Others have done it; we can do it too, and it’s time to do it.

Learnings from Uganda for Digitizing VSLAs in Malawi’s Rural Communities.

“Together, with the Strategic Impact Advisors and Ensibuuko partnership, and the invaluable lessons from Uganda, COMSIP is poised to create lasting change in the lives of countless individuals across Malawi. The representatives of the COMSIP Cooperative are now eager to implement similar strategies within Malawi.” These are the words of the COMSIP Investment Chief Executive Officer in Malawi, Kelvin Msiska, at the end of the exposure visit in Uganda organized by the UNCDF teams of both countries.

Kelvin Msiska was part of the recent journey with Ensibuuko, a fintech company working to build rural payments and digital banking infrastructure for Africa in Uganda. The exposure visit was organized in partnership with Strategic Impact Advisors and COMSIP Investment, bringing together six representatives from Malawi to Uganda. This knowledge-sharing event highlighted the striking similarities in challenges faced by communities in both countries. What stood out most was the significant progress Ensibuuko has made in Uganda in developing a proven solution for these challenges.

COMSIP Investment is a member-owned Cooperative Union Limited organization in Malawi, while Strategic Impact Advisors is a global consulting firm that provides technical assistance to help people overcome barriers and improve their lives through technology and analysis.

The digitization of Village Savings and Loans Associations (VSLAs) holds promise for rural communities. Among its various benefits, it provides efficient record-keeping and the use of transactional data streams to develop an alternative algorithm for credit scoring—a vital tool for ensuring financial inclusion.

This transformative shift addresses several pivotal aspects, as evidenced in the visit to VSLAs in Lira in northern Uganda.

Eliminating fraud: Secure digital platforms effectively curb fraudulent activities, safeguarding the financial interests of VSLA members, as is the case in Lira.

Time efficiency/convenience: Digitalization has the potential to significantly reduce the time spent in meetings, allowing communities to allocate these resources to equally important matters.

Accelerating loan processing: With digital systems in place, the time taken for loan approvals and disbursements can be greatly reduced, ensuring that funds reach members when they need it the most.

Enhanced repayments and reduced defaults: Streamlined digital processes empower members to make timely repayments, ultimately reducing default rates and bolstering the sustainability of VSLAs. In doing so, smallholder farmers, especially women and youth, can gain access to additional or increased credit—an important aspect.

The initial and crucial step towards successful digitization lies in creating awareness about the project. This involves breaking free from traditional record-keeping methods and fostering a strong adoption rate among beneficiaries. Simultaneously, it’s imperative to align the digitization process with broader strategic goals, ensuring that it seamlessly integrates with the cooperative’s vision.

Through the partnership with UNCDF, COMSIP is spearheading groundbreaking efforts to digitize the operations and transactions of community banking schemes, known as Banki Mkhonde, in Malawi. With the goal of digitizing over 1,500 VSLAs across the country, benefiting over 50,000 individual members, this initiative promises to revolutionize financial access for underserved communities.

Funded by the European Union and the Secretariat of the Organisation of African, Caribbean, and Pacific States (OACPS), the Digital Financial Services for Resilience program, implemented by UNCDF, initiated the partnership between COMSIP, Ensibuuko, and Strategic Impact Advisory to bring inclusive innovations to Malawian communities.

The benefits of digitizing VSLAs extend far beyond convenience; they hold the key to unlocking the full economic potential of rural communities. Through this transformative journey, all partners envisage a future where women and young people in rural Malawi are not just beneficiaries but active participants in their own economic empowerment.

COMSIP Investment Chief Executive Officer, Kelvin Msiska, said the trip to Uganda was an eye-opener for us. He said, “I was happy to see that members of savings and loan groups are able to embrace digital technology and trust it. In Malawi, and particularly in COMSIP groups, we have problems with manual record-keeping. The visit to Uganda has taught us an important lesson that we can do savings and loan groups transactions using a simple user-friendly digital system that meets our needs. Others have done it; we can do it too, and it’s time to do it.”