K189bn still unpaid as Medf cracks down on defaulters, analysts expose deep-rooted failures behind loan scheme
The Malawi Enterprise Development Fund (Medf) is racing to recover a staggering K189 billion in unpaid loans after a 60-day ultimatum to defaulters expired on Monday—laying bare what experts describe as a deeply broken and politicised public lending system.
Medf Chief Executive Officer Kaisi Sadala confirmed in an interview that while a fraction of borrowers have begun settling their arrears, the overwhelming majority remain in default, forcing the State-owned lender to escalate recovery efforts.
Sadala said Medf is now moving aggressively to enforce repayments, including seizing collateral from defaulters.
“This is taxpayers’ money and it must be recovered to ensure it can also benefit others,” he said.
But as Medf tightens the screws, governance and economic analysts are warning that the crisis runs far deeper than individual borrowers failing to pay—pointing instead to systemic collapse in how the loans were issued and managed.
Centre for Social Accountability and Transparency Executive Director Willy Kambwandira said the massive default should not come as a surprise, arguing that the entire system was compromised from the start.
“The disbursement and recovery of these loans have been selectively and politically influenced,” he said.
“Weak loan recovery is the predictable outcome of a system that lacked strict due diligence, enforceable collateral and visible consequences for default. This is not just individual failure—it is an institutional failure.”
Kambwandira delivered a blunt assessment: loans under the previous National Economic Empowerment Fund (Neef) were treated less as financial obligations and more as political handouts.
“Neef loans were treated as entitlements rather than obligations, undermining the very purpose of empowerment financing,” he said.
The unfolding recovery battle comes just days after government relaunched Medf to replace Neef—an attempt to reset and restore credibility to public development financing.
At the launch, Minister of Finance Joseph Mwanamvekha struck a stern tone, warning that the era of politically influenced lending and casual defaults was over.
“There will be no political favours and these are not entitlements. They are public resources entrusted to Malawians for productive use and they must be repaid fully and on time,” he said.
Mwanamvekha acknowledged that Neef had been crippled by weak loan appraisal systems, poor monitoring and widespread political interference—factors that eroded both performance and public trust.
The scale of the problem is stark.
Government figures show that over K200 billion was disbursed under previous lending schemes, yet only about K20 billion has been recovered—an unsustainable gap that has effectively turned empowerment financing into a fiscal burden.
“Can we continue doing that? The answer is no,” Mwanamvekha said, urging Medf leadership to prioritise aggressive loan recovery.
The rebranded Medf is now being positioned as a critical tool to drive economic growth by expanding access to finance for women, youth, small businesses and persons with disabilities.
But the success of that vision now hinges on whether authorities can enforce discipline in a system long criticised for rewarding default and shielding politically connected beneficiaries.
For now, the K189 billion question remains: can Medf recover what Neef lost—or is the country once again confronting the cost of turning public funds into political capital?
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