- In 2013, the Government of Malawi (GoM) through the Ministry of Finance, Economic Planning and Development (“MoFED”) under the Financial Sector Assistance Project (“FSTAP”) mandated a team of consultants to conduct a feasibility study (“Feasibility Study”) for the establishment of a development finance institution (DFI) in Malawi. Specifically, the study sought to provide answers to two key questions:
- Is a DFI in Malawi relevant?
- What form should the DFI be established to ensure it is successful and remains sustainable?
- The Feasibility Study report dated 16th December 2013 showed among other things, that a great need existed for the establishment of a development financial institution as there were significant gaps in the supply of and demand for financial services across a number of Malawi’s economic sectors particularly in finance for industrial infrastructure and for small and medium enterprises (“SMEs”) and start-ups thereby dwarfing the economic growth Malawi could attain.
- One of the key recommendations of the study was that the DFI should be established as a public limited company authorised under the Companies Act. Once the DFI has been established and attained the required level of track record to attract private investment, the initial investors should gradually invite the public to subscribe for equity.
- It is, therefore, important to update the feasibility study to afford new insights since 2013 and also close the knowledge gaps in relation to the initial findings. It is anticipated that the knowledge generated from the research would set the stage and map the way forward for the establishment of this entity in Malawi.
- The Government of Malawi (GoM) and CDH Investment Bank (CDHIB) on 3rd May 2018 signed a Memorandum of Understanding (MoU) to establish a private sector-led development financial institution in Malawi. In the view of the GoM and CDHIB the gap in financial services that was identified by the 2013 feasibility study still exists particularly in the area of long term finance.