Mobile money for financial inclusion?

airtel money

My latest piece for looks at issues surrounding financial inclusion. Recently-launched mobile money services promote themselves as offering secure and affordable financial transactions for Malawians, of whom only around a quarter are formally banked. Yet among Lilongwe’s unbanked poor, uptake has been limited due shortcomings in the services offered. Read the full article here and join the discussion here.


Keep the heat on.

Malawi’s two main telecoms, Airtel and TNM, are both eagerly advertising their mobile money services in Lilongwe. Not sure who is behind creating TNM’s campaign, but seems they didn’t quite think all their posters through: in a city where temperatures currently hover around 30 degrees Celsius (80-90 Fahrenheit), TNM is urging people use their service to pay the electricity bill to keep the heat on.

TNM ad fail

To subsidise or not to subsidise?

Bricks drying in the sun in on of Lilongwe's poor settlements

Bricks drying in the sun in one of Lilongwe’s poor settlements

Heated debate over an upcoming subsidy for cement and iron sheets is raging in Malawi. Put forward in the new government’s 2014-2015 budget, the MK7billion ($18.4million) programme is, according to the government, aimed at supporting low income Malawians achieve decent and affordable housing. Critics, of which there are many, are not convinced. They have argued that it’s poverty, not availability of materials that is the problem, adding that other subsidy programmes, such as the Farm Input Subsidy Program (FISP), have not been properly managed and therefore have not always benefited the most needy. Furthermore, the low number of intended beneficiaries, around 15,000 families or 80 houses per constituency in Malawi, has been faulted for being a drop in the ocean in a country where 80% of residents are estimated to live in sub-standard housing, as well as a drain on public funds.

There’s no doubt that something needs to be done on the housing front in Malawi. And while the quality of housing certainly is an issue – homes built using sun-burnt bricks are known to collapse during the rainy season – my own research (forthcoming) in Lilongwe’s poor settlements suggests this is considered less of a problem than some of the other features of what is defined as adequate housing. Specifically, at least residents in Lilongwe’s urban areas seem to consider their lack of access to key public services such as potable water, education, and health care as far bigger challenges than the quality of their housing.

Bricks are made on-site even in some of the most dense settlements in Lilongwe

Bricks are made on-site even in some of the most dense settlements in Lilongwe

So should the government subsidise cement and iron sheets? They will, no matter what, but I definitely don’t think they should. The (now ruling) DPP party’s election promise to put subsidies in place was all about gaining votes, while implementation of the subsidy reveals a populism that betrays a lack of appreciation of the real situation. Sure, the majority of Malawians live in sub-standard housing. Sure, that’s a problem. Are cement and iron subsidies for 15,000 families – one percent of the population by a generous estimate – the solution? No.

Much more forward-thinking solutions would include reverting to developing sites-and-services schemes in the country’s urban areas, promoting better techniques for making durable sun-burnt bricks, improving access to finance among the poor, and strengthening tenure security to give people the confidence to invest in their homes.

And all of the above does not even touch upon how hot and loud roofs made from iron sheets can be, and the multitude of environmental concerns associated with cement.

urban_net: Revenue mobilisation, private sector, and SDGs

The third urban_net meeting was hosted by ActionAid Malawi.

The third urban_net meeting was hosted by ActionAid Malawi.

The third urban_net meeting took place in Lilongwe on Sep. 4. This month’s meeting featured a presentation by the Revenue Development Foundation, about their local government revenue mobilisation programme in Mzuzu. A interesting initiative, the programme has enumerated all properties in the city – whether in formal or informal areas – and is gearing up to get all of the city’s residents (as well as businesses) to pay property taxes in return for better public services.

The second presentation was by Nicholson Kumwenda of Sustainable Urban Land and Shelter Development Consultants (SULSDEC), a private company promoting easy access to affordable land and housing in safe, secure, and decent urban communities.

Finally discussion turned to the post-2015 development agenda, and the possible impact of the proposed urban Sustainable Development Goal on Malawi’s new development priorities, to be reflected in the third Malawi Growth and Development Strategy (starting 2017).

Chez Bingu.


I recently spent a day at the Bingu International Conference Centre in Lilongwe, named after the late President Bingu wa Mutharika. I was there for the closing ‘symposium’ of the Malawi-German Programme for the Promotion of Democratic Decentralisation. The Germans have spent 18 years bank-rolling decentralisation in the country and are now phasing out, with the overall feeling that they got little for their investment. But this post isn’t about them.

This post is about the centre itself, which occupies the vast grounds of Umodzi Park, right next to the new Parliament building. It was built, along with the country’s first five star hotel and a residential area known as the Presidential Villas, with – you guessed it – Chinese money. Following Malawi’s abandonment of links with Taiwan in 2007 (after 41 years), the country has enjoyed a surge in Chinese investment in the country, to the extent that many up-scale restaurants have three menus: international; Indian (to cater to the resident Indian business class); and, now, Chinese. (Some disagreement on the exact size of Chinese investment into the country however exists, as evidence by this 2009 US Embassy cable.)


The story of the Bingu Centre is predictably complex. It was built by the Shanghai Construction Company, with over $90 million borrowed by Malawi from the Export-Import Bank of China. Since completion two years ago, the centre, and in particular its on-site hotel, has only been used a handful of times; its failure to be ready for the 2013 SADC meetings drew particular criticism. Earlier this year, after extensive financial troubles and government interference in the bidding process for operators, the centre was finally leased to South African company Peermont Global Limited for a period of ten years.


It seems one of the reasons for the Centre’s long under-use is political: following the death of Mutharika two years ago, Joyce Banda, a former deputy President but who started her own party before his death and inherited the presidency when Mutharika passed, seems to have had limited interest in getting the place up and running. This may be about to change however: the May 2014 elections brought the late president’s elderly brother Peter into power, and it is therefore expected that the centre will be fully operationalised in the near future. That’s not a bad thing in a city starved for conference spaces, but with already loose floor tiles it remains to be seen whether the $90 million centre was a good investment.




Renminbi building Lilongwe.

Shots of two large Chinese funded developments in Lilongwe: the National Stadium and the Henan Guoji Investment housing complex. The former is a venture to build a state-of-the-art stadium with capacity for 40,000 people. The project, based on an approximately $65m loan from China to Malawi, is expected to be in preparation of a Malawian bid to host the African Cup of Nations. The second project is a joint venture between the Malawi Housing Corporation and Chinese investment firm Henan Guoji Investments to build 7,500 housing units. The images below are from Lilongwe’s Area 49; it is unclear whether or not all the 7,500 houses are to be built in the same area, but what is blatantly clear is that the project, two years on, still has some ways to go. A big question mark is also who is going to live in the houses which are evidently beyond the financial reach of the country’s poor population.

chinese stadium 1

chinese stadium 2

chinese development 2

chinese development 3

CDC, invest in building affordable housing, not luxury projects.

Woman in front of her house in Lilongwe's Chinsapo settlement (2014).

Woman in front of her house in Lilongwe’s Chinsapo settlement (2014).

A couple of years ago I attended a real estate seminar held in Phnom Penh’s swanky new Sofitel hotel. I was anomaly among the participants – most people there were, predictably, working in Cambodia’s real estate sector, there was a smattering of journos, and then me, a land and housing rights activist. My reasoning for attending the workshop was to get a sense of how ‘the other side’ thinks. The other side, which in Phnom Penh has over the past few decades occasionally been directly responsible for, and has regularly indirectly benefited from, forced eviction of the growing city’s urban poor.

The seminar focused on both the real estate sector in Cambodia and Burma/Myanmar. Discussion on the latter focused on how investors could by-pass as much red tape and tax as possible to get in on the expanding market in Rangoon/Yangon. When talk turned to Cambodia, it was all about the need for malls, gated communities, and serviced apartments. Now granted, from what was presented there did seem to be a demand for these things. But a need? Unable to contain myself I stood up in a room of a few hundred realtors and asked exactly that question: Is there really a need for more malls and gated communities, and even if there is, is there not more of a need for affordable housing for the city’s working classes? The response I got was something along the lines of ‘we’re capitalists, we’re here to make money’. And that was that, no affordable housing projects on the horizon.

I was reminded of this episode by the recent controversy surrounding the British CDC development fund’s investments into what can be described as luxury projects in places like El Salvador, Kenya, India, and Mauritius. To make it clear: that’s investments that are classified as aid, and contribute to the UK’s spending of 0.7% of gross national income as aid.

It’s hard to see how the CDC can justify the investments. Claims that they contribute to the creation of jobs in the construction industry simply don’t cut it. Not unless there is a simultaneous, significant push for better working conditions for construction workers. Also, as Jonathan Glennie points out in The Guardian “the creation of jobs can’t be the only rationale for aid investments. When aid money is spent to support the private sector, it should go on projects that struggle to find alternative means of finance because of the perceived risks involved and the expectation of relatively low returns.”

Affordable housing is exactly such a sector. As I’ve written before, Lilongwe for example needs some 10,000 new dwelling units each year to keep up with demand and population growth. The majority of these need to be affordable to the country’s poor. In Phnom Penh too, there is a distinct need for affordable housing. Over the past two decades, over 10% of the city’s population has been displaced, usually to poorer futures at the city’s unserviced outskirts. Factory workers, who form the heart of the country’s economy, meanwhile flock into the city to live in highly inadequate, small rooms where landlords charge a premium for basic services like water and electricity.

With realtors being ‘capitalists’, few actors are stepping in to develop housing for the poor in Lilongwe and Phnom Penh. As such, these are exactly the kind of projects that struggle to find alternative means of finance that Glennie highlights. These are the ones the CDC and its likes should be funding if they want to make a real difference. And they come with construction jobs to boot.