Malawi Innovation Challenge Fund (Micf), a competitive grant facility for businesses to finance innovative projects, is back with a $11 million (about K8 billion) fund to finance projects in agribusiness, logistics and manufacturing.
This is second round of the fund after the first one was launched in 2014 in which nine projects, three in manufacturing and five in agribusiness, were awarded a matching grant pegged at $8 million (about K5.6 billion).
Both windows are expected to create about 11 000 jobs and benefit 33 300 households.
In the first round, the target was to create 3 300 jobs but only 1 100 jobs were created with 250 in manufacturing and 850 in agribusiness.
This means that the target for the first round was not met.
The $8 million (about K5.7 billion in the first round was not exhausted because some businesses did not qualify as they failed to meet the criteria for the fund.
Speaking in an interview on the sidelines of the launch of the second round in Blantyre yesterday, Micf project director Buddhika Samarasinghe said the fund has returned to provide smallest possible financial contribution to a socially worthwhile project in the private sector.
He said: “This is a new way of working with the private sector to try new business models which can have solid impact on the poor so that they can ably participate in the economic development of the country.”
To access the fund, applicants are required to deliver sizeable benefits to a significant number of poor people in Malawi, bring in new, unproven inclusive business models with the potential to be commercially sustainable.
The business has to convince Micf that the project would not have gone ahead without Micf financing of between $250 (about K180 000) and $400 (K288 000) in either monetary or asset form.
Successful businesses are awarded a matching grant within a period of 30 months after submission of their proposals.
In the first round, successful projects under the agriculture window included livestock, horticulture, tea, information technology and groundnuts. The project owners contributed $3.8 million (about K3 billion) while Micf provided $2.3 million (K1.6 billion).
Micf is supported by the United Nations Development Fund (UNDP), UK Department for International Development (DfID) and KFW, a Germany government-owned development bank based in Frankfurt.
German Embassy deputy head of development cooperation Christine de Barros said they are keen to support the private sector through the fund to finance projects that could bring about major change in people’s lives.
“We have very high ambitions for the manufacturing and logistics window of the Micf,” she said.
On his part, Malawi Confederation Chambers of Commerce and Industry (MCCCI) president Karl Chokotho applauded the initiative, saying it has the potential to turn around the economic growth of the country.
“The concept of businesses integrating to impact the community is a good initiative,” he said.
Under the manufacturing window, processed agricultural products, low-cost water filters and milk production are the projects that are currently being implemented. In this window, project owners contributed $4.8 million (K3.4 billion) while the fund provided $3 million (K2.1 billion). n