BLANTYRE, 17 September 2015 – In Malawi, one of the biggest hurdles to business growth is limited access to credit, particularly for small and medium-sized companies (SMEs). This segment cannot be ignored because it represents over one million companies in Malawi. If these companies had greater access to credit they could more easily expand, compete and contribute to job creation. The government of Malawi has prioritized financial reforms as a priority in an effort to support this sector and to reduce the estimated US$1 billion existing credit gap. And banks are seen as a key part of the solution.
Today the African Trade Insurance Agency (ATI) together with the Bankers Association of Malawi and the Reserve Bank of Malawi launched an insurance product that will help banks increase their lending to local companies.
Under the initiative, banks in Malawi will be able to use credit insurance in place of or in addition to collateral in cases where companies may not be able to provide security for their loans. ATI has tailored the product specifically for banks by covering non-payment risk, the greatest risk they face when lending to small companies. The product is widely used by International and African banks in other ATI member countries, making them more competitive. The product launch in Malawi also includes a workshop for banks to provide information on how banks can access and utilize these tools.
“We are targeting banks as the most efficient way to benefit the greatest number of people within our member countries. Malawi is a founding member of ATI and we’ve helped the country support and attract over $455 million worth of trade and investments in the last five years. With local banks on board, there is no reason why we can’t help Malawi double this figure in an even shorter time frame,” noted Pizzaro Lukhanda, ATI’s Zambian-based Underwriter responsible for Zambia and Malawi.
In 2014, ATI insured $1.3 billion worth of trade and investments in its African member countries and of this amount, 80% of these transactions involved banks.
COMESA member countries founded ATI 15 years ago. Supported by the World Bank and the African Development Bank, ATI’s aim is to give comfort to foreign investors who may think Africa is too risky a destination and also to help trigger more trade within Africa. ATI provides two main products, political/investment risk insurance and trade credit insurance.
In Malawi in 2014, ATI helped the country attract $175 million worth of investments in the infrastructure and telecommunications sectors. In this period, ATI also supported $90 million worth of trade in the agriculture sector. ATI has built a project pipeline in Malawi valued at over $417 million, which reflects the growing demand from investors and local companies.
“We are here to support the government’s economic goals. A partnership with ATI can help Malawi become more attractive to investors and to build a stronger financial base for local companies. This is our primary objective,” added Mr. Lukhanda.
ATI’s Impact in Malawi
Current Projects (As of 31 August, 2015)
Type Project Sector Project Value
(US$ millions)
| Type | Project | Sector | Project Value |
| Investment | An East African contractor rehabilitating road networks | Infrastructure | 2.0 |
| Investment | A financier investing in the construction of a shopping mall | Financial Services | 47.0 |
| Investment | Investment African company supplying fertilizer to the government | Agriculture | 27.5 |
| Investment | An East African company supplying uniforms to a government agency | Services | 0.17 |
| Investment | Investment Increased insurance capacity Services | Services | 16.0 |
| Trade | Supply and installation of telecommunications equipment helping a local carrier upgrade its network |
Infrastructure | 2.30 |
| Trade | Trade facility to help a local company export to buyers in Asia, Europe, the Middle East, S.America and the U.S. |
Agriculture | 90.0 |
| Total Investment | 92.6 | ||
| Total Trade | 92.3 |
Project Pipeline (as of 31 August, 2015)
| Investment | Trade | Sector | Contract Value
(US$ millions) |
| Investment | Services | 30.0 | |
| Investment | Services | 15.0 | |
| Investment | Services | 7.1 | |
| Investment | Infrastructure | 116.0 | |
| Investment | Services | 20.6 | |
| Trade | Agriculture | 33.2 | |
| Trade | Agriculture | 15.2 | |
| Trade | Financial Services | 20.0 | |
| Trade | Financial Services | 3.0 | |
| Trade | Services | 47.3 | |
| Trade | Agriculture | 110.0 | |
| Total Investment | 188.7 | ||
| Total Trade | 228.5 |
