Local firm to partner with $1bn private equity fund

A local firm is engaged in negotiations to partner with a $1 billion (K515 billion) multinational private equity fund to provide technical and financial support to increase the reforestation programme of Viphya Plantations in Mzimba, Business News has learnt.

This group invests around the world in businesses that provide cost effective solutions to pressing energy, resource and environmental challenges.

It also manages an initiative to develop sustainable forestry activities in sub-Saharan Africa, and they have taken an interest in Malawi.

Officials from the local implementing partner company have been in close discussions regarding a partnership with the Malawi Government and the investment group.

Minister of Natural Resources, Energy and Mining, Atupele Muluzi was in South Africa last week to visit one of the group’s plantations in South Africa.

The tour of the plantation that employs over 3 000 people and produces over 500 000 cubic metres of timber products per annum, was meant to demonstrate the investment groups commitment to the forestry sector in Africa and how this model could be replicated in Malawi.

The expected partnership, according to the local partner, is set to bring economic benefits to Malawi in terms of foreign direct investment (FDI) amounting up to $50 million (K26 billion), immediate creation of 2 000 full-time jobs in the Northern Region, export revenues of over $30 million (K15 billion) at plantation maturation and reduced import spending of $30 million (K15 billion) through value addition timber sales.

Muluzi said in a telephone interview yesterday they wanted to learn how organisations such as the investment group are operating and planting trees in a sustainable manner.

“One notable thing is their management of forests and how local communities are empowered in terms of outsourcing planting, pruning and harvesting.

“We were very impressed with what we saw. There is urgent need to reverse the situation in Malawi, particularly at Dzalanyama and Viphya. Previously these plantations were a source of national pride, now they are a source of national shame,” he said, stressing that there are ongoing reforms in the management of government-owned plantations.

“Over the next 10 years, a forestry project managed by this partnership in Viphya could potentially manage more than 30 000 planted hectares with an annual, sustainable harvest of approximately 800 000 cubic meters.

“This would require an investment of at least $35 million (K18 billion),” said the general manager of the local partner.

He said should Malawi government choose to support the investment in modern down stream manufacturing, the fund would target an additional industrial investment of at least $15 million (K7.7 billion).

The most prominent and active development banks in Africa are all investors in the forestry sector including multilateral banks such as International Finance Corporation/World Bank and African Development Bank (AfDB) and the bilateral banks from the UK, Germany, France, Spain, Switzerland and Finland.