The Malawi Rural Development Fund (Mardef) has paid K61.2 million (about $153 000) for warehousing equipment wrongly procured for the Youth Enterprise Development Fund (Yedef), The Nation has learnt.
This figure is bound to rise to K69.2 million by the end of April or K75.2 million (about $188 000) by end of July, when the new financial year begins, based on the K2 million (about $5 000) monthly, warehouse rental that Mardef pays for the tools.
The K61.2 million has accumulated over the three years Mardef has kept the equipment meant to have been distributed to youth clubs across the country under the late President Bingu wa Mutharika dream project for the youth.
According to Secretary for Sports and Youth Development Alex Mseka, the problem was that Treasury procured wrong equipment, not what “we specified following our needs assessment.”
This was also corroborated by Malawi’s Youth Minister Enock Chihana who said equipment, such as the briquette making machine, is “too huge for the kind of youth we targeted.”
The machines also came in with huge power generators as they were meant to be used in rural growth centres.
According to Mardef company secretary John Chilomo, the organisation pays K2 million (about $5 000) on average per month for warehousing the equipment.
“Cumulative expenditure for the past three years to December 2012 was K61.2 million,” said Chilomo.
To end April, therefore, Mardef will have paid roughly K69.2 million for the equipment the ministry now plans to dispose of.
The equipment was supplied by Apollo International, an Indian company operating in the country, through an agent, according to Treasury spokesperson Nations Msowoya.
Yedef is so broke
Meanwhile, Yedef is so broke that the Ministry of Sports and Youth Development is pleading for an extra K3 billion (about $7.5m) bailout from Treasury for the project.
The fund, largely politicised by the Democratic Progressive Party (DPP) regime, spent the initial K3 billion between 2009 (the launch year) and 2012 when the current regime suspended it.
The fund has so far disbursed K1.6 billion (about $4m) in loans most of which are not being repaid, according to Chihana and Mseka.
During separate interviews last week, the two officials also confirmed that a further K450 million was approved for release during the period and that supposed beneficiaries were trained.
The fund’s guidelines dictate that 70 percent (K2.1 billion) of the K3 billion fund is supposed to directly finance the purchasing of equipment and 30 percent would be loaned in cash (K900 million). But, according to the Ministry, most youths preferred cash.
From the K1.6 billion loaned out to around 62 000 youths between 2009 and 2012, government has only recovered K352 million.
Of the recovered money, K165 million (about $412 500) has been repaid this year alone after Chihana took a nationwide tour of the beneficiaries to help round up defaulting youths.
Number of beneficiaries
The rest of the funds are with beneficiaries who cannot be traced, or have squandered the money and cannot afford to repay whereas others are refusing to repay, arguing that the money was a grant from the DPP regime as a ‘thank you’ for helping the party win the 2009 general elections, according to the ministry.
In an interview, PS Mseka confirmed that “the ministry can’t trace a number of beneficiaries while others can’t afford to pay anything because their businesses didn’t work out.”
Meanwhile, the fund owes the Malawi Savings Bank (MSB) K600 million in overdrafts.
According to Chihana, the overdraft came because “people continued to get loans even after the fund had run out of money.”
“That’s why we had to stop the programme,” he said. Chihana blamed the Yedef mess on politics.
“This is a very good programme if we are to empower our youths. The only problem was that politicians were directly involved in the implementation, turning it into a political tool,” he said.
On his part, Mseka—a long time youth worker himself—said the problem is that the youth did not understand the late president Bingu Mutharika’s vision of creating rural enterprises.
“That is why, when they were told the loan is in two forms; 70 percent equipment, 30 percent cash, most of them refused, opting for 100 percent cash,” he said.
“Most of them came to get loans without any idea of a business,” he said.
Meanwhile, Yedef is failing to distribute this capital equipment that Treasury bought in 2009 for the project because the procurement entity did not consult the Youth Ministry on the required specifications.
While the equipment was meant for idle youths, the ministry now plans to sell it off to willing business people “who can make good use of the equipment.”
“Of course, the youth who can manage will be a priority, but we would want to sell the equipment and plough back the money into the fund,” said Chihana.
“The problem is that equipment was supply-driven. The equipment such as the briquette making machine, is too huge for any youth in the rural areas we are targeting,” he added.
Politics dogged the programme
Chihana told Parliament in December last year that the DPP regime controlled the fund from party headquarters such that only its youth supporters benefited.
But this was crushed by DPP leader in the House, George Chaponda, who demanded that Chihana bring evidence.
Since then, the media has been awash with evidence of abuse.
DPP director of youth Lewis Ngalande was reported to have used three students to access about K2 million loans from Yedef, a development described by the fund director Harrison Mandindi as illegal.
An investigation revealed that Ngalande used two young men and a woman in Blantyre to access the second tranche of Yedef loans whose beneficiaries were published in the press.
In Nkhata Bay, the First Grade Magistrate’s Court jailed 16 youths for failing to pay a K3 million (about $7 500) loan they obtained from Yedef.
One of them told the court that he was under no obligation to repay the loan, saying it was DPP government money.
“In fact, when we went around some of the youth said they could not pay because they were being told that the money was a grant because they helped DPP win in 2009,” said Mseka.
Change of plans by government
Meanwhile, government has reworked the Yedef programme guidelines before it can be allowed to resume work.
Among other things, government wants to connect the Yedef programme to what is being called the National Youth Service (NYS) due to start in July this year.
The NYS is being likened to a training system under the defunct Malawi Young Pioneers, which empowered mostly the less educated youths with skills to help them stand alone.
Mseka said the programme will start in July on a pilot basis.
“We need to have a structure. We need to have a programme like MYP to teach the youth discipline,” said Chihana.
The pilot phase will recruit youths to six training centres at Neno, Ngapani in Mangochi, Mtonda in Ntcheu, Kamwanjiwa in Mzimba, Hewe in Rumphi and Chipunga in Nkhata Bay.
The programme will emphasise skills development, patriotism and agriculture.
“We will advertise but the selection will be done at district level,” said Mseka.
There are currently 273 traditional authorities, and each T/A will contribute two youths in the pilot phase.
All the trained will automatically qualify for Yadef loans, according to the ministry.