| Summary: | This research study examined the implications of adaptations in organisational capacity and cultures of microfinance organisations (MFOs) in Malawi. It was conducted on the premise of three main turning points which impacted on the micro finance environment: ensuing macro-economic reforms following the adoption Structural Adjustment Programmes in 1981; political changes following the adoption of a multi-party democracy in 1993/94, and a new global paradigm shift towards commercialisation of microfinance. A case study approach was used to study three different types of MFOs: a Government owned company - the Malawi Rural Finance Company (MRFC) originally the Smallholder Agricultural Credit Administration (SACA), an NGO - FINCA Malawi and a member owned credit union - the Malawi Union of Savings and Credit Co-operatives (MUSCCO). Using the concept of the cultural web, the study analysed the paradigm shift towards commercialisation among the three case study MFOs and its impact on micro and small enterprises (MSEs). Changes in the macro-economic and political environment manifested by a competitive market and a pluralist political system triggered the dissolution of SACA due to its inefficiency, mismanagement and heavy politicisation. This led to the formation of MRFC. Whereas SACA pursued a 'welfarist' approach to financial service prOVISIon, MRFC adopted an 'institutionist' approach characterised by commercialisation of financial services. FINCA Malawi also pursued an 'institutionist' approach and continued to promote the "Village Banking" (VB) model. MUSCCO however, combined principles of both the 'welfarist' and 'institutionist' approaches. The study concludes with some learning points m the three MFOs' differential adaptations and commercialisation process: a government owned MFO shook off the image of its heavily politicised predecessor; an NGO operated as a "parallel" system to reach out to poor women, and a member owned MFO, coped with the changing environment by combining social and business principles. Therefore, provided there is a right balance, the culture of service and understanding of the poor, and banking can be complementary to each other for successful provision of microfinance services for the poor. However, the way this balance can be achieved may vary significantly according to the type of MFO and the context within which it is operating.
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