HomeNational NewsBusiness and FinanceNEEF incurs huge losses due to Weak Systems, High Default Rate

NEEF incurs huge losses due to Weak Systems, High Default Rate

PAC calls for proper accountability

- Advertisement -

National Economic Empowerment Fund (NEEF) has incurred a K13.6 billion loss while non-performing loans have also been increasing, the 2023 Annual Economic Report from the Ministry of Finance and Economic Affairs reveals.

The report cites weak systems and a high default rate as the cause of the loss and poor performance.

“The poor performance has been attributed to weak management information system [MIS] operating system-banker’s realm, poor quality of loan portfolio as a result of high default rate which resulted in high provisions for bad debts and lack of capacity in good credit management skills and integrity,” the report stated.

Despite the loss, NEFF recorded some gains, including a 48 percent growth in interest-earning assets due to portfolio growth from K32 billion as of March 2022 to K48.3 billion as of September 2022, allowing it to clear its arrears and re-invest in loan disbursements.

“Loan repayments of K7.6 billion were recorded in the period representing an average collection rate of 63 percent which is below the regulator’s [RBM] of 80 percent,” the report added.

Public Accounts Committee (PAC) chairperson Mark Botomani expressed concern over the loss and called for proper accountability if people’s trust is going to be maintained.

Botomani: There is a need for proper accountability if people’s trust is to be maintained

“This fund should have been one of the best managed revolving funds considering that government has invested a lot in terms of putting systems in place, including change of management. The expectations are, therefore, high,” Botomani stated.

Governance expert Boniface Chibwana said the loss shows that some basic things were not done right.

“Are the people trained in financial management before disbursement of loans? Were the people submitting viable business proposals that were verifiable? If these variables were not followed, then it is not surprising that we are in this huge debt,” Chibwana questioned.

Chibwana recommended that the program be put on hold to allow for proper evaluation and that, once resumed, there should be robust monitoring of beneficiaries to assess the type of businesses they are conducting.

“Then, defaulters should be made to pay through enforcement of the legal framework guiding the funds,” Chibwana suggested.

In October 2022, NEEF stopped disbursing loans due to lack of funds after under-collecting from beneficiaries.

Government committed to pumping in K75 billion by 2024, which will have supported 300,000 people, creating thousands of jobs. NEFF has already received over half of the target.

- Advertisement -
Sosten Mpinganjira
Sosten Mpinganjirahttps://nthandatimes.com
Sosten Mpinganjira is a news reporter with a track record of delivering timely and accurate news stories. With vast experience working with renowned news electronic, press, and online outlets, he has honed his reporting skills and has a deep understanding of the media landscape. When he's not chasing stories, John enjoys exploring new destinations and staying updated on the latest technological advancements. He has a knack for delivering breaking news with accuracy and insight. He is dedicated to keeping his readers informed about current events and trends that shape our world.

YOU MIGHT ALSO LIKE

Enter your comment

POPULAR

TNM SUPER LEAGUE STANDINGS

Rank Teams Played Won Lost Points
1 SilverSilver 2 2 0 6
2 Creck SCCreck SC 2 2 0 6
3 HammersHammers 2 2 0 6
4 WanderersWanderers 2 1 0 4
5 Civil ServiceCivil Service 2 1 1 3
6 ChitipaChitipa 2 1 1 3
7 MoyaleMoyale 2 1 1 3
8 KarongaKaronga 2 1 1 3
9 FOMO FcFOMO Fc 2 1 1 3
10 KBKB 2 0 0 2
11 BulletsBullets 2 0 0 2
12 MAFCO FcMAFCO Fc 2 0 1 1
13 TigersTigers 2 0 1 1
14 DedzaDedza 2 0 1 1
15 BakaBaka 2 0 2 0
16 BangweBangwe 2 0 2 0
Nthanda Times

Discover more from Nthanda Times

Subscribe now to keep reading and get access to the full archive.

Continue reading