The World Bank has approved a $60 million (about K102 billion) facility through a International Development Association grant to ease importation of essential commodities such as fertilisers and pharmaceuticals and support economic recovery.

The bank said in a statement dated November 20 2023 that it would use the De-risking Importation of Strategic Commodities project to provide back-stopping support to local commercial banks to ease the flow of critical imports amid concerns over a loss of confidence from corresponding banks.

Reads the statement in part: “Specifically, the project provides backstopping support on the payment obligations of local issuing banks to their correspondent banks, targeting the import of fertilisers and pharmaceuticals.”

The approval follows discussions between the World Bank and the Reserve Bank of Malawi (RBM) for the multilateral financial institution to act as a guarantor to help ease the burden local firms are facing when importing strategic commodities.

Riddell: It will support economic recovery

World Bank country director Hugh Riddell is quoted in a statement as having said the project aims to support economic recovery with a specific focus on the private sector.

“The project complements the government-led macro-fiscal reforms under implementation and aims to restore the long-term functioning of markets,” he said.

Minister of Finance and Economic Affairs Simplex Chithyola Banda said they requested the World Bank for the project to boost confidence in the country’s commercial banks.

In an earlier interview, RBM spokesperson Mark Lungu said the central bank will recommend financial institutions to participate in the programme and what products to be included, among others.

This three-year project builds upon existing World Bank, International Finance Corporation and Government of Malawi programmes on enhancing access to trade finance.

Malawi requires $250 million (about K425 billion) to meet its import needs in a month which translates to $3 billion (K5.1 trillion) per annum, according to RBM data.

This is against exports valued at slightly over $1 billion (K1.7 trillion).

The World Bank has approved a $60 million (about K102 billion) facility through a International Development Association grant to ease importation of essential commodities such as fertilisers and pharmaceuticals and support economic recovery.

The bank said in a statement dated November 20 2023 that it would use the De-risking Importation of Strategic Commodities project to provide back-stopping support to local commercial banks to ease the flow of critical imports amid concerns over a loss of confidence from corresponding banks.

Reads the statement in part: “Specifically, the project provides backstopping support on the payment obligations of local issuing banks to their correspondent banks, targeting the import of fertilisers and pharmaceuticals.”

The approval follows discussions between the World Bank and the Reserve Bank of Malawi (RBM) for the multilateral financial institution to act as a guarantor to help ease the burden local firms are facing when importing strategic commodities.

World Bank country director Hugh Riddell is quoted in a statement as having said the project aims to support economic recovery with a specific focus on the private sector.

“The project complements the government-led macro-fiscal reforms under implementation and aims to restore the long-term functioning of markets,” he said.

Minister of Finance and Economic Affairs Simplex Chithyola Banda said they requested the World Bank for the project to boost confidence in the country’s commercial banks.

In an earlier interview, RBM spokesperson Mark Lungu said the central bank will recommend financial institutions to participate in the programme and what products to be included, among others.

This three-year project builds upon existing World Bank, International Finance Corporation and Government of Malawi programmes on enhancing access to trade finance.

Malawi requires $250 million (about K425 billion) to meet its import needs in a month which translates to $3 billion (K5.1 trillion) per annum, according to RBM data.

This is against exports valued at slightly over $1 billion (K1.7 trillion).

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