Malawi Agricultural and Industrial Investment Corporation (Maiic) says despite the development finance institution receiving about 200 investment proposals for funding, many of the businesses are yet to master writing convincing business proposals.
Maiic chief executive officer Taziona Chaponda said in a written response on Wednesday that with such developments, it is difficult to fund a project or enterprise without a clear business plan or indication of the means to repay the loan.
But he said the institution, operating under a Public Private Partnership (PPP) model, will work closely with businesses to build their capacity to better articulate their business plans.
Chaponda, who could not quantify the faulty proposals, said the financing proposals come from a wide range of investment areas, including agriculture, agribusiness, mining and manufacturing.
“Many of the proposals fall in line with Maiic’s mandate and the national development priorities. We are now reviewing the proposals to develop an investment pipeline,” he said.
Maicc plans to partner microfinance institutions (MFIs) as one of its unique product offering to bolster their lending activities to small-scale businesses, farmers and start-ups.
“This unique offering comes from the understanding that rural entrepreneurship is a critical path for growing Malawi’s economy and, when supported, will drive productivity, innovation and job creation,” said Chaponda.
Weighing in on the poor proposal presentation, Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe said in an interview on Wednesday that unlike commercial banks Maiic, as a development bank has a responsibility to help businesses shape up their investment proposals.
“The idea of Maiic was to provide access to finance for those who could not access it now, owing to a number of reasons such as cost and security considerations.
“At times, local banks do not finance long-term projects. That is the gap they are supposed to fill and we hope they will manage that aspect on the financial market,” he said, observing that a development bank works closely with the applicants to help them shape up their proposals.
The establishment of Maiic follows findings of a study in 2013 and 2018 that found that government-led development finance institutions were plagued by numerouns government hitches.
Maiic’s shareholding structure consists of Malawi Government’s stake at 20 percent and 80 percent to come from the private sector, the public and foreign investors.
The government has already provided the initial seed capital of $25 million (about K18.5 billion) and that Maiic is engaging local financial institutions, the private sector and international development finance institutions to raise the rest of the capital.