Government has told National Economic Empowerment Fund (Neef) to find other means to recover about K9 billion in bad loans extended between 2012 and 2014 which they wanted to be written off because the borrowers, mostly politically-linked persons, cannot be traced.
In November last year, Neef through its Chief Executive Officer (CEO) Humphrey Mdyetseni made the request to the Public Accounts Committee (Pac) and the Ministry of Finance to have the K9bn disbursed by its predecessor Malawi Enterprise Development Fund (Medef) written off.
Neef Public Relations Officer Whyghote Kapasule told Malawi News this week that 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 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,” he said.
Pac Chairperson Shadrec Namalomba said they instructed Neef to track those that obtained the loans and that write off was not an option.
“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 so they must follow up,” he said.
Treasury spokesperson Taurai Banda asked for more time.
Last year, Mdyetseni said most of the beneficiaries before Neef were not creditworthy, claiming they were not adequately assessed and given the necessary guidelines to service the loans.
“As a consequence, we have had so many delinquent loans, in the process, eroding the capital base of the institution,” he said.
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. However, it later transpired that the equipment was mis-procured.
Mdyetseni said the equipment was distributed by politicians to undeserving people who were not even registered by Medef.
He said that in the process the equipment, including goats and cows distributed during the 2014 elections campaign, disappeared.
In October last year, the Office of Ombudsman said it was investigating allegations that Neef flouted loan procedures every now and then.
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.
Neef says as of May 2022 Neef has disbursed about K34 billion in loans.