President Lazarus Chakwera has expressed displeasure with the lack of progress and innovation in the disbursement of loans through the National Economic Empowerment Fund (Neef).
He was speaking in Lilongwe on Monday when he officially opened the Women in Business Summit which aimed at discussing how women can access affordable capital and enhance their participation in government procurement processes.
Government restructured and rebranded the Malawi Enterprise Development Fund (Medf) and created Neef to offer loans mainly to women and the youth.
Chakwera said he has received complaints from businesswomen and the youth from across the country about how prohibitive the loan scheme is.
Said the President: “We created Neef to be a bridge, not a barrier. I expect the Minister of Finance to work with Neef and the local banks on these issues and devise solutions, including new and sustainable ways of funding the programme.
“I will not abide by the notion of going into the next fiscal year with the problems in the design of the Neef programme that people are complaining about this year.”
Chakwera said the issues must be resolved to “fertilise Malawi’s entrepreneurial soil for businesses to thrive”, especially in view of the way business has suffered under Covid-19 pandemic conditions.
He said the purpose of restructuring and rebranding the microfinance institution was to depoliticise it by ensuring sound management.
Last year during the Karonga Central by-election campaign, the two key Tonse Alliance partners, UTM Party and Malawi Congress Party (MCP), were at loggerheads as they tussled following their respective efforts to prioritise their members in loans disbursement.
UTM Party secretary general Patricia Kaliati was on record as having promised Neef loans to Karonga business groups while MCP second vice-president Harry Mkandawire countered Kaliati’s move by promising MCP followers that they would be prioritised.
Apart from the Karonga incident, there have also been reports of groups of party zealots from the alliance partners formed to benefit from the loans.
But Chakwera yesterday said he has noted with grave concern that among the Tonse Alliance partners, there are people conspiring to politicise the loans by using them as a way of rewarding party followers.
He condemned the practice as unsustainable and toxic, saying the prosperity he wants to see Neef facilitate is national, not partisan.
In the 2020/21 National Budget, government has injected K75 billion as capital for loan disbursements to small businesses to spur the growth of medium and small-scale businesses.
But the National Association of Business Women (Nabw) chief executive officer Barbara Banda said women are struggling to access the loans because conditions are not favourable.
She called for government’s consideration to support women in business by making access to capital cheaper, and softening loan access restrictions to spur economic growth.
Neef public relations and marketing officer Whytone Kapasule was not available yesterday to comment on the development.
However, recently he said the current rates and tariffs were set after taking into account the target market and the desire by the shareholders to have the fund as a sustainable entity.
Neef is currently struggling to recover about K6.8 billion loans that groups and individuals obtained from the institution when it operated as Medf.
A special audit report at Neef exposed deep-rooted rot where officers gave loans to wives, ex-wives, relatives and friends.
The investigation conducted from August 3 2020 to September 25 2020 by the government’s Central Internal Audit Unit, uncovered what the report called “a criminal syndicate” involving officers from various departments at the head office in Lilongwe and Liwonde branch.
At least 21 members of staff implicated in the report at Neef were arrested and are out on bail.