Economist says K37bn capital injection to boost businesses
Economist Milward Tobias says the injection of K37 billion into the economy through National Economic Empowerment Fund (Neef) loan disbursements can help to cushion businesses from the harsh economic environment.
He was reacting to the announcement by Neef during a news conference in Lilongwe on Monday that between February 2021 and June 2022, the fund has disbursed soft loans amounting to K36.8 billion to 108 000 people.
Tobias, who is Centre for Research and Consultancy executive director, said this capital injection can help to cushion businesses that would have collapsed.
He said: “This is good news economically. It means that there has been a capital injection of K37 billion to support businesses. Given the effects of Covid-19 on businesses, the capital injection certainly is a cushion to businesses.
“However, the figures suggest an average loan amount of approximately K336 000, which means the loans are tilted towards micro-scale enterprises most of whom just buy and sell rather than doing substantial investment.”
Tobias said if properly planned and executed, Neef can anchor many industries.
Neef chief executive officer Humphrey Mdyetseni said during the news conference that they increased the minimum loan amount to K250 000 from K50 000.
He said the maximum loan amount was also increased to K250 million from the previous K75 million to cater for the establishment of micro industries.
The disbursements between February 2021 and June 2022 at K36.8 billion are more than the K12 billion disbursed by the predecessor organisation, Malawi Enterprise Development Fund (Medf) in six years.
Said Mdyetseni: “The equitable disbursement of loans reaching every corner of the country underscores the inclusiveness that has been taken this time around.
“We believe that when we disburse up to K75 billion in the 2023-24 fiscal year, nearly 300 000 Malawians will have been covered. This, however, is not a satisfactory target on our part as we strive to exceed the K75 billion depending on increased revenue mobilisation.”
He also said Neef has registered a 72 percent collection rate for the loans disbursed in the past six months in contrast to Medf which achieved at 21 percent collection rate.
Neef has disbursed K16.2 billion to 52 417 youths, K14.5 billion to 44 584 women and K5.8 billion to 10 533 men.
