Minister of Finance, Economic Planning and Development Goodall Gondwe says plans to turn Malawi Enterprise Development Fund (Medf) into an agriculture bank are at an advanced stage.
The development, according to the minister, comes against the background of financial records showing that Medf has been struggling to operate largely due to poor loan recovery.
Figures contained in the 2018 Malawi Government Annual Economic Report show that Medf has continued to post losses since its establishment in 2005.
In the 2016/17 financial year, Medf revenue reduced by 26 percent to K197.6 million from K1.5 billion the year before, according to the report.
In an interview yesterday, Gondwe said the losses have pushed government to turn Medf into an agriculture bank and progress in that direction is underway.
He said the injection of money into the fund is short-term to ensure it continues to disburse loans.
“We are aware of the loss-making records of Medf and we have been looking at it critically. It is against this that we have taken the move to turn it into an agriculture bank as a long-term solution.
“As a bank, it will have proper measures in place to continue providing financial needs to Malawians,” said Gondwe.
The minister could not disclose the timeframe for the transition of Medf to an agriculture bank.
He said the bank will work towards ensuring that farmers are accessing loans at softer interest rates.
But Medf is optimistic of turning the corner, owing to the issuance of a K3.8 billion promissory note by Treasury which it will use to issue new loans, according to government report.
Medf chief operations officer Dingiswayo Jere was yet to respond to an e-mailed questionnaire yesterday, but earlier said the entity has been struggling due to high default rates.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer Chancellor Kaferapanjira yesterday noted that being a public fund, it is subject to abuse.
He said the loans are normally given to groupsor individuals who are politically connected.
He said this is a shame as the country is missing opportunities to promote deserving enterprises which can add value to the economy.