Rédaction Africa Links 24 with Times News
Published on 2024-04-11 07:50:53
The government has recently made the controversial decision to write off K6 billion worth of loans that were borrowed from the National Economic Empowerment Fund (Neef). This move has raised concerns among analysts, who suspect that the funds may have ended up in the hands of politically connected individuals.
This development follows a similar decision in 2023, where loans totaling K9 billion that were disbursed by Neef’s predecessor, the Malawi Enterprise Development Fund, were also written off. Sources reveal that the Cabinet met recently to discuss and approve the write-off of the K6 billion loans.
Neef Chief Executive Officer Humphrey Mdyetseni declined to comment on the matter and directed inquiries to the Secretary to the Treasury, Betchani Tchereni. Similarly, Office of the President and Cabinet (OPC) spokesperson Robert Kalindiza also referred questions to the Treasury for clarification on the Cabinet’s decision.
Tchereni confirmed that he has been dealing with the matter and is in the process of gathering more information from stakeholders. However, he suggested that the OPC would be in a better position to provide detailed information regarding the issue.
Despite the government’s decision, economists and stakeholders have expressed their disapproval. Scotland-based economist Velli Nyirongo raised concerns about ineffective lending practices at Neef, suggesting that loans may be granted to individuals who are unlikely to repay them. He also highlighted the lack of proper credit checks and potential political influence in the loan approval process as major issues.
Ferdinand Mchacha, a Business and Finance lecturer at Catholic University of Malawi, pointed out governance challenges at Neef, emphasizing the need to prevent political interference in loan disbursements and recovery processes. He recommended restructuring Neef’s operations or considering disbursing loans through commercial banks with better debt management systems.
Willy Kambwandira, Executive Director of the Centre for Social Accountability and Transparency, called for transparency in the criteria used to write off the K6 billion loans. He warned that without proper justification, taxpayers’ money could be exposed to fraud, setting a dangerous precedent for future loan repayments.
Kambwandira also criticized the politicization of Neef loans, suggesting that beneficiaries are often chosen based on political affiliations rather than merit. He highlighted the need for accountability and urged the government to clarify whether these loans are grants or actual loans.
In a separate development, the Treasury previously ranked Neef among the worst-performing State-owned enterprises, while other financial sector players were reporting significant profits. This disparity has raised further questions about the effectiveness and transparency of Neef’s operations.
Overall, the decision to write off K6 billion worth of loans from Neef has sparked criticism from economists and stakeholders, highlighting concerns about governance, transparency, and political influence in the loan approval process. Moving forward, there is a growing call for reforms to ensure that public funds are utilized effectively and responsibly to benefit the intended recipients.
Read the original article on The Times
