CYD Financing Solutions is a Centre for Youth and Development enterprise located in Mzuzu City, in the Northern part of Malawi. CYD offers small business, agricultural and health financing loans to women in Mzimba North. Women borrow in groups of 10 – 15, each person with her own business plan and responsible for each other’s repayments. The formation of the groups is voluntary, and is the first line of selection of creditworthy clients. After initial selection, the group process exercises peer pressure on clients in danger of default, or practical support and knowledge sharing when a business is in jeopardy. To make full use of these mechanisms (selection, practical support, knowledge sharing and peer pressure), CYD stimulates group dynamics in three ways: 1) clients are required to make payments as a group, physically present each week for their weekly savings meetings, 2) clients are encouraged to share knowledge and practical support during business-specific workshop sessions, 3) Business and credit Management training are delivered in groups.
CYD offers three types of loans;
The loans have a one year period of validity and are paid back weekly – which ensures a regular repayment rhythm and facilitates on-going contact between CYD and the client groups. This type of loans are integrated with business management training and group savings and loaning model to ensure that groups continue to save in small amounts excess money from their small businesses.
Agricultural Inputs financing Loans:
CYD further provides agricultural inputs loans to its clients to ensure that its clients are able to produce enough for their food and nutrition security. This type of loans is provided in the form of inputs other than cash, noting the volatility of cash in households with varying needs. The agricultural inputs loans are provided together with business training and crop enterprise training. The project further offers a marketing solution, where all the produce that women put up for sale is put together and sold in bulk using the group’s bank account. All the loans due to CYD financing Solutions are deducted.
Health financing Loans:
CYD financing further provides small health emergency loans which are approved within 24 hours to ensure the health of women and children. This type of loan is provided to clients who are on track with their outstanding loans. It’s mostly been used by pregnant women to prepare for delivery.
CYD does not require any physical collateral from its clients, which makes its loans accessible to even the poorest of women. This value proposition is tailored after the Grameen Bank model as developed in the 1980s.
Today, CYD financing solutions has issued 12 business loans and 4 agricultural loans to 4 groups of women benefiting 60 women in the Mzimba North districts. We are continually carefully tracking economic and social impact of the project, to ensure that we keep learning and continue to maximize the beneficial effects of the project.