ASSESSING THE SUSTAINABILITY OF FINCA’s MICROFINANCE SUPPORT TO 265 ENERGIES: A SMALL-SCALE ENTERPRISE IN LILONGWE

Abstract

This study examines the contribution of microfinance services provided by FINCA Malawi to the sustainability of small-scale businesses, with specific reference to 256 Energies, a renewable energy enterprise operating in Lilongwe District. Small-scale businesses play a vital role in employment creation and economic development in Malawi; however, limited access to finance remains a major constraint to their growth and long-term sustainability. Microfinance institutions have emerged as key providers of financial services to enterprises that are often excluded from the formal banking sector, yet empirical evidence on their sustainability impact remains mixed.

The study adopted a mixed-methods research design, integrating both quantitative and qualitative approaches to obtain comprehensive insights. Quantitative data were collected using structured questionnaires administered to employees and management of 256 Energies, while qualitative data were obtained through semi-structured interviews with key informants. The collected data were analyzed using descriptive statistics and thematic analysis. The study was guided by Financial Intermediation Theory and the Sustainable Livelihoods Framework to explain the relationship between microfinance services and business sustainability.

The findings reveal that microfinance support from FINCA Malawi significantly improved access to working capital, cash flow management, revenue generation, and operational efficiency at 256 Energies. However, challenges such as high interest rates, strict repayment schedules, and limited financial literacy were identified as constraints to long-term sustainability. The study concludes that microfinance institutions can effectively promote small-scale business sustainability when financial services are complemented by flexible loan terms, continuous monitoring, and financial literacy training. The study recommends policy interventions aimed at strengthening microfinance delivery to enhance sustainable enterprise growth in Malawi.