The European Union (EU) will disburse 560 million euros (about K431 billion) to Malawi towards programme support in the next six years, EU ambassador to Malawi Marchel Gerrmann has said.
The funding is to support growth in Malawi through collaboration with government and other stakeholders to develop programmes that focus on addressing private sector needs.
Gerrmann said this on Tuesday during a visit to the Malawi Bureau of Standards (MBS) state-of-the-art Standards Laboratory Complex under construction in Blantyre.
The EU ambassador said the K431 billion funding will also support governance, sustainable agriculture, secondary education and vocational training.
“As EU, we are very supportive of the government’s movement position from aid to trade that is the position that Malawi keenly wants to take and we fully support this move. That is why we have allocated in our programmess in the next five to six years 560 million euros that we are going to invest in Malawi,” he said.
Gerrmann said EU puts so much emphasis on policies in its dialogue with government.
“We always say that it is not about resources, but equally or even more important is the need to make right policies and how Malawi can make better policies and become a very attractive investment destination.
“It is a fact that all countries are aiming at growth for their economies in an effort to stimulate productivity, create employment, and reduce inequalities,” emphasised Gerrmann.
The pledge has come at a time when donor disbursement continues to fall, which has since caused government to largely turn off infrastructure investments, especially in agriculture and transportation.
EU’s commitment will come as a huge relief to Minister of Finance, Economic Planning and Development Goodall Gondwe who recently lamented the disappointingly low grants and funds for foreign financed projects.
For example, in the 2016/17 National Budget, government has so far received grants only K30 billion in funds for foreign financed projects 2016 against a target of K103.3 billion reflecting an underperfomance of 71 percent.
Gondwe told parliament a fortnight ago that foreign funded development programmes have since been revised downwards by 20.3 percent from the approved amount of K257 billion while grants from donors have been revised downwards from K197.4 billion to K158.7 billion.
According to the 2016/17 Financial Statement, development expenditure was projected at K318 billion.
Of this, roughly K283 billion (around 90 percent) was expected to come from donors while nearly K38 billion was to be locally generated.
But at mid-year, donor disbursements to projects fell sharply short of expectations.
The budget envisaged that it would spend K140.5 billion on development by mid-year, but that only turned out to be around K88 billion, of which K76 billion came from donors and K12 billion was from local resources.
Deputy Director in the Ministry of Industry, Trade and Tourism Clement Phangaphanga said while government appreciates support rendered from EU, there is still a lot more that needs to be done to support the country.
“We are excited with developments meant to realise our vision that will help us to realise our goals of becoming a predominantly exporting nation.
“However, a lot more work needs to be done to support the Malawi Growth and Development Strategy (MGDS) and quality infrastructure in Malawi,” he said.
In May 2016, when he was officially opened the 28 Malawi International Trade Fair (Mitf) at the Chichiri Trade Fair Grounds in Blantyre President Peter Mutharika said Malawi is undergoing a silent economic paradigm shift as it is moving from aid to trade by addressing the fundamentals of economic growth which were overlooked for the last fifty years.