Comesa $1bn fund to enhance Malawi trade

Malawi’s internal distribution of goods and services is expected to be enhanced should it tap into the $1 billion (K303 billion) Comesa infrastructure fund being raised by the 19-member trade bloc.

Africa’s largest trade bloc is in the process of raising at least K303 billion, just K1 billion short of the Malawi’s 2012/13 budget, to ease infrastructural challenges faced by the grouping.

Trade experts have long argued that infrastructure challenges such as poor roads, airports and border facilities in the Common Market for Eastern and Southern Africa (Comesa) contribute to increasing costs of doing business.

Ministry of Industry and Trade spokesperson Wiskes Nkombezi told Business News on Tuesday that when all is set, the Ministry of Transport and Public Infrastructure will have to submit a proposal to Comesa on their infrastructure needs.

“This means that if their project proposals go through, it will speed up the movement of goods and service; hence, lessening the trade hurdles,” said Nkombezi.

“Malawi does not have enough and good trade related infrastructure such as good roads and other border infrastructure to facilitate the ease of doing business,” he said.

Nkombezi observed that the effect of the Comesa infrastructure fund will be massive and Malawi stands to reap maximum benefits.

The narrow export base is one of the major constraints to trade in Malawi because this restricts the country’s ability to exploit various markets around the world.

Comesa secretary general Sindiso Ngwenya is quoted in the Trade and Law Centre (Tralac) assaying that the bloc is currently putting together the fund.

“PriceWaterhouse Coopers (PWC), SNR Denton are putting together the first chunk which will be $1 billion,” he said.

Ngwenya said the trade bloc has already signed contracts with PWC as their financial adviser and SNR Denton as legal advisers to help raise the funds.

According to Comesa, the high cost of doing business in the region is due to logistical costs, with poor infrastructure accounting for as much as over 50 percent of such spending.

Poor infrastructure remains one of the challenges countries not only in Comesa, but Africa as a whole continues grappling with.