Community Development Bank

Community Development Bank

Lilongwe, MalawiSydney, Australia
Organization type: 
nonprofit/ngo/citizen sector
Project Stage:
$1,000 - $10,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

Enabling rural entrepreneurs build self reliant communities.

About Project

Problem: What problem is this project trying to address?

Access to financial services in the form of both capital and savings is a pressing challenge for rural entrepreneurs in Malawi. Formal collateral is an issue and the extreme remoteness of some areas means that microfinance institutions (MFIs) tend to avoid working there due to ‘uneconomic’ operation costs. The only option is money lenders who charge up to a 100% in interest. People find themselves borrowing money to settle another loan resulting in a desperate state of indebtedness. Also, development projects mostly fail because of lack of sustainability after the ‘project life’. The Solution to this is to enable people fund their own development initiatives and enterprises through a community bank that is owned and managed by member villages.

Solution: What is the proposed solution? Please be specific!

Empowers Community Development Bank is an improved savings and credit cooperative model based on membership and participation. Villages come together and deposit their money where others can access it at an agreed interest. Membership is Village based, once a village is registered then its villagers can form groups to make deposits or deposit as individuals. Loan allocation is in proportion to the level of village based savings in order to encourage a culture of saving. A village can take a development loan from the bank to- for example, drill a village borehole. Individuals can also take a loan with their village membership acting as collateral. The Community Development Bank also provides certified business management training (CEFE) to ensure that the bank’s clientele are able to generate effective business plans to meet funding requirements. Tailor made services are also provided e.g. Women Loans.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Community Development Bank (CDB) started as a pilot with Zatuba Village (South-East Mzimba) which comprises of 40 households. This village wanted solar lanterns compared to kerosene and torches. Empower, bought 40 solar lanterns delivered to the Village Development Committee and agreed to a 9 month recovery period without interest. The VDC collected money from the solar lanterns in time and that became seed money for a CDB that expanded to 38 villages in just 1 year. An AGM makes operating guidelines for the bank. The CDB is owned by Chiefs who form an advisory committee. Chiefs in turn send 2 representatives who amongst themselves elect Bank Committee which manages the bank as volunteers and hires officers. Membership is village based, a village pays membership fee (one time), its clients open books with the bank to make deposits. Depending on deposits, each village is allocated loan sum. The village then draws from that allocation. First time individual applicants have to join a club which acts as a collateral. Later if there is no history of defaults, individuals apply directly but with authority from their village chief and the village membership acts as surety. The CDB also organises certified business trainings and one has to have a certificate to acquire business loan.

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

Peers & competitors: Opportunity Bank of Malawi – commercial entity- legal bank Money Lenders – Called locally as ‘Katapira’ (Caterpillar) because they offer 100% interest loan instantly. No bank gives a loan to a village to drill a village borehole for example, or construct a village child care centre. They do this as part of their CSR which undermines people’s capability. CDB specifically aims at enabling individuals and villages build self reliant communities- fund their own projects. It is established by villages for villages through a vision workshop. All guidelines are determined by an AGM with chiefs acting as advisors.

Founding Story

The approach towards developing community banking flowed from our view to develop solutions that enabled self-reliance. James, Shyamika and Shanil discussed how pivotal affordable finance was for sustainable development - they researched many MFIs. While they loved the concept, they saw limitations in terms of product/service offerings and crucially ....ownership. Thus the concept of CDB was a natural solution in the context of us enabling self-reliance in 5 years. When we successfully piloted village savings to pay for solar lanterns; that was it! We discovered a ‘power in unison’ model that can be applied anywhere to enable communities build self reliant communities while upholding human dignity and without exploitation. Given our organisation’s holistic approach – a community based solution to finance integrates beautifully with components such as agriculture, water, sanitation and energy access.
About You
Empower Inc
About You
First Name


Last Name


About Your Organization
Organization Name

Empower Inc

Organization Country

, NSW, Sydney

Country where this project is creating social impact

, LLG, Lilongwe

How long has your organization been operating?

1‐5 years

Has the organization received awards or honors? Please tell us about them

SSE Social Entrepreneur of the Year 2010 (Founder)

The information you provide here will be used to fill in any parts of your profile that have been left blank, such as interests, organization information, and website. No contact information will be made public. Please uncheck here if you do not want this to happen..

How long have you been in operation?

Operating for 1‐5 years

Which of the following best describes the barrier(s) your innovation addresses? Choose up to two

Access, Equity.

Social Impact
Please describe the goal of your initiative; outline what you are trying to achieve

We believe in human potential and the capacity of people to action their vision for change if given the resources and opportunity. The main goal of our initiative is to enable financial inclusion, starting with the South-East Mzimba region (38 villages). This would enable the region to provide its people with: Promote a culture of saving and a safe centre for local deposits; Provide affordable capital for businesses as well as local development projects; Provide vital business education to entrepreneurs and leaders to develop viable business and development plans; The means to deploy renewable energy solutions such as solar lighting through tailored loans; The possibility of insurance services should the Bank Committee decide to add to their service provision capacity.

Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)

Physical and other accessibility obstacles that prevent communities from reaching financial services, The lack of affordable financial products tailored to the needs of underserved and excluded communities,, Other (Please describe below).

If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:

Gender based barriers

For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?

Remote villages and their social entrepreneurs. Rural populace accounts for over 80% of Malawi’s total population mostly as small scale subsistence farmers. Over 50% of the total population live below poverty line mostly in very remote locations neglected by MFIs and Banks due to high operation costs to access them. Agriculture is the highest GDP contributor as high as 70%. CDB wants to introduce very simple and quick financial system and education flexible enough to be understood by a grade 5 drop out. CDB also in essence brings the town to the rural as much as possible thereby enabling the creation of jobs and locally driven development

Could your solution work in other geographies or regions? If so, where?

One key success factor to CDB is a 5 year community vision which is arrived during a Participatory Vision Workshop and revised every year. This ensures that everyone taking part in CDB is aware of where the communities want to go and how they will achieve their dream. This ensures that the CDB is built on Unity, Trust, Transparency and Accountability. That said, the CDB model can be replicated anywhere in Malawi and beyond as long as a Vision Workshop is priotised. A number of villages (as many as manageable) can come together as a Development Epicentre and develop a CDB of their own.

If your solution is dramatically successful, how will things be different in 10 years?

We anticipate that in 10 years CDB’s would enable a highly decentralized, community driven approach to development. Local epicentres for rural finance would reduce reliance on external or predatory money lenders and shift the responsibility and energy for development towards local village committees that collaborate at a regional level. This would in turn make the work of many Aid and Development organisations redundant or relegated to support roles that work off existing social infrastructure. Additionally, we feel that there would be an increased culture of saving among the rural people. CDB’s financial services must diversify to include Livestock insurance, school fees loan, life insurance, seed bank and adhoc. We also expect that Village Development loans will be large enough to afford large projects like biogas or hydro plant installation thereby increasing rural electrification which was key to the development of this project idea- access to renewable energy technologies.

What will have had to have changed to make this happen?

Employment of a technical person
Intensify Women and Human rights campaign
Introduce Mobile Banks to ensure security of deposits
Introduction of a number of vocational training
Develop strategic partnerships for example with the Veterinary Department to provide extension services to livestock farmers like poultry and dairy farmers

What has been the impact of your solution to date?

From 1 village of 40 households, the first and only CDB has grown to reach 38 villages with a population of more than 5000. The bank’s capital has increased from MK155, 000 to over MK1million in less than 1 year. 9 individuals have already accessed business loans. Over 300 people have undergone a business development and management training. 1 village has acquired a solar lantern loan, one has acquired a loan to construct a water tank and have access to clean water. A culture of saving has begun with more people joining. Leadership skills among the leaders have improved tremendously. Some people were taken on an education visit to another area to learn how to lead and this has since increased their self confidence. One of the rules for the CDB is that a Woman must always head the CDB and also in any committee and club they must achieve 50:50 gender balance and this has empowered women.

What is your projected impact over the next five years?

Currently there is only one CDB in one district in the northern region. The target is to have a CDB everywhere Empower establish a new project. Thus in the next 5 years we expect to have 2 more CDB- one in the central region and one in the southern region.This will help directly reach out to more than 30,000 people.

What barriers might hinder the success of your project? How do you plan to overcome them?

Barrier: Business copying among rural entrepreneurs
Solution: Introduce and promote vocational training (train and provide start-up equipment)
Barrier: Currently heavy reliance on volunteers
Solution: Introduce paid positions within CDB
Barrier: Government delays in offering registration to operate as a financial institution
Solution: Partnership with a commercial bank

Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact

Increase Bank capital base to MK3million excluding deposits

Identify three major tasks you will have to complete to reach your six-month milestone
Task 1

Village by village awareness campaign

Task 2

Introduce small cash loans

Task 3

Allocate special money for loans for renewable energy technologies

Now think bigger! Identify your 12-month impact milestone

Construct a community development centre, to house the CDB, a community hall, library (information centre) and a dispensary.

Identify three major tasks you will have to complete to reach your 12-month milestone
Task 1

Fundraising and budgeting

Task 2

Community contribution- contribute resources and materials within reach like sand, labour, quarry and bricks

Task 3

Chiefs (communal land owners) to allocate land for the project and be approved by an AGM

Tell us about your partnerships

CDB already is in the process of partnering with Opportunity Bank of Malawi to become its mother bank. Later on, we intend to have Mobile Van Banks visit the CDB on schedule weekly to ensure security. CDB can also take loan from the mother bank at times. We also partnered with Business Expansion and Entrepreneurship Development (BEED) Malawi, which offer internationally certified CEFE training in business development and financial management.

Are you currently targeting other specific populations, locations, or markets for your innovation? If so, where and why?

Targeting other very remote areas especially in the central and southern region of Malawi. The reason is to extend this initiative to other able communities who are willing and ready to turn their situation themselves without being exploited. Our target is to have 1 CDB in each region within the next 5 years and eventually 1 in each district for the next 20 years.

What type of operating environment and internal organizational factors make your innovation successful?

We are a valued-driven organisation and our partners work within this framework. Our operations centre on facilitating community-driven change with a view towards making our role redundant. Thus at the core of all activities is the intent to transfer knowledge and build local capacity around the provision and management of financial services in a manner that does not require our sustained involvement.

Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list

We would love to partner or get an investor to help us replicate CDBs across Malawi. We can also offer support and collaboration with other organisations and innovations.