Fund increases loans portfolio for councils

The Development Fund for Local Authorities (Dfla) says it has increased its loan portfolio from K220 million in 2017 to the current K1.4 billion and urged councils to utilise the promotion for socio-economic development.

Dfla, which lends investment finance to local councils, said its loans are key in meeting capital expenditure.

Speaking during an interactive meeting with district commissioners  (DCs)and directors of finance from the Southern Region, Dfla chief executive officer Cydex Makunje said the loans, offered at policy rate level, are for both infrastructure and non-infrastructure commercial projects as well as bridge financing.

He said the loans are also meant to cater for any other purposes decided upon by the Trustees as being appropriate to the advancement of local authorities to manage urban growth and development.

Said Makunje: “This is an in-house arrangement under the Ministry of Local Government to finance councils for local development. More than 50 percent of the councils haven’t applied for loans. Only three, Blantyre City Council, Thyolo and Luchenza applied.

“We think that due to transfers, some of the DCs, especially those that have just been promoted, don’t know. So we want them to know that there is money for the people that are waiting for them. We are looking at bankable projects that can generate revenue for them.”

On his part, Dfla board member Ronald Mtonga said some councils are not aware of the fund; hence, the need for the engagement.

Phalombe District Commissioner Douglas Moffat said while the council has not yet benefitted from the fund, they are contemplating on seeking funding for their projects, which include multi-story bulding to house government offices and street lights.

“So, this source of funding is critical to ensure that we achieve development,” he said.

Among others, Dfla loans have a maximum grace period of six months for loan repayment, a minimum if 1.5 percent of the loan amount as a processing fee, gets collateral from the funded project and property with title deeds and has no loan limits but based on the capacity of the council to repay.