Neef struggles to recover loans

Government-owned microfinance firm National Economic Empowerment Fund (Neef) has admitted that it is struggling to recover loans disbursed last year under the Democratic Progressive Party administration.

About K6.8 billion was disbursed nationwide when Neef was operating as Malawi Enterprise Development Fund.

In response to a questionnaire, as to how they have been enforcing repayments, Neef public relations and marketing officer Whytone Kapasule said few beneficiaries have paid back.

“We disbursed in the region of K6.8 billion to a large number of beneficiaries. While the majority of the loans are yet to be recovered, there are some cases of excellent repayments in selected areas and groups,” he said.

Kapasule, however, could not disclose how much has been recovered, saying such an assessment was still underway.

“At the moment, we are still carrying out deep-dive reconciliation of the loans against the clients’ listings. It is anticipated that this exercise will be through in a month’s time. The fund will provide updates regarding the enquiry,” he said.

The recovery revelation comes after an audit commissioned by Treasury in July 2020 exposed gross abuse of funds through ghost beneficiaries and misallocations.

After the Tonse Alliance administration was inaugurated last June, loan disbursements were suspended to pave the way for Neef restructuring.

Meanwhile, Kapasule has said they expect to resume loan disbursements at the end of this month.

“We are full-throttle in the finalisation of recruitment of groups to access the loans. We are set to finalise the processing of the applications in readiness for the first batch of clients to get their loans by of January,” he said.

Centre for Social Accountability and Transparency (Csat) has since urged government to set up mechanisms that detect fraud as quickly as possible.

Said Csat executive director Willy Kambwandira: “Neef should put in place real-time means and mechanisms of detecting fraud and malpractices in the disbursement of the loans.

“Added to that, they should set up a responsive and robust whistle-blowing mechanism to ensure transparency and accountability in the disbursement of the loans.”

In the 2020/21 National Budget, government has injected K75 billion capital for loan disbursements to small businesses to spur growth of medium and small-scale businesses.

According to Neef, the loans have mainly targeted women and youths. The loan products targeting groups have a monthly 2.5 percent interest, 3.5 percent processing fee and 1.5 percent insurance.

Meanwhile, Malawi Congress Party (MCP) has urged women in the country to join business groups to enable them benefit from Neef loans.

MCP national director of women Patricia Mkanda said this yesterday when she met MCP women at the party’s Southern Region headquarters in Blantyre.

She said the party will assist the women by engaging consultants to train them, to ensure that they benefit from the loans.

“I expect that at the end of the day, they [women] will be able to go back and continue forming groups as well as working on business plans,” said Mkanda.

She expressed optimism that the government-owned microfinance facility programme will also help to unite women as they will be doing business together on the other hand exchanging business ideas.

In as separate interview, MCP regional chairperson for the South Flossie Lombola said Mkanda’s visit to the South has given the party’s women confidence that they will benefit from the loans.

“We are optimistic that if women assess the loans, they will help to boost the economic development of the country as they are the most active business people in the country,” she said.

The meeting was Mkanda’s first since the Tonse Alliance administration came into power in the June 23 2020 court-sanctioned fresh presidential election.

An independent audit probe which Secretary to the Treasury commissioned in July 2020 exposed gross abuse of funds in Neef.