Lawyer, Mike Chinoko has said project finance can help the country achieve meaningful infrastructure development.
Chinoko, who is also the deputy Chief Law Reform Officer at the Law Commission, said Malawi has no funds to finance large, complex and expensive installations hence the need to adopt this financing model.
Project Finance is described as a funding structure that relies on future cash flows from a specific development as a primary source of repayment. The project’s development assets and interests are held as collateral security.
Making his presentation during this year’s Malawi Law Society Annual General Meeting in Mangochi, Chinoko opined that without the right infrastructure, economic development and prosperity for Malawi will remain a farfetched dream.
“Appropriate infrastructure is the engine and jugular veins for social economic development of any country. But looking at Malawi’s peculiar situation, it does not really have funds itself, majority of people live on a less than a dollar per day and there is donor fatigue, as such project finance can be a proper tool,” Chinoko said.
He claims once the country adopts this financing model for projects, it will generate considerable income to be used by government and also act as a catalyst for investment in other supporting industries.
“These projects demand a lot of money from government to be undertaken, but if we allow investors to come and build or operate the infrastructure and get revenue out of that without having to put anything into it, this would easily help Malawi achieve its goal of infrastructure development hence achieve the ultimate goal of sustainable social and economic development,” he said.
Malawi has in the past few years undertaken some infrastructure developments using project finance like the Kayerekera Uranium Mine and the Nsanje Inland Port.
These projects have, however, not brought significant economic benefits to Malawi.
But Chinoko blames this on lapses in implementation.
“Implementers for both Kayerekera and Nsanje Port ignored the environmental risks attached to the projects. Political risk has also affected the project because with change of government, the effects are also passed on to the projects,” he said.