AMOUNT OF THE LOAN
The initial minimum loan amount per individual in a group is K10,000
The maximum loan amount per individual is K100,000 and such amounts increase appropriately up to K100,000 in group lending.
Interest on the loan is 32% percent per annum, levied on a reducing balance basis.
Short Term Businesses
The repayment period is 12 months inclusive of a grace period of up to 3 months.
Medium Term Businesses
Such as dairy farming, egg production, fish farming etc are given longer grace periods and repayment is more than a year
Installments for loan repayment is monthly
MARDEF runs a Group Loan Protection Scheme covered by Vanguard Life Assurance Company Limited whose objectives are to repay the institution in the event of premature death of the beneficiary or client and to guarantee the beneficiary and members of the family that in the event of premature death, the family members will not be required to continue repaying the outstanding loan balance. The charge is 0.5% of the total loan.
Claims are paid by the insurer upon receipt of official notification of death of beneficiary, proof of death in the form of original death certificate or original death report or affidavit of death. MARDEF gathers these and sends to the Malawi Savings Bank who in turn forward to Vanguard for processing of payment on the claim. It should be noted though that claims are only paid within the agreed period for the loan to be paid back.
The loans granted are either group loans where the group jointly owns the business or individual loans where within a group, a member owns an enterprise.
MARDEF facilitates group formation and select groups whose projects meet the requirements of the Fund for possible funding. After appraising the applications, a recommendation to the MARDEF secretariat is made who in turn send the names for final approval by the Board of Directors through the Loans and Operations Committee which meets every quarter for this exercise. Each and every application is scrutinised during the exercise ie for both new and repeat loans and the policy is that 56% of the loans are new loans and 44% repeat loans during every loan approval by the Board.
No fee is charged when processing the loan at any stage. Loan application forms ca be obtained from MARDEF Secretariat and Regional Offices, MARDEF District Offices.
Application forms for successful applicants are retained by MARDEF. Upon final approval by the Board, MARDEF communicates the outcome to the prospective beneficiaries and mandates MBS to disburse funds to the group savings accounts as the case may be after the groups have been trained in business management skills, record keeping and group dynamics.
Where institutional suppliers are involved, the purchase component of the loan amount is paid directly to the suppliers. This is the case for projects such as poultry, fish, dairy and irrigation farming and machinery for tailoring, timber production, carpentry and tin making.
The group guarantees the loan as all members are required to endorse the loan forms for every beneficiary, thus undertaking to repay the loan at all costs. This provides peer pressure and some form of social collateral security.
In the event that a borrower defaults on repayment, all members of the group are jointly liable to repay the outstanding sum. The institution reserves the right to prosecute a defaulter in a Court of Law.
The MARDEF secretariat and MARDEF Officers make periodic visits to the clients to monitor and evaluate the progress businesses are making and offer advice on the proposed operation modalities and make recommendations where necessary.