Naming, shaming of loan defaulters long overdue

Beneficiaries of Medf, previously known as the Neef—have historically defaulted on loan repayments due to a combination of institutional, political, and socio-economic factors. As of early 2026, the fund’s recovery rate was reported at just 52 percent, with billions of Kwacha still outstanding. In this write-up, we map the troubled trajectory of the fund from its inception to the present day.

We thus argue that there is nothing new in the current mess where the fund is struggling to recover billions of kwacha from defaulters. As of April 8 2006, Mardef had disbursed K35 million worth of loans, but Parliament’s Budget and Finance Committee chair Friday Jumbe toldThe Nationin an interview on January 3 2007, that the fund was on the blink of losing the K35 million it had disbursed because “almost all the beneficiaries of the loans cannot be traced because the loans were given based on political affiliation”. Government doubled Mardef’s loan base from K1 billion to K2 billion on January 29 2010.

And a month later, Mutharika launched the K3 billion Youth Enterprise Development Fund (Yedef), which was to operate under Mardef. ButThe Nationwrote on February 27 2010 that “there is mist and confusion over how K1 billion from the K3billion Youth Development Fund has been spent even before the fund was launched. Yedef was not spared the political controversy that had mugged Mardef withThe Nationon January 12 2012 writing that only K5 million out of K19.5 million distributed to 42 youth groups in Rumphi had been repaid.

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This mirrored the state of loan recovery across the country prompting the then Minister of Youth Symon Vuwa Kaunda to call on members of Parliament to remind youths to repay the loans. Chihana further said government had discovered that some beneficiaries were not youths as per requirement of the guidelines approved by Parliament but adults and senior DPP officials who owed government K40 million in Yedef loans. It also transpired in April, 2012 that government had bought wrong tools for distribution as loans to youths worth K60 million.

After a functional review, in June 2013, Mardef and Yedef merged into Medf Limited which would also be responsible for coordinating the Farm Input Loan Programme (Filp). The firm was also mandated to reclaim all Mardef and Yedef loans. Did this happen?

Some effort was made but with negligible success. In June 2018, Ministry of Finance published figures which indicated that in the 2016/17 financial year, total revenues for Medf reduced by 26 percent to K197 million from K1.5 billion, a loss after tax of K962 million compared to a loss after tax of K114 million in 2014/15. “These deficits were a result of a number of poor loan recoveries arising from loan recipients viewing the loans as grants and therefore not repaying them,” said the report in part by the Ministry.

As if it was a Fools’ Day joke, on April 1 2020, the then Medf’s chief executive officer Mervis Mangulenje told the Budget and Finance Committee of Parliament that her organisation would not be able to recover about K8.9 billion worth of loans issued by Mardef and Yedef in 2015. She said an audit Medf had conducted uncovered that K8.9 billion was issued to ghost beneficiaries who used fake phone numbers, fake identification cards and fake locations. That was a sad day for Malawi.

With that announcement K11 billion was lost. Presenting the 2020/21 Budget Statement the then minister of Finance Felix Mlusu announced the rebranding of Medf and change of name to the Neef. Mlusu also announced an increase of the allocation to Medf to K40 billion from K15 billion, which was to be gradually increased to K75 billion.

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