monitoring and progress reports.
The borrowers must be MSMEs that meet the credit qualification requirements of NEEF or those that have been certified to have undergone business development training by NEEF
Capital expenditure and working capital loans to MSMEs will be limited to a maximum of the equivalent of USD70,000 per entrepreneur.
All borrowers must be issued with an ID number, according to guidelines that are issued by the Lender (RBM) in order to monitor progress reports.
NEEF shall keep records of Sub-Loan Agreements financed with the proceeds under the Credit Facility Agreement including a copy of each Sub-Loan Agreement and all material documents relating to the Sub-project financed for the duration of the relevant Credit Facility Agreement.
NEEF shall keep MSME sub-loans funded under MSMELCF separate and distinct from the rest of the credit portfolios. The portfolio will be reported to RBM on monthly basis to support the monitoring and evaluation framework of the project.
NEEF shall establish appropriate MIS adequate to generate the required information for performance monitoring, loan tracking and for timely preparation and submission of prescribed monitoring and progress reports.