United Nations (UN) has committed a $41 million (about K32 billion) allocation to Malawi and three other countries to accelerate attainment of Sustainable Development Goals (SDGs) by creating a new business financing vehicle in the country.
The specialised structured blended finance vehicle, the first of its kind in Malawi, will catalyse strategic financing by providing flexible capital solutions to transformative and inclusive business models that drive the achievement of the SDGs in the country.
In a statement issued yesterday, UN resident coordinator Maria Jose Torres said the programme seeks at to de-risk investments, facilitate access to finance for businesses and increase productivity by focusing on guaranteeing capital access for the most impactful investments in the production chain.
“This is an exciting and ground-breaking initiative that will directly impact mobilisation of additional resources for Malawi to support poverty reduction by increasing investments in agriculture, manufacturing and service supply-chains,” she said.
In Malawi, access to finance has remained a critical issue for most small and medium enterprises (SMEs), especially women, with figures showing that 558 090 women-owned SMEs face difficulties to access formal credit due to collateral demands and working capital challenges.
Torres said the joint programme will support businesses at different levels of growth in the country’s undercapitalised productive sectors, working with the private sector to increase productivity using technology and innovation.
She said: “One of the targets for the programme in Malawi is to integrate 75 000 small-scale producers as investees in the supply chains to increase their incomes and, in turn, expand the country’s revenue base.
“With a total funding of $8 million [about K6.2 billion] from the Joint SDG Fund, the programme is anticipated to leverage an estimated $28 million [K22 billion] in co-financing and $20 million [K16 billion] in private investment.”
Torres said the programme will also provide technical assistance to accelerate growth and reduce associated risks and costs to businesses.
Commenting on the development, Chamber for Small and Medium Businesses Association president James Chiutsi applauded the UN for the initiative, expressing hope that it would grow SMEs in Malawi.
He said: “We have several members in value addition or wishing to venture in value addition, but support has been lacking.
“Malawi, being an agricultural-based economy, the definite route to economic growth is value addition to our raw commodities, which at the mostly are exported unprocessed, fetching very low prices. “
SDGs are a collection of 17 interlinked global goals designed to be a blueprint to achieve a better and more sustainable future for all.
The SDGs were set in 2015 by the United Nations General Assembly and are intended to be achieved by 2030.