Assessment of the Effectiveness of Credit Rating Techniques on Loan Repayment Amidst Prevailing Economic Challenges in Malawi: A Case Study of the Mangochi NEEF Branch

Nancy Belinda Basikolo*, Hastings Kumwenda**
*-** School of Management and Commerce, DMI St. John the Baptist University, Mangochi, Malawi.
Periodicity:September - December'2024

Abstract

This paper aims to determine if the credit rating methods used by the National Economic Empowerment Fund (NEEF) can assist Malawians in repaying loans during economic hardships. This paper examines the role of NEEF in national economic growth, analyzes its credit rating techniques, evaluates staff capabilities, identifies issues, and offers solutions. Motivated by concerns over inaccurate credit assessments leading to loan write-offs, this study emphasizes the impact of credit rating on economic decline. NEEF was formed in 2014, replacing MEDF and MARDEF, with the objectives of supporting MSMEs for economic growth, reducing unemployment, improving access to finance, and alleviating poverty. Economic downturns increase the risk of loan defaults, highlighting the need to assess NEEF's credit rating strategies during recessions. Stakeholders seek insights for promoting financial stability and responsible lending. Using a mixed-methods design and simple random sampling, 36 participants were studied through both primary and secondary data sources. The findings indicate that customer creditworthiness affects loan repayment, but current assessment methods are flawed. This study recommends enhanced staff training and the adoption of advanced technologies for credit assessments.

Keywords

Time Period, Credit Worthiness, Interest Rates, Employee Competency, Effectiveness, Credit Rating Techniques, Loan Repayment, Economic Challenges.

How to Cite this Article?

Basikolo, N. B., and Kumwenda, H. (2024). Assessment of the Effectiveness of Credit Rating Techniques on Loan Repayment Amidst Prevailing Economic Challenges in Malawi: A Case Study of the Mangochi NEEF Branch. i-manager's Journal on Economics & Commerce, 4(3), 1-11.

References

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[10]. The Ministry of Trade and Industry. (2015). National Economic Empowerment Action Plan. Bernadette Malunga.
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