Fund (Neef), which has now reverted to the Malawi Enterprise Development Fund (Medf) name, has given loan defaulters 60 days to settle their arrears or face consequences.
Briefing the Parliamentary Committee on Commission, Statutory Corporations and State Enterprises in Lilongwe on Friday, chief executive officer Kayisi Sadala said Neef is struggling to recover loans, with recovery rate pegged at 52 percent, the lowest in history.
He said: “We have placed an advert informing those yet to repay to do so within 60 days. This is not a handout, the money belongs to Malawians and comes from taxpayers.
“We are implementing a stringent recovery programme for those in default or with arrears, particularly for loans disbursed in 2025 where we have encountered numerous challenges.”
Sadala said the total loan portfolio stands at K240 billion extended to 377 460 Malawians as of December 2025. From the amount, he said K116 billion was disbursed in 2025 alone and that most of the recovery challenges are linked to loans issued during the year.
He said some districts are recording repayment levels of as low as nine percent.
Sadala also admitted that some loans intended to empower ordinary and under-served Malawians, including women, youth and persons with disabilities, ended up in the hands of Cabinet ministers and other politicians.
He said at least 20 employees are currently facing disciplinary proceedings over the alleged mismanagement of funds in 2025.
Sadala said the absence of an Act of Parliament governing the institution has created room for frequent name changes, highlighting that the fund currently operates under a presidential decree, underscoring the need for legislation to guide its operations.
He said the Neef board felt reverting to Medf name would restore the organisation’s original enterprise development mandate.
Medf changed to Neef in 2020 after the Tonse Alliance administration led by Malawi Congress Party took over government following the triumph of former president Lazarus Chakwera in the June 2020 court-sanctioned Fresh Presidential Election.
Reacting to Sadala’s presentation, committee chairperson Sylvester Ayuba James attributed the institution’s long-standing challenges to external influence and faulted the continued rebranding as costly.
He recommended establishing the fund through an Act of Parliament to clearly prescribe its mandate.
“We are talking about billions lost because due diligence was not properly conducted on certain beneficiaries who received substantial loans and farm inputs but have failed to repay. Those who allowed this to happen must be held accountable to prevent a recurrence,” said James.
Meanwhile, Mzuzu University-based economist Christopher Mbukwa has described the name change as costly and unnecessary, particularly at a time when the government is implementing austerity measures.
In an interview, he warned that the institution’s success will remain limited unless it is insulated from external pressure.
“There is no way recovery rates will improve if influence remains high over the organisation. The model itself is sound as it provides financing to small businesses, but it must be protected. I support calls for an Act of Parliament and an independent board, with authorities kept away from key decisions, including the appointment of board members and managers,” said Mbukwa.
University of Malawi economics lecturer Edward Leman also said the 52 percent recovery rate is unimpressive and falls well below the Reserve Bank of Malawi’s recommended threshold of 80 percent.
He observed that the prevailing macroeconomic environment may have affected loan performance and repayments.
Leman suggested that future loan disbursements should be guided by borrowers’ repayment capacity, while those unable to repay should be supported through social cash transfer programmes rather than credit facilities that risk undermining the fund’s sustainability.
Human Rights Defenders Coalition chairperson Michael Kaiyatsa said government should prioritise strengthening the institution rather than changing its name.
“This level of non-repayment threatens the sustainability of the fund and undermines its purpose as a revolving facility meant to empower more citizens over time,” he said.
Established on January 29 2005 through a presidential decree, the institution was initially named the Malawi Rural Development Fund (Mardef) before being rebranded as Medf in 2014 and later renamed Neef in 2020, a title it still holds pending the latest approved change.
Records show that 377 460 Malawians had obtained loans from Neef as of December 2025, a sharp increase from 98 417 borrowers recorded in the 2021/22 financial year shortly after the previous rebranding.
