AID microenterprise stock-taking : Malawi

has supported microenterprise development in Malawi by providing technical assistance, credit, and training through two Malawian intermediary institutions. This report, part of major A.I.D. stock-taking of its experience with microenterprises, describes the composition and growth potential of Malawi's small enterprise sector, followed by an evaluation of the institutions - the Development of Malawi Traders Trust (DEMATT) and the Malawi Union of Savings and Credit Cooperatives (MUSCCO). DEMATT provides technical assistance and training to traders, producers, and service businesses; in 1986/1987, DEMATT reached 545 enterprises with a total of 1,254 employees. MUSCCO provides savings and credit services in 79 Malawian villages - many of which offer no other credit sources except through informal markets. MUSCCO loans are used to fund household expenses, including school fees and funeral costs, as well as productive investment such as fertilizer and other agricultural inputs. Unfortunately, the impact of DEMATT and MUSCCO services on their clients is impossible to determine due to the failure of both organizations to develop adequate monitoring systems. Moreover, the long-term sustainability of these organizations is endangered by inefficiency and an unwillingness to charge interest rates or service fees high enough to cover a significant portion of their operating costs.