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Lilongwe tops Neef loan disbursements

National Economic Empowerment Fund (Neef) loans disbursement figures show that Lilongwe  is dominating with the largest chunk totalling K5.2 billion out of K20.3 billion as at August 30 2021.

Lilongwe’s share of loan disbursement represents 25.6 percent of the money disbursed this far, with experts describing the K20.3 billion disbursed as critical to grow the economy from the grassroots level.

Youths establish small-scale businesses such as these ones using Neef loans

Other districts that have received over K1 billion include Blantyre, Mzimba, Mzuzu City, Karonga and Machinga while the rest of the districts received hundreds of millions with the least beneficiary districts being Neno at K52.7 million and Nsanje at K99.5 million.

In an interview on Tuesday, Neef acting chief executive officer Humphrey Mdyetseni said the outcome is based on the population size and demand for the loans in the districts that received more.

He said: “If you look at Lilongwe alone as a district, it has over 2.5 million people. Actually, this population is almost the population of seven districts. Apart from the demographics, another factor is the level of business demand and the proactiveness of people to look for loans.

“So, the population, business opportunities and people’s agitation to look for loans are trigger points leading to varied uptake of the loans.”

Mdyetseni said another factor is that in some districts, especially in the Southern Region, people defaulted on loan repayment and they cannot access new oans.

He said the rapid loan recoveries per district is also influencing rapid disbursement of the loans because when people finish paying back their loans in time, they qualify for another loan with increased amounts.

Mdyetseni explained that the districts that are impressive in repaying the loans include Nkhotakota, Dedza, Mangochi and Zomba.

Parliamentary Committee on Commissions, Statutory Corporations and State Enterprises deputy chairperson Bintony Kutsaira bemoaned that Neef is underfunded hence majority of the loan seekers are not being serviced.

He said: “In our engagement with Neef management, they have revealed that they need K30 billion to reach out to many people seeking loans out there. Government promised to capitalise the Neef with K75 billion and we will inquire about this in Parliament.

“The demand for loans is huge in all the constituencies nationwide, members of Parliament should take this as a serious issue and ensure Neef is adequately funded.”

Economist Milward Tobias, who is executive director of the Centre for Research and Consultancy, said a capital injection of K20 billion is significant and can make impact on livelihoods of beneficiaries and the economy. 

However, he said the extent to which the investment makes impact depends on the quality of businesses that beneficiaries do, saying that the country has had loan facilities for small businesses for a long time, but the impact is too negligible to be noticed.

Tobias said: “We need a mechanism to track that there is graduation to next level of business. How may small-scale businesses which are supported have graduated to medium and how many medium-scale businesses which are supposed to graduate to large-scale after some years.”

He said the status of small businesses should not be glorified as if that is the desired state. He said they must graduate.

In an interview, associate professor of economics at the Malawi University of Business and Applied Sciences Betchani Tchereni explained that equalisation through small-scale loan disbursement is hugely important to curb inequalities.

He said to assist the country to achieve self-sufficiency, everyone must be involved.

“When there are inequalities of opportunities, the development will be seen as skewed and this may increase conflicts and poverty in some areas may be higher than others,” Tchereni said.

Neef was last year rebranded from the Malawi Enterprises Development Fund to economically empower ordinary and under-served Malawians particularly women, youths, and persons with disabilities through the provision of quality, affordable and sustainable microfinance services.

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