New K6.2 billion financing vehicle to boost SMEs
A new Joint Programme funded by the United Nations (UN) Joint Sustainable Development Goals (SDG) Fund Tuesday announced that it would create an $8million (about K6.2 billion) business financing vehicle in Malawi.
Among other things, the programme targets to integrate 75,000 small-scale producers in Malawi as investees —firms given money in order to make profits— in the supply chains to increase their incomes and, in turn, expand the country’s revenue base.
The initiative which will see three UN agencies, namely UNDP, Fao and UNCDF jointly working with the government in implementing the programme, is expected to leverage an estimated $28 million in co-financing and $20 million in private investment.
According to the UN, the $28 million in co-financing will come mainly from other development partners, adding to the already allocated $8 million from the Joint SDG Fund, to increase the support under the fund and make it more robust.
The $20 million in private investment are resources expected to come from private investors into the SMEs that the Fund will support.
The private investment will only come once the SMEs are financially sound and profitable to attract additional private investment.
UN Resident Coordinator Maria Jose Torres said in a statement Tuesday that the specialised structured blended finance vehicle, the first of its kind in Malawi, will catalyse strategic financing by providing patient and flexible capital solutions to transformative and inclusive business models that drive the achievement of the SDGs in the country.
“This is an exciting and ground-breaking initiative that will directly impact mobilisation of additional resources for Malawi to support poverty reduction by increasing investments in agriculture, manufacturing and service supply-chains.
“The whole idea of the programme is to de-risk investments, facilitate access to finance for businesses as well as increase productivity by focusing on guaranteeing capital access for the most impactful investments in the production chain,” Torres said.
According to the statement, in reducing poverty and hunger, the Joint Programme will support businesses at different levels of growth in the country’s severely undercapitalised productive sectors, working with the private sector to increase productivity using technology and innovation.
The programme will also promote gender equality by supporting businesses in which women are significantly represented in boards, management, staff, suppliers, or buyers.
“We will also provide technical assistance to accelerate growth and reduce associated risks and costs to businesses. With this programme, we are opening opportunities for job-creation for youths and women and boosting Malawi’s growth,” Torres said.
The initiative comes at a time the Tonse Administration is in the process of creating one million jobs for Malawians.
Malawi is among four countries that were selected from 155 proposals from over 100 country applicants across the globe in the $41million portfolio of the UN’s Joint SDG Fund.
The other countries are Fiji, Indonesia and Uruguay.