President Lazarus Chakwera yesterday announced plans to transform National Economic Empowerment Fund (Neef) into a K1 trillion bank to empower women and youths to access capital.
Speaking during the official opening of the 35th Malawi International Trade Fair organised by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) at Chichiri Trade Fair Grounds in Blantyre, he said in the next five years, government will provide over K1 trillion in business capital to women and youths.
The President said Malawi Government has already engaged the African Development Bank (AfDB) for financial support.
He said: “Our job in government is to ensure that Malawians who want to venture into business have access to finance. This is why in the past four years, we have disbursed over K300 billion in loans to women and youths who have established 100 000 businesses.
“Our goal is to see to it that in the next five years, we disburse business capital of not less than K1 trillion to women and youths. We have already discussed with the AfDB for financial support to help us turn Neef into that bank.”
But former minister of Finance in the Democratic Progressive Party administration Joseph Mwanamvekha, an economist and former senior banker, said a government bank can succeed with a proper governance structure and a public-private partnership (PPP) arrangement.
He said a development bank concept can work provided there is good governance structure, right people with requisite qualifications and is private-sector driven.
Mwanamvekha, who served as chief executive officer and later board chairperson of the disposed of government wholly-owned Malawi Savings Bank (MSB), observed that with government ownership, senior appointments are politically-influenced, a development that scares away investors, leading to collapse.
He said: “We have failed to come up with a development bank for a long time because investors are not keen to invest as long as it is government-driven. Investors want to be assured that funds are managed properly.”
In a separate interview yesterday, Secretary to the Treasury (ST) Betchani Tchereni said Ministry of Finance and Economic Affairs has constantly engaged financial institutions, including AfDB to help marginalised groups, especially women, with access to bigger loans.
He said: “We are going to AfDB next week and this is one of the issues to be discussed. The technicalities of the nature of the bank will be determined once conditions are established.
“Establishment of a development bank has been on the cards for a long time now. We have been looking at either sourcing the resources locally or outside, but concessionary.”
On the PPP proposal, Tchereni said it takes long to materialise and that evidence has shown that government can do big things alone and come out profitable.
“It’s all about good governance,” he said.
On his part, Neef chief executive officer Humphrey Mdyetseni yesterday said while they welcome the development, the fund’s board was yet to discuss the proposal.
Neef, previously known as Malawi Enterprise Development Fund (Medf), was incorporated as a limited company by guarantee in 2014 and rebranded to Neef in September 2020.
From 2005 to 2020, about K20 billion was allocated to the institution then called Medf, a successor of the Malawi Rural Development Fund.
The loans, with an interest rate of two percent per month, range from K250 000 to K250 million, an improvement from the past when they ranged from K50 000 to K75 million with an interest of four percent per month.
The age bracket for beneficiaries was also revised to between 18 and 75 from the previous 18 to 60.
However, in April 2024, Treasury wrote off K6 billion of loans, a year after another K9 billion was written off in 2023.
In 2019, Malawi Government also rolled out the Malawi Agricultural and Industrial Investment Corporation (Maiic), the first-ever PPP development finance institution. Its shareholders comprise government, private sector and international investors and mandated to offer loans and lines of credit.
In Maiic, Malawi Government’s start-up or seed capital comprises K22 billion and another K13 billion from the proceeds of the sale of MSB and Indebank.
