National Small and Medium Enterprises (Nasme) a countrywide business grouping for SMEs, is pleading for the speedy operationalisation of the Malawi Agriculture and Industrial Investment Corporation (Maiic) which was launched last week to finance the regarded risky long-term investments.
The Maiic was launched as a financial entity following the signing of a Memorandum of Understanding between government and CDH Investment Bank (CDHIB) under the Public Private Partnership (PPP) arrangement with the government owning 20 percent stakes in the firm and 80 percent stakes for the private sector under CDHIB portfolio.
Government injected K22 billion ($25 million) and another K13 billion that government realised from the sale of Malawi Savings Banks (MSB) and IndeBank as start-up capital that totaled K35 billion while CDH Investment Bank will be hunting for financiers to take up the 80 percent deficit.
The launch of the corporation comes after commercial banks in the country have not been financing long-term investment projects, owing to risks that are associated with sectors like agriculture, mining, manufacturing and as a result farmers and some long-term investors have been left destitute.
In a telephone interview with the Weekend Nation, Nasme national coordinator William Mwale explained that SMEs are excited and ready to tap the readily available business financing for production and value chain addition for exports.
Said Mwale: “We are so excited because it has finally been set up. We have been fighting for this for so long since the collapse of Malawi Development Corporation [MDC]. The corporation fills the gap. Let’s hope it will not be politicized.”
He hoped that the corporation would help in the establishment of the tangible SME-led industrialisation with soft lending interest rates and lending conditions, saying SME businesses are currently not viable to significantly contribute to the economy because they have been reduced to the buying and selling of goods and services than manufacturing and value-addition.
“SMEs in the country feel that as long as interest rates are favourable. We only hope the interest rates will not be so high, since the corporation will partner with micro-finance institutions who often peg high interest rates as they are also in business,” said Mwase.
In an interview, CDH Investment Bank chief executive officer Misheck Esau assured SMEs of the speedy implementation of the corporation to meet its intended purpose.
“We are opening very soon because we already have the business plan. What remains is the completion of the operating framework to ensure how the institution will interact with existing financial institutions and cooperatives,” Esau said.
A government and donor-financed study conducted in 2018 estimates the financing gap in private sector to be around K2.8 trillion ($4 billion) and the government established Maiic after realising a significant financing gap that exists particularly in areas of infrastructure development and SMEs. n