EU sees M1 rehabilitation boosting economy

The European Investment Bank (EIB) and European Union (EU) have officially availed about 95 million euro (about K95 billion) to Malawi for the rehabilitation of the M1 which they tout to boost the country’s economy.

The 20-year loan will be complemented by a 43.1 million euro (about K43 billion) grant under the EU-Africa Investment Platform.

In a statement released on Friday after the loan signing agreement in Lilongwe, EIB said the M1 rehabilitation project will cut transport costs and reduce delays, thereby making it easier for the country to export agricultural produce to ports and neighbouring countries.

Quoting EIB vice-president Thomas Östros, the statement said: “It is a pleasure to be in Lilongwe today to demonstrate the EIB’s support for upgrading Malawi’s principal road that will unlock economic and social benefits both in this country and the wider region.

“The European Union Investment Grant being signed will be combined with the EIB loan that represents our largest ever single engagement in Malawi since the start of operations in 1977.”

Minister of Finance and Economic Affairs Sosten Gwengwe is quoted as having said the EIB and EU will finance the project to the tune of 139 million euro (about K139 billion) in support of the 191 million euro (K191 billion) M1 rehabilitation programme.

He said: “The M1 is crucial for Malawi given the essential need to improve trade and transport across our country and to neighbouring countries.

“The M1 is the main transport route for our agricultural exports and imports from regional ports.”

Gwengwe said the road corridor needs rehabilitation to cut transport delays and associated costs and reduce high maintenance needs.

“So, the financing agreement will enable the EIB loan and EU grant to ensure that Malawi benefits from better transport connections in the years ahead,” he said.

Minister of Transport and Public Works Jacob Hara said improving road links is crucial for the sustainable economic development of Malawi and the Southern African Development Community (Sadc) region.

He said: “The M1 forms part of the north-south corridor, linking Malawi and other Sadc countries to the port of Dar es Salaam.

“Once the works to upgrade the road is complete, farmers in rural districts will benefit from improved access to local markets, and our country will have easier access to international markets.”

Hara further said over the last 40 years, the EIB has helped to improve water supply, agriculture, aviation safety and energy across Malawi.

“The EU has been involved in supporting the local transport sector for some time. This grant comes on top of an ongoing 35 million euro [about K35 billion] programme to rehabilitate rural roads in 12 districts throughout Malawi,” he said.

EU Delegation to Malawi head Rune Skinnebach said the EU is a key partner of Malawi and is proud to support the most important transport investment in the country.

He said: “Upgrading the M1 will help accelerate economic development across the country. It will also provide new opportunities for agriculture and better access to markets.

“We are pleased to provide 43 million euro grant financing, through the EU Africa Investment Platform, for the project alongside national, European and international partners.”

Skinnebach further said the new investment will lead to improved road safety by upgrading the road to modern standards.

The signing agreement was witnessed by Roads Authority (RA) acting chief executive officer engineer Francis Dimu, Roads Fund Administration (RFA) chief executive officer Stewart Malata and representatives of the EIB.

The investment programme to upgrade the M1 road includes rehabilitation of the main road connection to Tanzania, which carries one fifth of national exports and is a key link between eastern Zambia and the Indian Ocean port of Dar es Salaam.

Overall, about 346 kilometres (km) of the road will be transformed, including sections between Karonga-Songwe covering 46km, Kacheche-Chiweta of 66.5km and Mzimba Turn Off–to Kamuzu International Airport Turn-off extending over 234 km.

The Karonga-Songwe section of the road carries 22 percent of Malawi’s foreign trade to Songwe, the border point with Tanzania. Financing for the section is provided by the World Bank.

The M1 upgrade programme will be implemented by the RA under the supervision of the Ministry of Transport and Public Works.

Construction is expected to be completed by July 2024.

President Lazarus Chakwera presided over the launch of the rehabilitation project in July.