The Malawi Agricultural and Industrial Investment Corporation (MAIIC) has unveiled an ambitious plan to raise $1 billion (about K750 billion) in capital in the next decade.
MAIIC Chief Executive Officer Taziona Chaponda announced the ambitious targets in Lilongwe during an event marking the official operationalization of the entity.
The Development Finance Institution (DFI) will help mobilize local and international financial resources to help boost agricultural and industrial development in the country.
MAIIC, which shall operate on the basis of commercial principle, has government as its minority shareholder with a maximum equity of 20 percent.
In MAIIC, government invested K 35 billion – some of which came from the proceeds of the sale of Malawi Savings Bank and Indebank.
Chaponda said they plan to draw resources from pension funds, private equity firms, regional and international DFIs, family offices, and other international investors.
“Next year we will focus on the local market and our target is to raise $80 million during the year with a local focus. In the next three years, our focus will then be broader as we want to raise about $200 million during the period. So the $1 billion will be spread within a period of ten years,” he said.
Chaponda said unlike the banking credit which is short-term in nature, MAIIC shall be offering credit facilities with loan tenors longer than the short-term horizon which he said will also be cheap compared to the commercial market.
Meanwhile, the institution already has about 200 projects shortlisted for funding.
“We are, therefore, geared to support commercially viable investments in the public and private sectors of the economy in order to consolidate and promote growth, productivity, employment, wealth creation and broad-based economic development,” said Chaponda.
Speaking when he officially launched the operational phase of the institution, Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe described the establishment of MAIIC as strategic and an opening to more diversified opportunities.
The RBM boss said currently, Malawi only has high streets banks which, he said, offer predominantly short-term loans as well as the Malawi Stock Exchange which offers equity in business opportunities.
“What we have been missing is the presence of Development Finance Institutions which offers Medium to Long Term project loans. MAIIC is, therefore, filling this gap and is complementing efforts such as the one done recently by the National Bank in establishing the NBM SMEDevelopment Bank,” said Kabambe.
A feasibility study commissioned by government in 2013 showed gaps in terms of a development financial institution in Malawi.
Five years later, it was estimated, through another feasibility study, that the private sector had a financing gap of around $4 billion (about K3 trillion), hence prompting government to pioneer the establishment of autonomous, sustainable, and private sector-led development finance entity in line with the Malawi Growth and Development Strategy (MGDS 111).
The institution, launched last year, is mandated to spearhead private sector development and was established under the Public Private Partnership Agreement.