Two Malawi Stock Exchange-listed firms, Standard Bank and Old Mutual, and asset management firm Continental Asset Management have signed a K34.5 billion infrastructure financing agreement with the Roads Fund Administration (RFA) for the construction of six-lane Kenyatta Drive and Mzimba Street.
The agreement binds RFA as project implementer and Standard Bank plc as the lead financier and joint arranger. Old Mutual comes in as co-financier and joint arranger while Continental Asset Management plays a co-financier role.
Finance Minister Sosten Gwengwe has since hailed the bank for leading the private sector in facilitating economic transformation through financing of Malawi’s transport infrastructure.
Speaking after signing the agreement in Lilongwe on Thursday, Gwengwe said the government recognises the three private institutions for financing Malawi’s development agenda.
“The upgrade of the Kenyatta Drive and Mzimba Street is a fulfillment of the Malawi 2063 pillars nine and two, which state that Malawi will build resilient infrastructure, promote sustainable industrialisaton, promote innovation as well as develop low cost and competitive transport systems across all modes.
“Completion of the upgrades will lead to the decongesting of traffic and accelerate movement of people and goods in Malawi’s administrative capital,” Gwengwe said.
The financial agreement clears the way to accelerate substantive construction works for the road, which will become Malawi’s first six-lane road.
Preparatory and other ground-breaking works for the project began in 2021.
Gwengwe said the government values the role of the private sector in economic development, and will continue creating an enabling environment to ensure that the private sector fully engages itself in the economic development of the country.
He said the partnership between the RFA and the consortium of financiers would not have materialised if the environment was not enabling enough for the private sector to participate.
“Let me encourage other private sector players to emulate what the consortium of financiers has done,” Gwengwe said.
As Joint Lead Arranger, Standard Bank Malawi raised K21 billion for the road project.
Standard Bank plc Chief Executive Phillip Madinga said the move entails the bank’s commitment to contribute towards the national economic agenda.
“Our capability to finance a project of this stature highlights Standard Bank’s commitment to contribute to economic growth in line with our purpose which is ‘Malawi is Our Home, We Drive her Growth’. The bank has a desire to see the country achieve remarkable progress in key sectors such as roads and infrastructure.”
Old Mutual will contribute K11 billion and Continental Asset Management will contribute K2.5 billion towards the project.
Old Mutual Group Chief Executive Officer Edith Jiya said the investment and asset management firm shares the passion for the country to achieve sustainable economic growth and reduce poverty through infrastructure development as is the case with the Kenyatta Drive.
“We take pride in being associated with projects that improve Malawi’s transport networks, leading to better interconnection of our cities and direct positive impact to our customers and our nation,” she said.
Continental Asset Management Chief Executive Officer Gillian Kachikondo said the fund management firm has participated in the financing agreement on behalf of those under its care.
“Continental Asset Management is very excited to be part of this progressive project, which is expected to transform the city’s outlook and foster increased economic activity in line with Malawi 2063 vision,” she said.
RFA Chairman Matthews Chikankheni said the financing agreement demonstrates that it is possible for Malawi to undertake large and transformative infrastructure projects through public and private partnership.
“It would not have been possible for the RFA to raise this amount of resources from its internal sources without negatively affecting some of its other road works financing needs,” he said.
RFA will repay the funds over a 15-year period.
