Can the Grameen Bank Be Replicated in Africa? Evidence from Malawi

Although success stories of microcredit schemes from Asia have generated a lot of enthusiasm among development practitioners about the prospects of rural poverty alleviation, informed opinion is still sharply divided on the efficacy of this instrument in Africa. Using evidence from FINCA-Malawi, this paper empirically questions the replicability of Grameen-type banks in Africa. While the credit scheme was financially sustainable and FINCA clients had higher savings, working capital and business expenditure, these did not translate into higher household consumption. Clients' risk aversion in investment and uncharacteristically high turnover rates seem to explain the low program impact on the household economy.