By Wezzie Gausi:
State-owned financial lender, National Economic Empowerment Fund (Neef), has projected a record profit of K9.3 billion by March 2025.
The profit projection is contained in the 2025 Malawi Government Annual Economic Report which was released on Friday.
The report links the growth to the Targeted Enhanced Loan Recoveries Programme which was introduced in 2022-23 and is said to have improved the amount of loans recovered and financial stability.
The programme focused on recovering loans in arrears for over 90 days, increasing Neef’s loan collection rate from 73 percent in 2023-24 to 79 percent by September 2024.
The report says the improvement has strengthened Neef’s financial position, enabling it to disburse an additional K31.89 billion in loans over the period.
It says as of September 30 2024, Neef recorded a profit-after-tax of K1.7 billion, nearly doubling K814 million reported in the previous financial year.
According to the report, Neef’s gross loan portfolio grew by 23 percent, rising from K47.7 billion in March 2024 to K61.2 billion in September 2024.
“This growth was further supported by principal loan repayments totalling K83.78 billion, with an average collection rate of 81.6 percent, surpassing the regulatory benchmark of 80 percent.
“Neef’s liquidity position also significantly improved, with the current ratio surging from 49.2:1 in September 2023 to a projected 169.28:1 by March 2025,” the Annual Economic Report reads.
It has attributed the liquidity boost to a government equity injection, which was reinvested into the loan portfolio to ensure continued lending.
Economist Velli Nyirongo has described Neef’s financial transformation as a “milestone in public sector financial management”, noting that many government-backed financial institutions struggle with loan recoveries and operational efficiency.
“If these trends continue, Neef could emerge as a benchmark for sustainable microfinance institutions in Malawi. However, ensuring long-term profitability will require a delicate balance between aggressive loan recovery strategies and maintaining accessibility for small-scale entrepreneurs, who are the fund’s primary beneficiaries,” Nyirongo said.
Centre for Social Accountability and Transparency Executive Director Willy Kambwandira also welcomed Neef’s financial turnaround, given the institution’s history of losses.
“The fortune turnaround is obviously significant and good news considering that Neef has been registering losses over the past years.
“If this continues, the fund will be sustainable. We must also applaud Neef for putting in place strong loan recovery measures. Moving forward, our expectation is that more Malawians will be able to access loans from Neef,” Kambwandira said.
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