Chinese loans necessary for Malawi development: Economists back Mutharika

Malawi cannot construct a new airport at Chileka or increase power generation capacity without borrowing funds therefore the recent announcement by President Peter Mutharika to borrow $1.5 billion (K817.5 billion) from China to fund several infrastructure development projects, is a wekcome development, Economists Association of Malawi (Ecama) has said.

Edward Chilima: Back Mutharika on Chinese loans

Edward Chilima: Back Mutharika on Chinese loans

The loans would be obtained from the Exim Bank of China.

“If we don’t borrow, will we be able to construct an airport? It is a fact that we cannot raise our own resources and the loans will be for good intentions such as Blantyre District Hospital. Only if we were borrowing for consumption, then we would be in trouble,” Ecama executive director Edward Chilima said.

Economist Chilima is quoted in The Nation newspaper saying comparatively, the public debt levels in relation to the GDP was currently on track.

Among the Chinese projects is a 300 megawatts (MW) Kam’mwamba coal-fired power plant with a project cost of $667 million (about K387 billion) to be implemented by Gezhouba Group Corporation Limited of China.

The other projects the President announced include the National Identity Cards (IDs) project worth $50 million (about K29 billion) and construction of a new Chileka International Airport in Blantyre at the cost of $285 million (about K165 billion).

Ecama director has since asked the government to enhance domestic resource mobilisation so that our consumption budget is taken care of with domestically generated funds..

Meanwhile, the newspaper reports that Minister of Finance, Economic Planning and Development Goodall Gondwe would table Loan Authorisation Bills in Parliament in due course

Nations Msowoya, Ministry of Finance’s spokesperson would not go into specifics of the loans such as repayment period and interest rates, but said the terms of Chinese loans were “standard”.

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31 thoughts on “Chinese loans necessary for Malawi development: Economists back Mutharika”

  1. Eugene says:

    If government was responsible there would be no need to sell ourselves once again to the Chinese… Chamba basi. Ife tidzalipira mpakana liti

  2. wangalusa says:

    Looking forward to seeing beautiful infrustractures of Blantyre District hospital and the Chileka International Airport. Those that implement projects are biased sometimes. Because they don’t come from the region where the project is taking place, they deliberately leave out other parts appearing on the plan. I’m only thinking aloud.

  3. Kenkkk says:

    Nobody is questioning the necessity of the Chinese loans or grants, mr Chilima. It is the distribution of projects, transparency and use of these funds that are being questioned. Dpp are too greedy taking all these funds to the south.

  4. Concerned Citizen says:

    Wow, now we are talking DEVELOPMENT. Where have you all been?

    300 MW additional power and from an alternative power source, this is music to my ears.

    That you are borrowing offshore thank you as you will not crowd us out. At least there is a chance of taming this wild inflation and interest fire.

    But please can I urge us as a nation to be extremely serious. If we want tourism to be a major forex earner and we are upgrading our airport, let us get back to basics:

    1. You cannot leave the Mangochi road to be in the state it is in.
    2. You have to put Malawian natural beauties behind all Malawi tourism ads. I am not being biased, but when it comes to tourism, I am very sorry to say first impressions count and visitors will only pay that premium for that beauty element. I mean the ones that appear on advert to publicise Malawi, the members of the national dance troupe, flight attendants, airport ground staff need to be Malawian world class beauties. We have what it takes, but the right resources are being placed in the wrong places. There has to be a better scouting processes.
    3. We HAVE to as a nation improve our service ethic, learn to smile and show genuine interest in our guests and anticipate needs. Is it an issue from that arises from lack of adequate training?

    Wait and see what can be done with 300MW additional electricity. Is this a government venture? Who will manage it? More info needed.

  5. to me, IDs is welcome develop.,a must take. mankhwala athu mazambians,tamzaniansangolandilanawo coz of no IDs.check #s anthu olandira ma ARVs in border districts! zovetsachisoni. nanji chipatala chaulele hehede! ndinagwirapo ntchito m’boma ndi munthu wa ku zambiya,analembedwa ngati mmalawi,is mbewe by name & chewa by tribe,chichewa chapaphata could gov track him? mmalawi without ID is absurd kkk boma ili chitukuko langofikanacho pa uchitsiru ndithu zosowa izi..imagin boma kudziwa pamene munthu wakumudzi wafika zaka 100! kkk boma ilo! otsutsa ukweche uwo!

  6. Nde ineyo says:

    We sold our souls to the Chinese

  7. Martin says:

    I think Mr. Edward Chilima, you are missing the point altogether. Reading through all comments and input from the citizenry when this news of Chinese loans surfaced, no one is saying or against the borrowing itself, people want to know what are the terms of this loan as ita the citizenry that will contribute through tax to pay back those loans. And it is a democratic right for the citizens to know the terms of the loans. The second issue is the allocation of the projects in terms of sharing this national buffet of projects.

  8. innocentphiri says:

    To take aloan for national ID”S is usless kunalibwino kugulula mankhala muzipatala. Ine ndilipanopajoni koma ID ndililinayo yazikolino komasindinabadwilekuno ndiye or obwela atafunakuyipeza ID yamalawi akhozakuzayipeza.

  9. Balamanthu says:

    Chilima-You may not understand what strings and the Chinese aid comes with and the level of indebtedness the country is being saddled with.If only government were serious, they could finance these projects without borrowing.This is going to leave the country with high debt to GDP ratio and I am wondering why you cannot see that!Read Proverbs 22:7

  10. May the president not priorities the issue of ID & tackle with health first. Otherwise the other projects are important as well. Well done APM

  11. Victor Jumbo says:

    If the Malawian people know how much has been borrowed on their behalf then it’s rightly so for them to know how much in total will Malawi as a country pay back to China. The government needs to be transparent in their doings if it is to avoid suspicion and rebuild trust with Malawians. If you believe that you are not doing anything wrong then my question is, Why hide true costs of these loans and what measures have been put in place to safeguard the loans from fraudsters as has been the case in the past. Come out and spell out the repayment programme and it’s total cost to the people of Malawi.
    Victor Jumbo

  12. Katakwe says:

    Edward, the issue is not about borrowing huge loans from China. People are worried with the attached strings to these loans. From experience, these loans from China end up to be exploitative. We should not punish our children for the few of you who fly in and out of Chileka Airport. The revenue generated will not be sufficient to pay off this loans. You will need to market the airport for international flight. But that depend on the level of travelers to the outside world. The issue of energy plant is a very good idea to improve our electricity supply to support our industrialization drive. But our choice should be coal powered plant? This is the question our engineers needed to have done good homework…. We will be importing coal from other countries to run this plant. This is where the issue of sustainability will come into the equation. There will be issues of transportation, payments on time etc. Chikapezeka kuti mulibe coal to run the plants and will be definitely in black out like the fuel crisis we had. You need also to understand geo-politics plays a big role. A country that depends on other countries to supply energy is always on big risk of being cut off if things turn ugly. You might smiling for another similar “Nsanje Economic disaster”! Couldn’t we think of another hydro-plant in the North around Livingstonia. The plant will pump water from the lake and later run the turbines. You will not import water in this case. This is more sustainable….. and the electricity generated can supply the whole country and even with excess to export. We can become an exporter of electricity and the revenues can be used to pay back the loans. This is positive thinking! Learn from Lesotho where they have an ambitious water supply project which even supply South Africa. The revenue helps them to pay back the loans and for their own external needs. Azungu aja ankayendetsa Escom nthawi ya UDF had this project on their plans……Your local engineers think of coal plant which many countries are abandoning.

  13. George phiri says:

    Its about time we woke up to the realities of life. The government should actually establish ma ubale with countries like China, Russia, Germany, Iran, Qatar. These are the masters of the show. If you look at America and Britain, they owe these ciuntries big time. Chileka Airport is long overdue for upgrade. Let Chinese people work on it.

  14. abinte says:

    Chilima is very right only that when we borrow let malawians know when to pay and how? Thats what we want.osati kumatilembera line kuti izi sitiyenera kudziwa ndiye zodziwa ifezo ndiye ziti.zomanga jigo

  15. Mbiyazodooka says:

    I dont remember anyone saying getting the loan was a bad idea. All I have heard is the demand for more details about the conditionalities as well as the need for equitable spread of the projects.

  16. James says:

    Chilima you are right. We need to borrow for productive purposes. But the problem is that development is concentrated only in the South and Centre. For example, north does not have an airport. no good roads, no stadium etc.. Is it fair? In South Africa, for example, all the provinces have good infrastructure; good roads, airports, stadiums etc. That is why the north is crying foul.
    The logical thing that government should have done is to include one major project for the north. So you spread development across the region. Don’t you wonder that the north has no power station when it has a lot of coal?

  17. Trendex says:

    Is this the same money that has gay/ lesbian attachments?

  18. San says:

    I am no economist – so pardon me if this comes across as a stupid question.

    Why do we go as far as China to seek loans for key developmental projects when we have banks in-country (or within Africa) that may be equally able to grant the loans?

  19. steven smoke says:

    Athu ndimaso but your welcome kwanukwanu kwayini kunenetsa.

  20. Nyamiti says:

    How do other nations embark on multi-million dollar developments “Ethiopia” without donner support? It’s not correct to say that we cannot raise our own resources to construct the Chileka airport. The problem is our fiscal discipline. We can not manage our own resources. Borrowing is simply increasing a burden on already ailing economy. Don’t cheat people.

  21. SONG says:

    Where is the cake for north Malawi. If you don’t share any project for the north people then we will declare north independent. Try to miss or if you don’t rescind your decision.

  22. What we have seen so far is borrowing. Good it adds on already borrowed loans which are not paid. Since 1994 Malawi has borrowed billion of dollars for development. HadIf all the billions had gone to it meant to day at least we could have seen improvement in development. Even with this new loan it will not make a difference. Some of the money will go to Peter and some divided among throse who think they have right. It is not the first time Malawi has borrowed or ge aid. The problem is when the money will be paid back. Chinese are not stupid. Unfortunately there is no loans on human development. No new hospitals or clinics build. Malawi with 15 millions need many clinics in rural arears. No doctors and enough n urses. These is human development. If you dont invest in human can u run a county where people are suffering like Malawi. The whole young generation have no jobs. How will be the future? Does people like APM has a dream of future? NO! He has no children or grandchildren living in Malawi why should he care.

  23. mtate mike rsa says:

    You can not run the country like
    Malawi without the help of donorcommunity obviously you are mentally disturbled go to mental hospital u’w’ll be assisted.

  24. Mwendanato says:

    TELL THESE FAKE POLITICIANS ECONOMICS AND SO CALLED ACTIVISTS, SOCIAL AND POLITICAL COMENTATORS AND MCP/PP GURUS

  25. SAPITWA says:

    wadya ban ameneyo.

  26. Cashgate1 says:

    As long as sizizasololedwa ndi makosanawa. Koma nkhawa ndiyaikulu.

  27. mtate mike rsa says:

    He said he will run the government with no donor support,wat shit is this now.primary,secondary higher fees Bakilu Muluzi made it free for everybody chilima plz if u get money from government dont talk shit.36% is a minoriy stolen government he is going to rule malawi with strong opposition bcoz its only lomwes who voted fo you,look now the country is like there is no president.

  28. mtate mike rsa says:

    Kod chilima iwe ndiyeutinso backing trash.You forget that the deal was already sealed during Mam Joice B.Nowsomebody to claim ownership you coment on cheap politics,are you ablind person,you dont even understand the muthalikas politics.What is good i mean in ur house you buy acar but you dont have money for fuel,lnsurance how can that car move around
    Chilima dont provoko an insult just remain quit,the government is failing to fix insecurity,high food prices,impasable roads,no pay civil servants with his brother’s rotten kwacha with the
    faces of dogs i mean 20k

  29. The real ujeni says:

    Do your own projects don’t just relie on outsiders to do for you. You sit idle all year just waiting for outsiders to do projects for you. With Tha attitude don’t expect to move out from the bottom of the poorest ladder

  30. Professor Dr. James Napwiri Phiri says:

    Bola Edward Chilima wanena za nzeru!! Osati Kachaje akuti ife tikusauka chifukwa tikufuna za ulele!! Mapwala ake !! Much as I agree with you, they should be transparent on the interest rate and how we will repay the loans.

    I have no problem with borrowing to increase the power generation because this in turn will attract investors. There is a need to look at the water problem because that becomes an ingredient in manufacturing industry too .

    I am at pains with the borrowing for national Ids. What investment is this? In fact this is an operational cost which is needed to be sustained by our selves for the rest our lives? Are we saying we will be borrowing just to get every one registered. NO please, Chilima, on this one , I am not with you

  31. BRAJOE says:

    Borrowing money for constructing the airport? How are you going to pay back?

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