Select Financial Services Malawi

In Malawi, access to formal financial services remains a challenge for many, particularly those outside major urban centers and those in the public sector. Select Financial Services Malawi has emerged as a significant player in addressing this gap, focusing specifically on providing unsecured retail lending to government and civil-service employees. Operating as a non-deposit-taking microfinance institution, Select Malawi leverages a blend of digital and physical channels to deliver its credit products.

Company Profile and Presence in Malawi

Select Financial Services Malawi Limited commenced its operations in February 2011, having been incorporated in December 2007 under the Companies Act of Malawi. It functions as a private limited liability company and is a wholly owned subsidiary of Select Africa Finance Limited, with its ultimate holding company, Select Africa Limited, based in the Isle of Man. This broader group operates across several African markets, including Eswatini, Lesotho, Kenya, Uganda, and Malawi.

The company’s business model revolves around microfinance, funded through a combination of equity, medium-term note programmes, debt from Development Finance Institutions (DFIs) and impact investors, and local bond listings. Its primary target market comprises Malawian government and civil-service employees, a demographic often underserved by traditional commercial banks. Additionally, Select Malawi extends its services to other salaried individuals seeking unsecured personal finance and incremental housing loans.

Headquartered in Lilongwe at the Centre House Arcade on Robert Mugabe Crescent, Select Malawi maintains a strong physical presence with regional branches in Blantyre and Mzuzu. This ensures broader accessibility for its clientele across the nation. The company's leadership is currently spearheaded by Chief Executive Officer Akuzike Kafwamba, who is often quoted in corporate communications regarding the firm's strategic direction and commitment to financial inclusion.

Loan Products, Pricing, and Application Process

Select Financial Services Malawi offers two main credit products designed to meet distinct financial needs:

Flexi Loan (Payroll-Deductible Line of Credit)

• Amounts: Borrowers can access funds ranging from MWK 100,000 to MWK 4,000,000. For context, using an approximate exchange rate of MWK 1,075 per USD, this translates to roughly USD 93 to USD 3,720.
• Tenor: The repayment period is flexible, spanning from 1 month up to 72 months (six years).
• Approval & Disbursement: Select Malawi prides itself on efficiency, with loan approvals typically occurring within 24 hours and same-day disbursement directly to the customer’s verified bank account.
• Collateral: A key feature of the Flexi Loan is its unsecured nature. The primary form of assurance is a payroll deduction mandate, meaning repayments are automatically deducted from the borrower’s salary.

Flexi Housing Loan (Incremental Housing Finance)

• Amounts: Specific loan amounts for this product are not publicly disclosed, as they are tailored to the incremental phases of home construction or improvement, allowing for flexibility as building progresses.
• Tenor: Repayment terms for housing loans generally range from 24 months to 84 months (seven years).
• Structure: This product is unique in that it consists of successive micro-loans, disbursed based on the borrower's repayment performance and ongoing affordability. Critically, it does not require land title or traditional collateral, which is a significant barrier for many Malawians seeking housing finance. Instead, the company provides technical assistance and applies lending discipline through staggered disbursements and robust affordability checks.
• Insurance: An embedded credit-life insurance policy is typically included with incremental housing loans, offering peace of mind to borrowers and their families.

Pricing and Fees

While Select Financial Services Malawi aims for transparency, specific details regarding its Annual Percentage Rates (APR) and exact interest rates are not publicly disclosed. However, based on group averages for similar products in Malawi, the implied gross loan book rate in 2022 was estimated to be between 25% and 50% per annum, aligning with benchmarks for incremental housing finance. It is crucial for potential borrowers to directly inquire about the precise interest rates applicable to their specific loan product and profile.

• Origination/Processing Fees: Standard facility fees apply, though their specific amounts are not published.
• Late Payment Fees: Charges are applied per day of arrears, but the exact tariffs for these fees are also undisclosed.

Borrowers are strongly advised to request a comprehensive breakdown of all fees and charges during the application process to fully understand the total cost of their loan.

Application Process and Requirements

Select Malawi offers multiple channels for loan applications, combining digital convenience with traditional accessibility:

• USSD Service: For existing Flexi Loan customers seeking top-ups, a quick and easy option is to dial *38420# on their mobile phones.
• Web Application: Prospective clients can initiate an online enquiry and application through the company’s responsive website at selectafrica.net/malawi.
• Physical Channels: Applications can also be made by visiting one of the company’s branches or through agent-assisted processing, which can occur at a borrower’s home or office.

To comply with Reserve Bank of Malawi guidelines for digital customer due-diligence (CDD) and risk-based verification, applicants must provide standard Know Your Customer (KYC) documents:

• A valid National ID.
• Recent payroll slips.
• An employer verification letter.

Credit scoring and underwriting involve a thorough payroll affordability assessment. The company utilizes a proprietary digital scoring platform integrated with employer payroll codes. For the more complex incremental housing loans, a manual review process is conducted, supported by dedicated Housing Support Services Officers who provide guidance and oversight.

Loan disbursement methods include direct bank transfers to the customer’s verified account. Select Malawi also has plans to integrate with popular mobile money platforms like Mpamba and Airtel Money via the national switch, enhancing convenience. In some cases, cash disbursement at a branch counter may be an option.

Technology, Regulatory Compliance, and Market Standing

Digital Engagement and Geographic Reach

Select Malawi has embraced digital channels to enhance customer convenience. Its USSD service (*38420#) allows for quick loan top-ups, while a responsive microsite provides product details and a loan calculator. It is important to note that as of now, there is no dedicated iOS or Android mobile application; digital engagement primarily occurs via USSD and the web platform.

The company's geographic footprint extends beyond its head office in Lilongwe and branches in Blantyre and Mzuzu. It deploys satellite offices and a network of mobile sales agents across all three regions, ensuring coverage in various urban and peri-urban districts. This extensive network enables Select Malawi to reach a broad customer base, predominantly government workers, including teachers, health professionals, and civil servants. The company currently manages approximately 11,400 loans in Malawi, representing about 17% of its group's total loans outstanding.

Regulatory Compliance and Consumer Protection

Select Financial Services Malawi operates under the strict oversight of the Reserve Bank of Malawi, holding a valid license as a microfinance institution under the Microfinance Act. Its payroll deduction codes are officially approved for government salary processing, providing a secure and reliable repayment mechanism. The company maintains a clean compliance record, with no public enforcement actions reported, demonstrating its adherence to regulatory standards, including the 2005 Customer Due Diligence Directive for financial institutions.

In terms of consumer protection, Select Malawi aims for transparent disclosure of loan terms. This is achieved through clear communication during USSD sessions and detailed printed contracts. The inclusion of embedded credit-life insurance for housing loans and the application of responsible-lending measures further underscore its commitment to ensuring loan affordability and safeguarding borrowers' interests.

Market Position and Growth

Select Financial Services Malawi is a prominent player in the Malawian microfinance sector, ranking among the top three MFIs by loan book, alongside well-known institutions such as FINCA and VisionFund. Its competitive edge stems from several key differentiators:

• Targeted Focus: A distinct emphasis on public-sector payroll clients, a segment with reliable income streams but often overlooked by larger banks.
• Innovative Housing Product: The provision of incremental housing loans without requiring land title or formal collateral, which is a significant barrier reduction for many Malawians aspiring to own or improve their homes.
• Agile Digital Channel: The effective use of USSD technology for quick and accessible services.

The company has demonstrated robust growth, with its gross loan book in Malawi expanding by 17% in the 2022 fiscal year. Future growth strategies include plans to launch a local Medium Term Note (MTN) bond programme to diversify funding and further deepen integration with mobile money platforms. Select Malawi maintains strategic partnerships with government payroll offices for direct salary deductions and is actively negotiating tie-ups with Airtel Money and TNM Mpamba to facilitate seamless on- and off-ramps for funds.

Customer Experience

Customer feedback for Select Malawi generally highlights positive aspects such as fast loan approvals, the convenience of flexible top-ups via USSD, and the supportive role of housing officers for incremental housing clients. However, some areas for improvement have been noted, including occasional USSD session failures, requests for greater clarity on fees, and delays in scheduling agent visits. The company provides 24/7 call centre support (+265 887 386 343) and utilizes field officers for remote onboarding, aiming to ensure high service quality. While formal case studies are not publicly available, anecdotal reports suggest successful housing projects realized through the incremental loan scheme.

Practical Advice for Potential Borrowers

For Malawian public sector employees considering a loan from Select Financial Services Malawi, here is some practical advice:

• Understand Payroll Deduction: Be fully aware that loan repayments will be automatically deducted from your salary. Ensure your budget can comfortably accommodate these deductions to avoid financial strain.
• Request Full Disclosure: Always ask for a comprehensive breakdown of the interest rate (APR), origination fees, late payment charges, and any other associated costs before signing any agreement. Do not hesitate to ask questions until you fully understand all terms.
• Compare Options: Although Select Malawi is a strong contender, it is always wise to compare their offerings with other microfinance institutions or banks in Malawi that serve similar segments, especially for unsecured personal loans. Look beyond just the headline interest rate to the total cost of the loan.
• Housing Loan Specifics: If considering the Incremental Housing Loan, understand the staggered disbursement process and how the technical assistance works. Verify the embedded credit-life insurance details and its coverage.
• Borrow Responsibly: Only borrow what you genuinely need and are certain you can repay. Over-borrowing can lead to a debt spiral. Use the loan calculator on their website as a guide, but confirm exact figures with a loan officer.
• Verify Contact Details: Keep the 24/7 call centre support number (+265 887 386 343) handy for any queries or issues that may arise during your loan tenure.
• Monitor Your Account: Regularly check your payroll statements to ensure correct deductions are being made and compare them against your loan repayment schedule.

Select Financial Services Malawi plays a vital role in Malawi's financial landscape, offering crucial credit access to government and civil-service employees. By understanding their products, processes, and maintaining open communication, borrowers can leverage these services responsibly to meet their financial and housing needs.