Malawi Enterprise Development Company (Medc), formerly Malawi Enterprise Development Fund (Medf), is owed about K67 billion (about $106million) by people the taxpayer- funded lending institution cannot trace.
Medc chief operating officer Dingiswayo Jere confirmed in an interview last week that most of the borrowers cannot be traced because some died, but said they will not write-off the loans.
Medf was established by government to lend money to small-scale entrepreneurs who were finding it hard to borrow from mainstream commercial banks where interest rates are hovering at around 40 percent.
Jere, a former board chairperson of Malawi Energy Regulatory Authority (Mera), however, said they expect the amount of bad debts to go down once reconciliation of the books is done.
He said: “According to what I found when getting into office in December last year, I think we are being owed K67 billion. But now, we have embarked on a reconciliation exercise of books and we expect that the figure will go down.
“We will not write-off any loan and hopefully when the reconciliation is through we will be owed between K6 billion and K7 billion.”
Jere said the company is now putting in place strategies to ensure that every person who borrows money pays back within the stipulated timeframe.
“Initially, loans were given to people looking at their political party affiliations, but since we are a limited company this will no longer be the case.
“Some of the loans date back to 2008 and it is difficult to trace those who borrowed because they either died or their addresses cannot be traced,” he said.
Jere hopes things will improve because they will be operating under their own mandate as a company with the help of Reserve Bank of Malawi (RBM) and Ministry of Finance, Economic Planning and Development.
He also said Medc has already given loans amounting to K200 million (about $315 400) to agribusiness groups and smallholder farmers.
Jere said working with farmers has proven to be easy because they operate in groups and are encouraged to grow specific types of crops such as legumes.
RBM spokesperson Mbane Ngwira confirmed in an interview that they are working with Medc, saying as a regulator they register all microfinance institutions in the country.
When Mardef was introduced some years back, one of its objectives was to help those who could not easily access financing to start and grow businesses, but along the way political party operatives were beneficiaries; hence, the huge accumulation of bad loans.