While Chief Secretary to the Government George Mkondiwa and the Public Service Reforms Commission (PSRC) admit that political interference is a problem in State enterprises, the Ministry of Finance, Economic Planning and Development is defensive.
Treasury spokesperson Nations Msowoya, while saying government appreciates the challenge of political interference, specifically in loan administration, he also blamed what he called Malawians’ poor credit culture due to lack of national identity system, as the chief reason for the high default rates at government-supported micro-finance institutions.
“It is imperative to mention that almost all financial institutions in the country, including banks, are currently facing the challenge of poor loan repayment, which has over time led to loan provisions and consequently loan write- offs,” Msowoya said.
He added that Treasury has been investigating the collapse of companies, saying “like in the case of MDC, there was a forensic audit done commissioned by Treasury. For Malawi Rural Finance Company and Air Malawi there were audits that were conducted and their collapse cannot be linked to politics,” he said.
As for Medf, Msowoya said the fund will implement several measures to recover loans, including introduction of a Loan Recoveries Unit to claim all overdue and outstanding loans.
He also disclosed that Treasury in June 2015 sanctioned the Auditor General to investigate and establish the general administration of the Farm Input Loan Programme (Filp) and the audit is still in progress.
On political pressure, Msowoya said institutions have management and boards of directors and it is government’s expectation that if there is any political pressure, such governance structures should be able to manage.
Meanwhile, PSRC, established to facilitate reforms in government, said last week it was aware of political interference challenges.