Neef dangles micro industry loan of up to K250m

National Economic Empowerment Fund (Neef) says it is targeting to reach 300 micro-industries with capital financing through its micro industry loans.

Launched in July 2022, the loan facility, which ranges from K30 million to K250 million, targets small and medium enterprises (SMEs) that are already into or want to venture into small-scale manufacturing.

The loans, which have a minimum of one-month grace period and a tenure of three to 36 months, are issued at a rate of four percent per month with a processing fee of 3.5 percent and one percent insurance.

In a written response on Tuesday, Neef spokesperson Elizabeth Hara said the facility is critical to advancing the country’s industrialisation in line with Malawi 2063, the country’s long-term development plan.

She said: “The facility aims to stimulate economic growth by fostering the growth of small-scale industries that promote import substitution and export enhancement.

“This product addresses the gap of lack of access to capital for small-scale manufacturing and processing businesses.”

Hara said Neef has implemented several strategies to address the issue of loan default, which has helped the fund to collect 70 percent of all expected instalments.

“To tame bad debts, we have improved our credit monitoring systems to identify early signs of default and take proactive measures,” she said.

Chamber for Small and Medium Enterprises Association executive secretary James Chiutsi said more businesses, especially in import and export trade, are closing shop amid rising inflation and forex shortage.

He said promoting small-scale industrialisation entails putting up deliberate policies to improve access to finance.

The facility comes at a time SMEs are being forced out of business due to a challenging business environment.