Financing the marginalized: Malawi Enterprise Development Fund ‘on right track’
Malawi Enterprise Development Fund (MEDF) has said it was on the right track after reinventing itself into a competitive modern financial institution.
In an exclusive interview, MEDF Chief Executive Officer (CEO), Mervis Mangulenje said that after having some difficult years in the past, MEDF has improved its operational strategies.
She said that, “Since 2014, MEDF has got some legacy issues emanating from Malawi Rural Development Fund (MARDEF) and Youth Enterprise Development Fund (YEDEF) which were closed. They closed MARDEF and YEDEF and transferred all assets and liabilities to MEDF which is a new company.”
Mangulenje explained that for the past eight years, MEDF has been struggling with losses because emanating from the legacy issues of its past all which changed for the positive from the 2017/2018 financial year when they decided to restructure the business which faced closure.
MEDF Improved its operational efficiencies in terms of performance quality, profitability, turnaround times for loan disbursements, enhanced procedures and process mapping, and improving its human capital development by continuously training and coaching staff.
“We had to re-engineer the business, we had to invest in training, we had to device new products and services, but we changed the process mapping for granting loans to ensure that we fit in the industry and comply with the regulatory requirements from the Central Bank.”
“Currently the financial position has changed from financial year 2018/19 to current due to the changes that were implemented in the past 24 months,” Mangulenje pointed out
The CEO added that they are doing their best as an institution to promote entrepreneurship development in the country through their four mandates which includes; assisting all Malawians to set up small businesses and providing financial assistance in the form of loan in urban and rural areas in Malawi.
“We are providing financial assistance especially in rural areas, because we are working on financial Inclusion where we are bringing the unbankables to banks.”
MEDF is committed to developing the youth and women through its mandates and products like business loans, trade finance loans, youth loans, women loans and agriculture loans.
On where MEDF is placed in the sector, Mangulenje said ‘We come in to create a mechanism where we groom the youth, we are ensuring that programs that involve the youth has its own process mapping and there are strategies that we have put in place to ensure that they have the skills, competences and opportunities to engage themselves in small enterprises. As MEDF, we are working with women, which are better performers when it comes to loan payment.”
She said that MEDF was determined to supporting government agenda through entrepreneurship development in the country.
“We want to support the government agenda of reducing the levels of unemployment through entrepreneurship, because if we find someone is doing well means has to be able to employ more people,” she said.
Mangulenje said that their biggest challenge was the legacy issue regarding MARDEF which greatly affected MEDF when it was being instituted.
“We have outstanding loans from MARDEF which are haunting us up to now, unfortunately after doing some audits and validations of those loan accounts, there were a lot of frauds and ghost clients, so it’s difficult to go on the ground and collect those loans,” she disclosed
Despite the challenges that MEDF faced, the strategy change helped MEDF to make great strides by recovering 97.8 per cent of the agriculture loans, 100 per cent of pay roll products and above 90 per cent of business loans for the last season.
“We changed the process mapping, we changed the procedures, we installed new banking software and this helped us to make great improvement,” Mangulenje added.
She urged the public to disregard the belief that MEDF is owned by government therefore it is free money, but rather they should keep in mind that MEDF funds are revolving funds hence they ought to continuously benefit others.
“People should understand that this was tax payer’s money and we have to revolve this money to ensure that a lot of people are also benefiting,” Mangulenje explained.
She added that the public should know that MEDF was not in any way influenced by politicians nor is it a political institution.
The CEO said that according to MEDF records, all politicians who have borrowed money before from MEDF paid back their loans.
“MEDF reports to three committees of parliament; PAC, Budget and Finance, and the Social and Rural Development Committee, and I challenge you that I do not have political interference.”
Mangulenje said their vision as MEDF was to have a deposit taking license, which would help them to have cheaper funds which would result in the reduction of the interest rates.
An ambitious young person from Zomba, Samuel Losani said the new reenergized MEDF offers an opportunity for self-uplifting that has been a challenge due to lack of finance and the knowledge to manage his business properly.
“MEDF will help me and others grow businesses by not only providing capital; but importantly giving us training on managing finances and proper investment which is a plus,” he remarked.
President Peter Mutharika launched a K13 billion MEDF Youth and Women Loan programmes which would enable women and youth have access to loans on March 4, 2020 in Blantyre.
“We can only achieve our vision if we empower youth and women to be drivers of change. No country can develop without youth and women participating in the economy,” Mutharika said during the launch.
He said the country has hardworking youth and women with no access to capital hence government coming up with initiatives to provide the same.
“Most youth and women are very hard-working people. What we need is to give them capital for them to grow their businesses and create new wealth.
“There are many young people and women who graduate from community technical colleges in order to establish new businesses and industries. They have skills. But they need financing,” the President pointed out.
MEDF is a state-owned enterprise which was established under the government’s act in 2014, and it emanated from the Malawi Rural Development Fund (MARDEF) and Youth Enterprise Development Fund (YEDEF).
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