Committee flags Neef abuse, mismanagement

Parliamentary Committee on Commissions and Statutory Corporations has reported systemic political abuse and financial mismanagement at National Economic Empowerment Fund (Neef) with loans targeted at underprivileged Malawians benefiting politicians and individuals with connections. Committee chairperson Sylvester Ayuba James presented the findings in a report tabled in Parliament in Lilongwe yesterday. He said the committee established that Neef, which is in the process of reverting to its old name Malawi Enterprise Development Fund (Medf), has drifted from its core mandate of supporting small and medium scale entrepreneurs lacking access to commercial financing.

This fund was meant for ordinary Malawians who cannot access commercial financing, yet others with capacity elsewhere are benefiting,” said James, who is Nkhotakota Central legislator (independent). He warned that politicisation of the facility has weakened accountability and repayment culture, with some beneficiaries allegedly treating Neef loans as political rewards rather than public funds that must be repaid. “When beneficiaries perceive loans as compensation for political loyalty or campaign work, repayment becomes a challenge.

That undermines the sustainability of the fund,” said James. The committee also faulted the fund’s legal foundation, noting that Neef was created through a presidential directive instead of an Act of Parliament, a gap it says has allowed inconsistent operational practices and weak oversight. The report follows engagements the committee had with Neef management and field inspections of warehouses in Kasungu and Dowa districts where the committee also uncovered operational irregularities.

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Concerns highlighted in the report include poor warehouse management, unrecorded stock, weak inventory systems and equipment exposed to weather damage. James said some assets, including brand new solar panels and water pumps, were found improperly stored. The committee also raised questions over procurement integrity, citing indications that some items were purchased at above market prices.

In his reaction, Mwanza Central member of Parliament (MP) Felix Njawala (UTM Party) condemned what he called entrenched politicisation of the fund, arguing that deserving beneficiaries are being sidelined. Taking his turn, Blantyre City Kabula Chilomoni Nancholi MP Noel Lipipa (Democratic Progressive Party) described the findings as a “forensic examination” of Neef’s failures and called for urgent legislative reforms to restore accountability. The committee has since recommended a full audit and revaluation of all Neef assets before any disposal, strengthening of procurement and inventory controls, improved warehouse management and enactment of legislation to clearly define the fund’s mandate and governance structure.

Two weeks ago, Neef chief executive officer Kayisi Sadala told the committee that the institution has given loan defaulters 60 days to settle their arrears or face consequences. He said Neef is struggling to recover loans, with recovery rate pegged at 52 percent, the lowest in history.

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