Malawi Agricultural and Industrial Corporation launched: Created by CDH Investment Bank

A government initiated but private sector led development finance entity, the Malawi Agricultural and Industrial Corporation Plc (MAIC), was launched to the media on Wednesday that will empower agro-businesses and industrial companies to acquire finance assistance, management skills and training as as loans.

It will not be a bank per se but will be a vehicle for spearheading private sector development in Malawi, an autonomous, sustainable and private sector-led development finance entity in line with the Malawi Growth and Development Strategy (MGDS) III.

The government, unlike in other institutions it set up and failed to sustain themselves, will only hold 20 percent of the shareholding plus just two board members while the rest shall be retained by the private sector.

The shareholders shall include financial institutions, government departments, foreign investors as well as the public once it shall be listed on Malawi Stock Exchange.

Misheck Esau, CDH Investment Bank CEO/Managing Director, said the  formation of MAIIC, of which they were part of in conjunction with Malawi Investment and Trade Centre (MITC), followed two feasibility studies done by independent consultants in 2013 and 2018 respectively.

“The key findings of the two feasibility studies are that previous government led development finance institutions [DFI] had been beset by governance problems and the success of this DFI depends largely on it being private sector led and having a strong corporate governance structure.

“And that the existing market financing gap hovers above K2.8 trillion in various sectors. Following these findings, Government of Malawi has established an autonomous, sustainable and private sector-led development finance entity in line with the Malawi Growth and Development Strategy (MGDS) III.

“We are grateful to the government for injecting $25 million as seed capital for MAIIC to crowd-in the private sector and international development finance institutions into the DFI. MAIC will work in collaboration with existing banks and financial institutions and will be a source of capital for the underserved sectors of the economy thereby accelerating the country’s economic growth and development.

“MAIC will play a leading role  in partnership with the government, the private sector and international investors as a catalyst for socio-economic development, job creation and wealth creation in Malawi.

“MAIC is not a bank as such it will not compete with the existing financial institutions; rather it will collaborate with them to fill the market gaps in the financial services sector in order to boost economic development in Malawi.

“For instance, MAIC will aim to de-risk transactions to make them bankable by the commercial banks and microfinance institutions thereby boosting industry growth and wealth creation in Malawi.”

He said MAIC has eight strategic themes to achieve its mandate:

• To mobilize financial and other resources for investment in commercially viable projects, businesses, agriculture and industries (existing and new) aligned with national development priorities.
• To be a catalyst for the creation and development of competitive, commercially sustainable industries to make Malawi a more production and export oriented economy.
• To support commercially viable investments in the public and private sectors of the economy to consolidate and promote growth, productivity, employment, wealth creation and broad-based economic development.
• To co-operate with other institutions and organizations (public, private, national, international or multinational including governments) that are interested in the socio-economic development of Malawi to complement financing to sectors under-served by the banking industry.
• To enhance capacity in domestic firms to enable them improve their performance and compete favorably with their peers in the regional and international markets.
• To invest in commercially viable industry-enabling infrastructure either alone or in association with various partners, both local and international.
• To deepen the utilization of domestic financial resources and attract foreign capital to enhance the resource envelope as a driver for investment in targeted industries and projects.
• To undertake such other activities as may advance these objects sustainably.

“MAIC has a strong corporate governance framework. It will operate as a sustainable and commercially driven entity with separate board of directors independent from government or any government agencies.

“It is the intention of Government of Malawi to limit its shareholding in the entity to 20% when it is fully capitalized. In addition, the entity’s board members will be selected based on relevant competencies including relevant qualifications and experience. This will deal with the fundamental problems of the previous development finance institutions in Malawi.

“MAIC will represent a key financing and support vehicle for commercially viable projects and businesses that would pursue opportunities in key priority sectors of the MGDS III to create sustainable wealth.

“In line with its mandate and in collaboration with existing banks and cooperating financial partners, it will be proactive and innovative in developing products and services that drive private sector development as follows: financing products-project and trade finance, equity and quasi equity, debt and mezzanine debt, loans and leases and non-financing products/services – bonds, guarantees, lines of credit, insurance arrangements and business advisory services.

He said the detailed description of the products will be provided to the market later by the institution and MAIIC will be officially launched on 28 November 2018 by President Professor Arthur Peter Mutharika at Bingu International Conference Centre (BICC) in Lilongwe.

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