Ministry of Industry, Trade and Tourism is upbeat that a $100 million (K73 billion) line of credit (LoC) from the African Development Bank (AfDB) will help to transform the economy.
The board of directors of AfDB last week approved a private sector multi-currency LoC of $100 million and 1.3 billion rand (about K71 billion) to Industrial Development Corporation (IDC) Plc to support industrialisation projects in both South Africa and other regional member countries such as Malawi, Mozambique, Ghana, Kenya, Namibia, Mauritius, Swaziland and Sudan.
Of the amount, 50 percent (the rand tranche) will be used for projects in South Africa while the balance (the dollar tranche) will be directed to regional projects in the other countries.
In an interview on Monday, Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi said while the facility will help private enterprises to access finance, the biggest issue will be the bankability of the projects.
“Malawi’s private sector needs to improve on packaging of projects. The opportunities are there, entrepreneurs just need to be robust with the paperwork and show that the projects they are promoting are bankable.
“The plea from the ministry is that time has come for the private sector to work harder particularly on their investment projects that are in line with conditions of the line of credit,” he said.
Nkombezi said if Malawi accesses this facility, it will lead to creation of jobs, expanded tax base and more tax revenue collection, improved export performance, improved foreign exchange earnings, increased incomes for households and reducing poverty.
In an interview yesterday, Small and Medium Enterprises Association of Malawi (Smea) James Chiutsi said SMEs have generated ideas that have not been financially supported; hence, this would be a chance for private enterprise development.
“SMEs have long decried the provision of essential business elements, one of them is skills in coming up with innovative business ideas and developing bankable business plans,”he said.
In a statement, the AfDB said the LoC is intended to support IDC’s five-year corporate plan for the period 2016/17 to 2020/21.
Reads the statement in part: “Specifically, it will be on-lent to IDC’s clients in key focus areas, including priority industrial value chains such as chemical and pharmaceuticals, metals and mining, agro-processing and agriculture value chains.
“It will also support industrial infrastructure, including energy, logistics, water, and telecommunications, new industries that derive from innovation, science and technology. n