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RFA hunts for another bond

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By William Kumwembe:

The Roads Fund Administration (RFA) has unveiled plans to secure another bond—a debt investment in which an investor loans money to an entity-for implementation of projects yet to be disclosed.

RFA Chief Executive Officer, Stewart Malata, said this on the sidelines of a symposium on pension funds investment in infrastructure in Blantyre.

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This comes after RFA secured a K7 billion Roads Bond Facility in 2017 from the Malawi Stock Exchange-listed NBS Bank in collaboration with its sister company, Nico Asset Managers, to finance the rehabilitation and construction of a 4.4-kilometre dual carriage stretch from Area 49 to Parliament Building in Lilongwe.

The cost of the facility will be settled over five years using the fuel levy and is payable by coupons at the 91-day Treasury bill (T-bills rate plus 1.75 percent interest per annum).

Commenting on prospects for next projects, Malata said the RFA intends to tap from the pension funds’ pull on the local market.

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Pension assets were reported at K757.4 billion as at end March 2019 from K74.8 billion in 2011.

“The debt financing is one of the strategic ways that we would like to take. We have seen this work. We are looking at embarking on other projects. Currently, our implementing agency, the Roads Authority, is looking at it and doing feasibility studies.

“Very soon, we will go on the market with one or two of the projects to raise resources, and we have no doubt that we will raise the resources,” Malata said.

Malata said the fund also intends to secure extra funding for putting up toll gates across the country which, he said, would be ideal for expanding RFA’s income base.

RFA is responsible for managing fuel levy.

The government changed the fuel pricing regime to automatic pricing based on a set formula and also changed the policy on fuel levy from a fixed rate per litre to a percentage of the landed costs.

Figures provided by Malata show that RFA’s annual revenue base for the 2018/19 financial year stood at K38 billion.

The Fund is projected to raise about K43 billion in the coming financial year, according to Malata.

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