Medf threatens to take legal action against defaulters
The Malawi Enterprise Development Fund (Medf) has threatened to take legal action against individuals and groups who have failed to pay back outstanding loan balances from 2005 to date.
Medf has since given up to Tuesday (May 31) for all defaulters to go to their nearest offices and pay off their outstanding loan balances or verify the balances and agree on payment structures.
Medf chief operations manager Dingiswayo Jere said Medf is owed up to K7 billion making it difficult for the revolving fund to benefit others.
Established by the Malawi government as Malawi Rural Development Fund (Mardef) in 2005 through a resolution of Parliament, the revolving loan fund aims to benefit marginalised entrepreneurs by giving them an opportunity to obtain loans for their economic empowerment and for the social economic development of the country.
Several loan programmes including Youth Development Fund (YEDF), Farm Input Loans Programme (FILP), Youth Employment Loans (Meddle East) were run using the fund.
While not ruling out political meddling as one of the contributing factors to defaulting, Jere faulted the old system of disbursing the loans saying it lacked structures that would enable smooth recovery of the loans.
Said Jere: “At first government was disbursing these loans through projects such as Mardef and Yedf and when the projects came to an end there was no one to follow up on the loans since there were to collaterals or lawyers involved.
But according to Jere, now that Medf is operating under its own mandate as a company with the help of Reserve Bank of Malawi (RBM) and Ministry of Finance, Economic Planning and Development, strategies have been put in place including legal backing to make sure that every person who borrows money pays back within the stipulated timeframe.
Jere said using the data that they have, Medf will trace all defaulters through their names, addresses or even witnesses.
Medf which was established as a company in 2014 has already given loans amounting to K200 million (about $315 400) to agribusiness groups and smallholder farmers.
According to Jere 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.
In an earlier interview with The Nation, RBM spokesperson Mbane Ngwira confirmed that they are working with Medf, saying as a regulator they register all microfinance institutions in the country.
