Malawi Rural Finance Company going bust

Saddled with debts amounting to over MK 2 billion, maladministration and dubious procurement processes, Malawi’s largest microfinance organization, the Malawi Rural Finance Company Limited (MRFC) is on the brink of collapse if government does not organize an immediate a bail out package, Nyasa Times has established.

An employee from the  company’s Kasungu branch is optimistic that the government will rescue employees and customers by injecting cash so that the company remains operational.

While another employee from Blantyre has demanded that the entire board should be dissolved and the executive management sacked.

MRFC CEO Patson Kuntambila, a highly educated lecturer, could not been reached for comment.

Mawindo: recommended that MRFC should be liquidated

Sources said Kuntambila lives a life style that signifies as if all is well at the Company at the time when ordinary employees are going for months without pay.

Nyasa Times sources said the company is on life support and traces its litany of problems to the years 2006 and 2007.

Recently Sheriffs impounded a Toyota Hilux CP 1753 after the Company failed to pay one of its former employee who was illegally dismissed.

Sources told  Nyasa Times that if the company folds up the biggest losers will be resource poor people both in agriculture and business sectors because the company offered loans where most banks could not afford and has offices across the country offering both loans and savings facilities.

Political play

“In 2006 the Company re-organized itself and replaced the then Director of Finance, Trust Chimaliro (ironically now at World Bank) with Patson Kuntambila, who was at Air Malawi. Kuntambila is a business associate of  Mrs. Teleza Chilambe,  MRFC Board Chairperson and wife to Air Malawi Board chairperson,” according to inside sources.

He said the company also replaced Geoffrey Kumwenda the then Director of Operations with Weston Kusani a seasoned banker who would later be frustrated and forced to resign in 2010.

“Much as the changes in 2006 were not only unnecessary they also proved costly as the new management failed to grasp the operations of Micro Finance Institutions as they went full throttle wrestling for power as the CEO was about to retire,” the source said.

A former MRFC Board member said the changes were made to ensure that the then ruling  DPP sympathizers were in the board and executive management.

Dubious Bank Software

In 2007, MRFC decided to purchase a new banking software, Bankers Realm MFO from Craft Silicon from Kenya, which despite its failure; management maintained it as they enjoyed numerous business trips fully funded by the supplier to Nairobi.

“Management asked employees to use manual interventions where the system failed. Borrowers have been ripped off as the new system overcharged interest,” sources said.

And to added on to its woes, Malswitch has disconnected MRFC from its WAN system rendering all branch operations inaccessible since customers are failing to get their savings.

The company, which is wholly owned by the Malawi Government has become a darling of the Sheriffs because of its failure to services its debts, pay its former workers and its disregard for court orders.

Government intervention

In 2011, the Malawi Government engaged a private consultant led by Dye Mawindo, the current Director of Public Procurement, to review the operations of the Company and make necessary recommendations.

Ironically, Mawindo, recommendations were the same as those which the MRFC Board and management had previous rejected.

In a nut shell Mawindo recommended that MRFC should be liquidated and have all its debts written off.

MRFC started its operations in 1994 after taking over all assets of the then Small Scale Agriculture Credit Administration SACA, which was under the Ministry of Agriculture.

In the year 2000, the company’s administration was left in the hands of Malawians headed by Silas Murotho as CEO and the company experienced unprecedented growth amassing more that MK6 billion in assets and opening 200 outlets across the country. Murotho retired in 2011.

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