Malawi leader Professor Arthur Peter Mutharika will on Wednesday November 28 launch the Malawi Agricultural and Industrial Investment Corporation (MAIIC) at the Bingu wa Mutharika International Convention Centre (BICC) in Lilongwe.
MAIIC is a Government initiated but private sector led development finance entity that has been created to bridge the financing gaps in Malawi’s financial sector as a vehicle for spearheading private sector development.
MAIIC has been created to complement existing banks and financial institutions to create sustainable funding streams for investment in critical sectors of the economy such as agriculture, mining, manufacturing infrastructure development, and small and medium enterprises (SMEs).
MAIIC will not compete with the existing financial institutions; rather it will collaborate with them to fill the market gaps in the financial services sector in order to boost economic development in Malawi.
MAIIC will represent a key financing and support vehicle for commercially viable projects and businesses (both existing and start ups) that would pursue opportunities in key priority sectors of the MGDS III to create sustainable wealth.
In line with its mandate and in collaboration with existing banks and cooperating financial partners, MAIIC will be proactive and innovative in developing products and services that drive private sector development in Malawi.
Anchored by a strong corporate governance structure, MAIIC will operate as a sustainable and commercially driven entity with separate board of directors independent from government or any government agencies.
Background to MAIIC
Formation of MAIIC follows two rigorous feasibility studies done by independent consultants firstly in 2013 and an updated one in 2018.
Following the updated feasibility report, GoM decided to pioneer the establishment of an autonomous, sustainable and private-sector led development finance entity, in line with Malawi Growth and Development Strategy (MDGS) III.
It is intended that the entity, working collaboratively with the existing banks and financial institutions, would be a source of capital for the underserved sectors of the economy thereby accelerating the country’s economic growth and development.
In view of this development, GoM and CDH Investment Bank (CDHIB) entered into a Memorandum of Understanding on 3rd May 2018 to lead the implementation of this project, with full recognition and agreement that the entity shall be a vehicle for mobilizing local and international financial resources to catalyze agricultural and industrial development.
The establishment of MAIIC will be a ground-breaking partnership between Government, the private sector and international investors to play a leading role as a catalyst for socio-economic development, job creation and wealth creation in Malawi.
It must be stated from the beginning that MAIIC is not a bank as such it will not compete with the existing financial institutions; rather it will collaborate with them to fill the market gaps in the financial services sector in order to boost economic development in Malawi. For instance, MAIIC will aim to de-risk some transactions to make them bankable by the commercial banks and microfinance institutions thereby boosting industry growth and wealth creation in Malawi.
MAIIC has eight strategic themes to achieve its mandate:
• To mobilize financial and other resources for investment in commercially viable projects, businesses, agriculture and industries (existing and new) aligned with national development priorities.
• To be a catalyst for the creation and development of competitive, commercially sustainable industries to make Malawi a more production and export oriented economy.
• To support commercially viable investments in the public and private sectors of the economy to consolidate and promote growth, productivity, employment, wealth creation and broad-based economic development “sectors” is hanging should we say “sectors of the economy”.
• To co-operate with other institutions and organizations (public, private, national, international or multinational including governments) that are interested in the socio-economic development of Malawi to complement financing to sectors under-served by the banking industry.
• To enhance capacity in domestic firms to enable them improve their performance and compete favorably with their peers in the regional and international markets.
• To invest in commercially viable industry-enabling infrastructure either alone or in association with various partners, both local and international.
• To deepen the utilization of domestic financial resources and attract foreign capital to enhance the resource envelope as a driver for investment in targeted industries and projects.
• To undertake such other activities as may advance these objects sustainably.
Unlike the previous development finance initiatives before, MAIIC will be a private sector led entity with a strong corporate governance framework.
It will operate as a sustainable and commercially-driven entity, with a separate board of directors independent from government and any government agencies.
It is the intention of GoM to limit its shareholding in the entity to 20 percent when it is fully capitalised. In addition, the entity’s board members will be selected based on relevant competencies including relevant qualifications and experience. This will deal with the fundamental problems that rocked the previous development finance institutions in Malawi.
MAIIC will represent a key financing and support vehicle for commercially viable projects and businesses that would pursue opportunities in key priority sectors of the MGDS III to create sustainable wealth.
In line with its mandate and in collaboration with existing banks and cooperating financial partners, it will be proactive and innovative in developing products and services that drive private sector development as follows:
a) Financing products-Project and trade finance, equity and quasi equity, debt and mezzanine debt, loans and leases.
b) Non-financing products/services – Bonds, guarantees, lines of credit, insurance arrangements and business advisory services.
The detailed description of the products will be provided to the market later by the institution.