Malawi Stock Exchange (MSE) listed Standard Bank of Malawi has entered into a partnership with the Export Development Fund (EDF) designed to support implementation of bankable projects and programs that are expected to prop up Malawi’s export sector.
The partnership will see the latter, using its financial instruments, de-risking Standard Bank by allocating capital to projects in growth sectors of the economy.
The arrangement will, however, only focus on large-scale deal which requires syndication, co-financing, asset down selling and other forms of risk-sharing.
The new partnership comes at a time when Malawi is struggling to expand its narrow export base which, since time immemorial, is anchored by a handful of cash crops, led by tobacco, which alone accounts for over 60 percent of the entire national export revenue basket.
However, tobacco is currently reeling from an intense anti-smoking campaign, championed by the World Health Organisation’s Framework Convention on Tobacco Control (WHO-FCTC), which in essence has reduced global demand for the leaf over the past years.
Malawi’s stunted export base has also dealt Malawi a heavy blow over the years as it has led to the widening trade gap or the gap between imports and exports, which is currently estimated at a whopping $1 billion (approximately K801 billion).
Speaking after the two institutions signed a memorandum of understanding (MoU) in Lilongwe, Standard Bank Chief Executive Phillip Madinga said the agreement will go a long way in reversing anomalies that have stagnated Malawi’s export capabilities.
He said: “This agreement comes as a result of our collective desire to rectify the trade anomalies that have stagnated Malawi’s economy for many years. Together with EDF we will build viable synergies to help local producers penetrate foreign markets and reverse the trade deficit this country has experienced for many years.”
Madinga added that their agreement with EDF also resonates well with the dynamics of regional, continental and global markets that Malawian producers intend to penetrate.
He added: “There has never been a better time than now for Malawi to explore viable export markets. Being a future-ready bank, we remain committed to finding new ways to make dreams possible for all Malawians. We will continue offering smart solutions for entrepreneurs who seek leverage in foreign markets, be it in Sub Saharan Africa, Middle East & North Africa (Mena), Europe, Americas and Asia,” said Madinga while singling out the recent operationalization of the Africa Continental Free Trade Area (AfCTA) as a good footing for expanding the export base.
In his remarks, EDF managing director Gerald Nsomba said the partnership has come at the right time when commercial banks have a growing need to cushion against risks that arise when dealing with bankable projects.
Nsomba was upbeat that going forward, Malawi economy will witness a boom in the sectors of infrastructure, energy, power, mining, tourism, and agriculture, among others, buoyed by the new partnership.
EDF is a subsidiary of the Reserve Bank of Malawi that has been entrusted with the responsibility of enhancing the export machinations by providing financial solutions to both producers and exporters.