South African based consultant Thom Mdina has advised government to seriously consider project financing if it is to attain its desired socio-economic goals.
Project financing is a loan structure that relies primarily on the project’s cash flow for repayment and is particularly attractive to the private sector because they can fund major projects off balance sheet.
Mdina, who is also managing director for Mdina Engineering, told Business News on the sidelines of the Malawi Institution of Engineers (MIE) Annual Conference in Mangochi on Friday that Malawi has great innovators who are marred by lack of financing to implement their innovations.
He said: “Government is encouraging growth and innovation at grassroots level and Malawi has great innovators whose main barrier to living their dream is finance. The only missing link that is there is no project financing. We need programmes that look at financing models if we are to achieve a lot.”
Mdina said Malawi has a vast and untapped source of engineering that need support, adding that government and the private sector have to find funding solutions if Malawi is to realise its tremendous potential.
He said despite the financing aspect, there is need for government to put in place legislation that would limit foreign contractors in government projects.
“There is an influx of foreign contractors and expatriates and other companies are even importing engineers. Malawi is one of the few countries where engineers can come and practise without licensing,” he said.
A fortnight ago, the Public Private Partnership Commission (PPPC) said unless efforts to establish the Malawi Development Bank are stepped up, Malawi will continue to struggle to embrace project financing.
“If we see at the nurture of infrastructure that Malawi has, you will see that there is more that needs to be done, one of which is to invest. But investment needs a lot of capital which is not possible right now,” said PPPC director of legal, contracting and compliance Allison M’bang’ombe.