Wolves in sheep’s clothing

 The avowed objectives of all the past and present loan initiatives such as the Malawi Rural Development Fund (Mardef), Youth Enterprise Development Fund (Yedf), Malawi Enterprise Development Fund (Medf) and the National Economic Empowerment Fund (Neef) sound noble. They target Malawians and are aimed at reducing extreme poverty among the people. But on the ground, the initiatives, at least the first three mentioned above, have been no more than wolves in sheep’s clothing fleecing taxpayers of their billions with wanton abandon under the systemic guise of empowering the youth, women and people with disabilities. Even Neef is far from being the angel it is being touted to be and needs to be subjected to an accountability test.

T h e M a l aw i Ru r a l Development Fund (Mardef) was established in 2005 under a parliamentary resolution. As a project it operated under the Ministry of Finance with the objective of managing loans to the country’s poor. But it was only five years later, on February 20 2010, after operating for five years, that former president the late Bingu wa Mutharika officially launched it.

Probably to give it more macho, on its official launch in 2010, Mardef incorporated in its operations the Youth Enterprise Development Fund (Yedf). This was a conceived vehicle specifically to provide the youth with sustainable technical, entrepreneurial, financial and business management skills and opportunities to enable them to engage in micro, small and medium enterprises as a self-employment mechanism. By all reckoning the objectives of Mardef could not have been nobler.

Soon after, government rolled out what it called the Farm Inputs Loan Programme (Filp). Mardef took on this child as well.

Exit the Democratic Progressive Party (DPP) and enter the People’s Party (PP), the new administration established the Malawi Enterprise Development Fund (Medf) which was essentially a rebranding of Mardef. But apart from taking over Mardef, the new entity also combined all product portfolios of Yedf, Filp and the Economic Empowerment Trust Fund of Malawi (E-Fund).

Registered in February 2014 under the Companies Act (Cap. 46:03), Medf became the country’s biggest microfinance institution in terms of product portfolio and outreach.

But in 2020, not wanting to be associated with Medf’s political excess baggage, from the DPP rule, the Tonse Alliance administration ushered into government following the court-sanctioned July 23 2020 Fresh Presidential elections, rebranded Medf renaming it the National Economic Empowerment (Neef).

The flowing month, Mangulenje and three other senior managers at Neef were summarily dismissed following an audit that exposed alleged abuse.

Last week Neef CEO Humphrey Mdyetseni reported that Medf failed to repay loans totaling K26 billion obtained between 2005 and 2018. Over 80 000 people are said to have benefitted from the loans during the 15 years. This means that the loans carried over from Mardef to Yedf to Medf still appear as loans in Neef’s books.

According to Mdyetseni, Neef recovered K2 billion from Medf loans, leaving K26 billion.

Here is the punch line. Neef CEO says his organisations’ predecessors were politically influenced. “Some people thought they were given the money as political gifts. Politicians were in the forefront in terms of identifying beneficiaries. Incorrect figures were recorded.”

You cannot dismiss Mdyetseni’s assertion. On his organisation’s failure to recover the loans it inherited, what he says ties in well with what Mangulenje said that Medf and its predecessors gave loans to ghost beneficiaries.

How?

According to Mdyetseni, “Politicians were in the forefront in terms of identifying beneficiaries. Incorrect figures were recorded.”

But on Neef’s performance, Mdyetseni is now waxing lyrical about his organisation’s loan repayment whose average repayment rate across the country he says stands at 83 percent so far. If this is true, then congratulations are in order. But can we trust Neef? Who is there to check if Neef is not wading in the same muddy waters like Medf, Yedef and Mardef? Chances are that we will come here again crying that Neef which now looks like an angel has also been dishing out loans to ghost beneficiaries.

Neef could well be trying to roll wool over our eyes so that we think it is all rosy there. After what we have gone through from Mardef to Medf, we cannot take Neef’s statement at face value. They all look like sheep. We only know they are wolves in sheep’s clothing when a new administration comes in. The Budget and Finance Committee of Parliament should push the Auditor General to audit Neef. The sooner this is done the better for the country