President Lazarus Chakwera has criticised Malawians who default on government orchestrated loans, saying the malpractice slows down economic development in the country.
He made the sentiments yesterday in Balaka during the launch of the second phase of the National Economic Empowerment Fund (Neef) loans disbursement pegged at K350 billion to be distributed to over 300 000 people in the country.
The sentiments come amid recent reports that Neef is yet to recover K20 billion and there is little hope on its recovery.
In the first phase, Neef disbursed over K100 billion against the targeted K75 billion to at least 175 000 people.
According to Neef data, the repayment rate was around 46 to 50 percent when the lender rebranded from Malawi Enterprises Development Fund (Medef) in 2020. But as of yesterday, repayment rate has hit 80 percent.
However, Chakwera said government is purposely giving out the loans to Malawians that have no access to loans from money lending institutions to set up their small-scale businesses.
Said the President: “It is through these small businesses that the country can ably achieve socio-economic development.”
Chakwera further called on business owners benefiting from the scheme to inspire others on the benefits the loans have towards the attainment of the Malawi 2063.
“Don’t speak negatively about the loans if many Malawians are to be economically empowered,” he said.
Neef board chairperson Jephter Mtema said they have beat the first phase’s target due to the integrity of financers, stakeholders and some clients in the repayment of loans in time.
He cited the example where they disbursed the funds to 175 000 Malawians that recruited at least 350 000 people in their businesses.
“These clients are contributing to access to financing by most underprivileged citizens in the country,” said Mtema.
Earlier, Neef chief executive officer Humphrey Mdyetseni said the fund’s five-year strategic plan, also launched yesterday, is expected to improve the fund’s performance on both recoveries and disbursement.
“In the strategic plan, our target was to create in excess of 2 million jobs through the programme, having already created over 500 000 to date and to contribute to the middle-income status of Malawians that benefit from the programme,” he said.
Mdyetseni said the milestone celebrated yesterday was reached in April this year, but the celebrations were shifted to this month.
“So far, Neef has disbursed over K120 billion to more than 175 000 clients with 80 percent repayment rate.”
Without giving statistics, he said the Central West Region has a huge demand for the loans due to the high level of economic activities in the region which has the country’s capital city.
“There is a high rate of urban migration into Lilongwe City as can be seen from the rate at which it is expanding,” said Mdyetseni.
Minister of Finance and Economic Affairs Simplex Chithyola Banda lauded Neef for the achievement and said it was government’s expectation that jobs will be created through the loans.
He said: “The disbursement and collection have been impressive so far.”
Balaka West legislator Bertha Ndebele, despite commending Neef’s impact in agribusiness development in the country stressed that poor road networks are affecting businesses.
She cited the example of the Chingeni-Liwonde as well as Balaka-Utale roads in Balaka District, saying they are impassable which contributes to damaging of farm products and other merchandise in transit to markets.
In an earlier interview, the Catholic Commission for Justice and Peace national coordinator Boniface Chibwana said Neef’s identification process still remains faulty and called on the lender to be serious on recovering the funds.
“We need to improve on identification then train these people on how to do business and repayment of loans,” he said.
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