MP Lunguzi query Malawi lines of credit: Parliament approves K6bn loan from India  for Blantyre water

Dedza East MP Juliana Lunguzi (Malawi Congress Party-MCP) querried Minister of Finance, Economic  Planning and Development Goodall Gondwe on the burden of taking loans from India and other international lending agencies which lack finer details and that the younger generation will be left with the burden of paying back the loans.

Finance Minister Goodall Gondwe: Tabled the bill

Finance Minister Goodall Gondwe: Tabled the bill

Lunguzi made query in Parliament when Gondwe presented to borrow over K6 billion (about K23.5 million) from Export-Import Bank of India for the development of a new water source for Blantyre Water Board (BWB).

“There are no details of the project so that relevant [Parliament] committees should be able to follow up step by step where every dollar will be going. We are robbing Malawians because of the way we are doing these things.

“Just having a blue document of two pages is not enough. The details of the project are important for us to appreciate what we are approving the funds for. Otherwise, I remain skeptical until I see the water coming to Blantyre,” said Lunguzi.

The MP’s concerns came following criticism that the age-old tradition of borrowing money from foreign financial institutions has done more harm than good to the Malawi economy and its larger development agenda.

It is noted that loan funds are obtained, most of them are either diverted to unintended use or actually used to repay other loans, which may have accumulated so much interest.

For example, the Government of Malawi, with the full authorization of Parliament, has over the past eight years, borrowed a total of US$156, 500,000 (about MK109 billion today) from the Export and Import Bank of India for various development projects but there is nothing to show for it today.

For  instance, on May 14, 2008, the Malawi Government borrowed US$30,000,000 to finance supply of irrigation, storage, and tobacco threshing plant and for the One Village One Product (OVOP) project.

On 1st February, 2011, your government borrowed US$50,000,000 for the purpose of Cotton Processing Facilities, Green Belt Initiative, and OVOP.

On 13th December 2012, government borrowed US$76,500,000 for development of irrigation network under the Green Belt Initiative and development of fuel storage facilitie

Commening on the bill presented by Gondwe, Lunguzi said she was sceptical because of the way government has handled loans of that nature.

She asked the Minister of Finance to provide a blue print of the Bills so that relevant committees of Parliament would be able to follow how government have used every cent that it borrowed

After deliberations, Members of Parliament authorised government to borrow  the money money from India to allow BWB finance the construction of water supply system from Likhubula River in Mulanje to Blantyre water supply area.

“The objective of the Bill is to authorise the Minister of Finance, on behalf of Malawi Government, to borrow from the Export-Import Bank of India sums of not exceeding $23.5 million for the purpose of financing the construction of a water supply system from Likhubula River to Blantyre area and for no other purpose,” reads the approved Bill.

Accoridng to Gondwe, people from other districts such as Mulanje, Thyolo and Chiradzulu will also benefit from the project.

Speaking when he delivered the State-of- the-National-Address (Sona), President Peter Mutharika said that government will ensure that foreign loans are obtained primarily to finance development projects that are thoroughly appraised and are of strategic importance to the country. He stressed that projects must be justified to be of high rate of return.

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The Commentator formerly known as Obanda Joyce Nti
The Commentator formerly known as Obanda Joyce Nti

Don’t waste your breath Juliana. Ndalama zimenezo azikakatula. The honorable minister probably thought you were talking nonsense.


“honorable minister probably thought” does that not tell you something? Why did they not tell us what Gondwe answered?

Just trying to make Juliana look clever, she was “probably” made to look stupid by Gondwes reply.

This clearly indicates that the Project Charter document was not made available for scrutiny. Every tax payer would want answers as to what happened to current source of water and why a new source.Would also be interested to know NPV, IRR and WACC and payback period of the project for the water consumers.Since this project is for the Blantyre Residents, then these Residents should pay the costs and not all the tax payers. It would also be ideal for Blantyre Water Board to own this debt to justify when raising the water rates to meet the cost of the project… Read more »



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