EDF posts K9.7bn profit in 2023

The State-owned Export Development Fund (EDF) has registered a profit-after-tax of K9.7 billion for the year ended December 31 2023.

A statement on Wednesday, on the audited results, says the company closed the year in a strong financial position, with current assets of K88.5 billion compared to current liabilities of K37.8 billion.

The financial statements also show that in 2023 the fund’s retained earnings grew to K20.9 billion while total equity increased to K45.0 billion.

“The profitability was mainly driven by substantial recoveries from loan impairment provisions as well as the fund’s ability to create new quality businesses,” the company says.

Financial expert Bond Mtembezeka commends EDF for pulling off such a profit under the difficult economic circumstances in the year under review.

“I think the performance is not bad considering that they made a loss before non-operating income in 2022, but what is clear is that there is a need for EDF to optimise its balance sheet and some things just don’t make financial sense,” he said.

He further explains: “For instance, it’s sitting on an overdraft and borrowings and yet it has cash and cash equivalents of over 27 billion.”

In terms of operational performance in 2023, the fund says it approved transactions worth K23.1 billion out of which K6.46 billion was disbursed.

The approved transactions, EDF indicates, include projects agro-processing that takes the largest chunk of 48 percent, agriculture at 21 percent, tourism at 17 percent, mining at 12 percent and manufacturing taking just 2 percent.

“These projects once operational are expected to create at least 1 500 jobs and save about 120 jobs,” says the EDF statement.

Looking ahead, the fund says it seeks to continue fulfilling its mandate of providing financial resources and advisory services to drive export diversification and development of high-impact projects in Malawi.

However, the EDF observes that lack of bankable projects continues to be one of the major bottlenecks to unlocking financing for transformative capital-intensive projects in the country.

“Considering risks that come with private sector investments in such ventures, EDF has strategically positioned itself as that Development Finance institution (DFI), to de-risk such ventures by providing project preparation and financial advisory services.

On this, Mtembezeka said Malawi, being a Third World country in serious poverty, is a haven of opportunities.

“What is key is to find innovative ways of de-risking such opportunities,” he said.

Nevertheless, the fund says it is poised to expand its product offerings to better support export businesses and economic growth initiatives in the country.