Microloan Foundation, a financial service provider in Malawi, particularly the northern chapter, which focuses on lending small amounts of money to women, is facing accusations of depleting loan funds by granting over K50 million to a former employee.
According to reliable sources, the northern chapter of the organization provided millions of kwachas in loans to one of its senior ex-employees, thereby exhausting the funds that were intended for women’s loans.
The ex-employee, whose identity remains undisclosed, resides in Embangweni, Mzimba district, and has a nephew currently serving as the institution’s Regional Manager for the Centre.
It has come to light that the ex-employee is connected in some way to several cooperatives in Rumphi and Mzimba districts. One particular cooperative in Rumphi received a loan of K30 million, from which she pocketed K27.5 million, leaving only K2.5 million for the remaining members of the cooperative.
An anonymous source revealed that aside from receiving a substantial share of the cooperative loans, the accused ex-employee also obtained an individual loan close to K50 million.
“The cooperatives in Rumphi and Mzimba were meant to receive loans, but it appears that all the cooperatives in these districts are linked to this individual. When the women confronted her, she claimed responsibility for organizing them and was taking nearly 90% of the funds,” the source informed Malawi24.
The source also disclosed via email that the accused ex-employee has acquired approximately over 100 million kwacha by exploiting the loan system.
As a result, numerous women and cooperatives have been denied agricultural loans for the 2022/2023 farming season, as the loan funds were allocated to this single individual, the ex-employee.
“Unfortunately, many clients who typically receive an average loan of fifty thousand kwacha have been denied loans due to the lack of funds. For instance, areas like Chigumukire, Chinkhuti, T/A Kafuzira, and Mtosa T/A Mwadzama in Nkhotakota district, to mention a few, have not been granted their loans despite clearing their previous ones,” added the source.
The source raised questions about the Microloan Foundation’s management, criticizing them for granting such a substantial amount of money to the ex-employee instead of benefiting hundreds of women in the northern region of Malawi.
Furthermore, it is alleged that the accused individual obtained the loan at a time when the organization was only providing cooperative loans, not individual ones.
“If the organization had not yet started offering loans to individuals, how did this lady manage to obtain one? What policy did they use, considering the absence of a policy for individual loans?” wondered the source.
The involvement of the nephew has also come into question. It is alleged that the nephew expedited the loan application process for his aunt, being directly involved in the proceedings.
“He played a more significant role than the branch manager in handling these applications, and the lady in question is his direct aunt. Is this not an abuse of office and a conflict of interest?” the source raised concerns.
On May 1, 2023, Malawi24 reached out to Microloan Foundation for their response to the allegations.
However, Chief Executive Officer Davison Rakasi declined to answer the questionnaire sent via his official email address, insisting on a physical meeting with one of the reporters.
“We appreciate your efforts in bringing this information to our attention, which we were initially unaware of. In order to thoroughly investigate the issues you have raised, I would like to meet with you at your convenience, which will allow us to launch our own investigation,” Rakasi responded.
Malawi24 declined the request for a physical meeting and proposed a virtual meeting instead. However, the MLF CEO rejected the virtual meeting, requesting additional time to gather facts before providing a response.
A month and some days later, on June 8, 2023, Malawi24 reminded Rakasi to respond to the questionnaire. However, Rakasi stated that the issue would not be discussed outside of their institution, deeming it an internal matter.
“The issue is an internal matter as such will not be discussed outside MLF,” responded Rakasi.
On the other hand, the nephew failed to address the allegations, as he did not respond to the questionnaire sent to him on May 1, 2023.
In trying to understand the procedural requirement in regard to such a scenario, the publication further approached the Reserve Bank of Malawi through Chisomo Gunda who is the bank’s Environmental and Social Specialist.
Gunda told Malawi24 that if the information we got from our source is true, then the conduct is unethical and out of finance regulations and further faulted the company through the CEO for refusing to respond to our questionnaire.
Meanwhile, the central bank says it has booked an appointment with officials from Microloan Foundation where they are set to hear the organisation’s side of the story next week a meeting which failed to take place on Thursday 13th, July, 2023.
MicroLoan Foundation Malawi (MLF-M) is a non-profit microfinance provider established in 2002, with headquarters in the UK.
