Tussle over MEDF loans

A battle for supremacy over the Malawi Enterprise Development Fund (Medf) loan facility has ensued between the two main Tonse Alliance partners—Malawi Congress Party (MCP) and UTM Party.

It all started at Mlare in Karonga Central on Saturday when MCP second vice-president Harry Mkandawire declared that MCP supporters will be prioritised in the Medf loans disbursement because President Lazarus Chakwera is the party’s leader.

Said Mkandawire: “The first people to obtain those loans [will be] members of MCP. The first people to get the loans will be you, the children of President Lazarus Chakwera, because Chakwera is the President. It is his face that we saw on the ballot paper and he was the one sworn in as President. Do you really think he can forsake his children?

He added: “Let me say this, I have heard stories about forms, but who is the President now? Can you have two Presidents at a time? The forms which were given out, I want you to go and tell them that Mkandawire says they are fake.”

In an interview yesterday, Mkandawire said he was reacting to UTM Party secretary general Patricia Kaliati’s visit earlier in the week to the district’s Medf offices to collect loan forms. He said Kaliati was accompanied by some UTM Party women during the visit.

He said he received a report from local leaders and his pronouncement at Mlare was made to “pacify the situation”, considering that other parties may have been aggrieved by Kaliati’s conduct.

But Kaliati has since distanced herself from the claims that she helped UTM Party women to obtain loan forms in the district.

Kaliati, who is also Minister of Gender, Community Development and Social Welfare, and whose action was condemned by the Karonga Business Community in a memo dated September 3, in an interview claimed Mkandawire had the wrong information.

She said: “When I go out to work, I am followed by all members of the Tonse Alliance. The people I met in Karonga were not just UTM Party members. Maybe Mkandawire had wrong information. I didn’t distribute any forms.

“When people have wrong information, it is difficult for them to understand the situation on the ground. In Karonga, I just met the women, it had nothing to do with Medf forms. I was not party to that.”

Kaliati could not state if the events in Karonga signal the beginning of squabbles between UTM Party and MCP, saying: “I don’t know anything on that.”

Meanwhile, University of Malawi’s Chancellor College political science lecturer Mustapha Hussein has said the use of Medf for political gain was regrettable and unfortunate.

Medf is the successor to Malawi Enterprise Development Fund (Mardef) 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.

Hussein also pointed to a possible conflict within the Tonse partnership.

He said: “There is ambiguity of the partnership relating to how these parties should conduct themselves when there is competition. Since both parties are in government, if left unchecked, this rivalry may bring confusion which can easily turn into conflict at the lower level.

“What has happened is an indication of the need to do away with some of undemocratic tendencies, politicising public resources, using them to entice voters to support them. They must avoid the use of public resources for partisan gain. Party leaders must clearly tell their followers the type of relationship that the alliance is about and convince them how healthy such a pact is.”

On his part, Centre for Democracy and Economic Development Initiatives executive director Sylvester Namiwa in a statement observed that the current squabbles predict a ticking bomb between MCP and UTM Party.

He accused Mkandawire of repeating mistakes made by the previous government by sidelining those in opposition in the sharing of public resources.

Reads the statement in part: “We do not only find Mr. Mkandawire’s thinking retrogressive, but also very careless, considering that not long-ago government sent on forced leave Medf senior management team for purportedly politicising the loan disbursement process.

“They should also be reminded that Malawians voted for the Tonse Alliance, a coalition of nine political parties, and not MCP alone. It is, therefore, not wise for any of the leaders of the nine political parties to take to the political podium to claim victory in the June 23 Fresh Presidential Elections as a ruling party.”

The Karonga Business Community, on the other hand, said Kaliati’s alleged conduct in prioritising UTM Party women on Medf loans was regrettable.

In a letter dated September 3 2020 signed by chairperson Wavisanga Silungwe, the community says Medf loans are for all Malawians, not just UTM Party members, and that names of beneficiaries have to be obtained through established structures and not parties.

In the Provisional Budget presented in July this year, Finance Minister Felix Mlusu announced that the Medf has been increased from K15 billion to K40 billion, stating that it will be increased further to K75  billion.

With the increased allocation, the minister said government is expected to support the creation of 200 000 enterprises run by women and the youth which will in turn create over 600 000 jobs.

“Government will also review the implementation of Medf loans to ensure that they are depoliticised,” he pledged.

Mlusu’s announcement came amid reports that the loans were previously only given to members of former governing Democratic Progressive Party during former president Peter Mutharika’s rule.

In April this year, Medf chief executive officer Mervis Mangulenje told the Budget and Finance Committee of Parliament that Medf will not be able to recover about K8.9 billion worth of loans issued by its predecessor Mardef in 2015.

Medf is a branded version of two former State-owned enterprises, namely Mardef and Yedef.

Medf was formed by an Act of Parliament in February 2014 as the only microfinance limited company owned by government.

In 2016, government said it had given up on reclaiming over K1 billion it loaned out to some youths through Yedef for business start-ups. Capital Hill wrote off the loans that critics said were largely given based on political leanings rather than sound business cases.

The nine-party Tonse Alliance, with Chakwera as torchbearer and UTM Party’s Saulos Chilima as runningmate, won the June 23 2020 Fresh Presidential Election, defeating Mutharika.

The two parties have in recent weeks embarked on strengthening their bases, with each welcoming councillors and legislators into their folds, predicting an interesting situation prior to the 2025 polls.