Revealed: The billions in bank loans building Malawi’s biggest roads

Malawi’s crumbling road network is being transformed through a sweeping borrowing programme worth billions of kwacha — with motorists across the country footing the bill every time they fill up at the pump.

The Roads Fund Administration (RFA) has revealed that so-called “road bonds” are allowing government to fast-track major infrastructure projects long before enough revenue has trickled in from fuel levies — effectively borrowing against future petrol and diesel sales to get roads built now.

RFA Public Relations Manager Masauko Mngwaluko explained the mechanism in blunt terms, confirming it amounts to government taking out loans from financial institutions to be repaid gradually using proceeds skimmed from every litre of fuel sold.

“A road bond in simple terms is a loan taken from financial institutions, allowing the government the flexibility to front load infrastructure investment while repayments are made gradually using proceeds from the fuel levy,” Mngwaluko said.

Among the flagship projects already delivered using the scheme are the Area 49 Presidential Drive dual carriageway and the Area 18 Interchange — both financed through a road bond facility from NBS Bank that has since been paid off in full.

Mngwaluko revealed the same borrowing model was used to fund the Chilima Highway, running from Parliament to Shoprite, as well as the Mzimba Street dual carriageway leading to Kamuzu Central Hospital.

And the borrowing shows no sign of slowing down. Mngwaluko confirmed government is now leaning on the same bond mechanism to finance the rehabilitation of the M1 Road from Bunda Roundabout to Kameza — with contractors already moving equipment onto site.

“We are also using bonds to finance the rehabilitation of the M1 Road, allowing us to secure funding in advance instead of waiting to collect road levy revenue,” he said.

Ministry of Transport and Public Works spokesperson Chikondi Chimala confirmed the borrowing spree extends even further, revealing the same financing model is bankrolling the mammoth 58.4-kilometre Golomoti to Monkey Bay Turn Off M010 Road Rehabilitation Project.

The scale of the borrowing involved is staggering. The project has been split into two lots — Lot 1, covering the 30-kilometre Golomoti Turn Off to Chantulo section, is being built by Unik Construction Engineering Limited and financed through a colossal K100 billion loan from FDH Bank.

Lot 2, spanning the remaining 28.4 kilometres from Chantulo to Golomoti, is being handled by Mota Engil Africa, backed by a further K100 billion loan facility from National Bank of Malawi — bringing the total borrowing for this single project alone to a staggering K200 billion, with construction expected to take 24 months.

The RFA insists the system is sustainable, confirming that road levy proceeds continue to be channelled into a dedicated Road Fund, used both for ongoing road maintenance and repaying the mounting infrastructure loans taken out on the country’s behalf.