The Malawi Enterprise Development Fund (Medf) continues to report a negative financial performance to poor loan recoveries, Treasury has said.
According to published figures from the Ministry of Finance, Economic Planning and Development 2018 Annual Economic Report, in the 2016/17 financial year, total revenues reduced by 26 percent to K197.6 million from K1.5 billion in 2015/16.
This resulted in loss after tax of K962.0 million compared to a loss after tax of K114.6 in 2015/16.
As at December 2017, the Medf continued to report losses with a loss after tax of K196.8 million.
“These deficits were a result of a number of poor loan recoveries arising from loan recipients viewing the loans as grants and therefore not repaying them,” reads the report in part.
This comes against the backdrop of reports that the fund has been struggling to operate as a loan revolving fund due to the high default rates since its establishment in 2005.
Earlier, Medf chief operations officer Dingiswayo Jere said Medf has been struggling due to the high default rates.
He said the fund is looking for not less than K4 billion to bounce back.
“The process is ongoing and the documents have been submitted and exchanged with the Ministry of Finance,” Jere said.
Meanwhile, Treasury said plans to recapitalise the company to enable it to continue disbursing loans were underway.
Medf is the successor to Malawi Enterprise Development Fund (Madef) and Youth Enterprise Development Fund (Yedef) and Farm Input Loan Programme which were established to target non-bankable individuals who could not access bank loans without collateral.
However, the micro-finance institutions were highly abused by politically-linked individuals who obtained loans and did not repay.