The government has asked National Economic Empowerment Fund (Neef) to find other means of recovering about K9 billion in bad loans extended between 2012 and 2014.
The fund wanted the money to be written off because borrowers, most of whom are said to be politically-linked persons, cannot be traced.
In November last year, Neef, through its chief executive officer (CEO) Humphrey Mdyetseni, requested the Public Accounts Committee (Pac) of Parliament and the Ministry of Finance to have the K9bn, disbursed by its predecessor Malawi Enterprise Development Fund (Medef), erased from the books.
In an interview, Neef Public Relations Officer Whyghtone Kapasule said the Ministry of Finance said the matter has to be discussed among Cabinet members, further saying Neef was asked to pursue other means of collecting the loans.
“At the time we presented the matter to Parliament, we had also submitted the request to government through the line ministry, in this case Ministry of Finance. This is the process according to statutes. They are handling it now.
“The process is long as the law requires that it [the issue] goes to the Cabinet. In the meantime, Neef will still pursue means of recovery from clients as the write-off did not entail debt cancellation or pardon of defaulters,” Kapasule said.
Pac Chairperson Shadric Namalomba said they instructed Neef to track those that obtained the loans.
“We told them that they did not have the powers to write off that amount. We directed them to write the Treasury and what the Treasury has done, asking them to find means of collecting that money, is the right thing. We cannot be donating public money in that manner. What they have done is a good thing. Neef should have records of individuals that borrowed the money; as such, they must follow up [on the issue],” he said.
Treasury spokesperson Taurai Banda asked for more time.
In 2005, the Malawi Government obtained a loan from the Indian Export and Import Bank to procure equipment for Medef to facilitate value addition for youth start-ups.
It later transpired that the equipment was mis-procured.
In November 2020, an audit report by Central Internal Audit Unit exposed that Neef loan application and assessment procedures were weak and that K64 million was disbursed to beneficiaries that could not be traced by the audit team.
Meanwhile, as of May 2022, Neef has disbursed about K34 billion in loans.