First Merchant Bank (FMB) and the United States Agency for International Development (Usaid) have entered into an agreement that will see the US government agency guaranteeing loans to Malawi registered micro, small and medium scale enterprises.
FMB Group General Manager, Philip Madinga, disclosed Tuesday that the loans will be provided to eligible enterprises in agriculture, education and microfinance sectors.
“Qualifying projects are limited to investments designed to encourage growth of borrowers,” he said.
Madinga specifically mentioned enterprises in warehouse receipts for agricultural value chain products, education, health, agriculture as well as microfinance targeted at supporting inputs, production, irrigation, equipment, aggregation, handling, storage, and shipment.
He said for each qualifying loan, the maturity date for the entire principal amount of such a loan shall be no less than six months, unless otherwise agreed by Usaid and that the loans are payable in Malawi kwacha if made in Malawi kwacha and US dollars with loans provided in US dollars.
For loans to microfinance institutions, Madinga said they are aimed at encouraging the growth of the sector in Malawi as long as it is not meant for refinancing, repayment or repurchase of an existing loan.
Eligible institutions will be expected to provide a report that their activities are environmentally sound and comply with applicable laws and regulations of Malawi, according to Mataka.
They will also be expected to submit annual audited financial statements in accordance with accounting standards generally recognised in Malawi.
“Usaid will also reserve to carry out additional audits, financial reviews, or evaluations as it considers appropriate in view of its status as guarantor of the loan,” said Madinga