Malawi Investment Portfolio - FINAL VERSION

Malawi InvestmentPortfolioMALAWI INVESTMENT ANDTRADE CENTRE (MITC)

1. Malawi Profile1.1 Country profileMalawi is a country in Southeast Africa with a population of 15.4 million people.Its predominant languages are Chichewa and English. The capital city isLilongwe and the main commercial city is Blantyre.Malawi is a low income country with a GDP ofUS$5.6 billion and Gross National Income (GNI) percapita of US$360. The country has experiencedpositive economic growth over the past 10 years.However, the country is currently in an economicrecovery phase after a series of economic shocksover the past 2 – 4 years.The Malawi Government’s recent policy reforms areaimed at enhancing economic and socialdevelopment by enabling a conducive businessclimate and an increase in private sector investmentas the means for driving growth.The country’s economy is largely agriculture basedand the Government’s policy reforms aim atsupporting diversification of the economy. To this effect, a number of key prioritysectors and export clusters have been identified for investment and these areoutlined in the country’s development strategic plans (i.e. MGDSII, ERP andNES).1.2 Key facts and figuresGDPGNI per capitaUS$5.6bnUS$360Population 15.4mExchange rate $1 = MWK 383(at 10.03.2013)2011 figures. Source: http://data.worldbank.org/country/malawi5

2. Investing in Malawi2.1 OverviewMalawi is a unique and rewarding place to invest and work, as it providestransparent and tangible options to contribute directly to the country’s economicgrowth. The country’s business is conducted in English, with a growingmanagement and middle class workforce, and its priority sectors offer highgrowthpotential that can be achieved through increased investment.In addition to the potential high commercial returns that can be achievedthrough increased private sector investment; other benefits can include socialimpacts such as reduction of poverty levels, improvements to health andeducation standards as well as youth development and women empowerment.Pre-identifiedsupply gapsThe Malawi economy faces an imbalance due to higherimport levels than exports. As such, a number of priorityexport clusters have been identified in the NES in order tofulfill local and international supply demands. Current, lowexport levels are primarily constrained by a lack of affordableinvestor funding.New international market opportunities have already beenidentified and these can be served with an increase inproduction capacity. For example, an increase in the supplyof pigeon peas (toordhall lentils, in high demand in the Indiansub-continent and UK Asian markets) can be achievedthrough commercial up-scaling of agro-processing facilities.Identification of new markets provides mitigation againstpotential demand side risks.High cost ofborrowingThe interest rate on loans currently stands at around 40%:the cost of borrowing within the traditional financial sectorindicates the returns that are available, and yet also indicatethe need for lower cost, external investors to provideaffordable finance to businesses.6

Contribution todevelopmentThe Government’s recent introduction of the threedevelopment strategies (MGDSII, ERP, NES) provides astrong indicator on the level of commitment to transformMalawi’s economy into one of the fastest growing in Sub-Saharan Africa.Additionally, Malawi is taking positive steps to improve theoverall business and investment climate and therefore itsranking for ‘Ease of Doing Business’. This commitment isalso demonstrated by the recent restructure of theInvestment and Export Promotion Agencies, to create asingle effective entity in the form of the Malawi InvestmentTrade Centre (MITC).A coherentnationalframework forinvestmentThe country’s framework for investment planning is coveredin the key development strategies (MGDSII, ERP, NES). Thestrategies provide a coherent and alignment of prioritysectors and export clusters for investment.2.2 Specific investment incentivesMITC has the responsibility of formulating and further enhancing Malawi’sincentives for inward investment and ensuring these meet stakeholderrequirements.The table below illustrates consideration of business requirements andincentives offered:BusinessrequirementIncentiveExportProcessing Zone(EPZ)Expatriation ofprofitsExpatriation ofincome• Capital equipment and raw materials are duty-free• No excise tax is imposed on the purchases of rawmaterials and packaging materials made in Malawi• No value added taxPossible under EPZ rules and as foreign exchange (throughforeign currency account).Under normal business operations, approx. 66% may beexternalized, with the remainder expected to remain in7

Malawi.Corporation taxInvestmentProtectionTax breaks onlarge investmentsBusiness PermitsLand rights andpropertyForex accountsMITC GeneralIncentivesSummary30%: under review• Constitution of Malawi guarantees protection of assetsof foreign investors• Member of the Multilateral Investment GuaranteeAgency (MIGA)• Signatory to the international centre for settlement ofinvestment disputes• Member of the Africa Trade Insurance Agency ofCOMESA• Allowance for manufacturing companies to deduct alloperating expenses incurred up to 25 months prior tothe start of operations• Loss carry forward of up to seven years, enablingcompanies to take advantage of allowances• Additional 15% allowance for investment in designatedareas of the country• 50% allowance for qualifying training costsCurrently offered when a minimum of US$50,000 isinvested, though this may be lowered to US$20,000.Property rights are based on Malawian Constitution.Foreign exchange accounts may be held with the CentralBank.• 100% Investment allowance on New and UnusedIndustrial Buildings, Plant and Machinery• Allowances of up to 40 percent for used buildings andmachinery• Zero duty on raw materials used in manufacturingExemption of Duty, Excise and VAT on IndustrialMachinery and Equipment• Exemption of duty on direct importation of goods usedin the tourism industry• There are no restrictions on remittance of foreigninvestment funds (including capital, profits, loanrepayments and lease repayments) as long as thecapital and loans that were obtained from foreignsources were registered with the Reserve Bank ofMalawi (RBM).8

2.3 Risk assessmentPOLITICAL RISKMalawi is renowned for being a peace loving country, and was rated as thesecond most peaceful country in Africa by the Global Peace Index in 2009. Thecountry has no history of civil war or conflict.In 1994 the country went through a peaceful political transition following thirtyyears of single party rule and held its first ever multi party democratic elections.Since then, the country has held three further peaceful democratic electionswhich were all deemed free and fair by international observers. This illustratesMalawi's maturing democratic and governance structures.Furthermore, in April 2012 Her Excellency Mrs. Joyce Banda the former Vice-President and now incumbent President was elevated from office of Vice-President to office of President following the untimely death of her predecessor.This was in line with the constitutional requirement. Since then, the Governmentof Malawi has initiated pro-private sector and inward investment growth plansoutlined in the country’s key development strategies (MGDS II, ERP, NES).FINANCIAL RISKIn April 2012, Malawi ceased operating the fixed currency regime and adopted afloating currency regime in line with common international practice. As such, thecountry’s currency, the Malawi Kwacha, now reflects its true market value.As Malawi looks to increase its export base and improve the overall balance ofpayments position, the strength of its currency is also likely to improve.Therefore, this should protect against any significant currency fluctuations in thelonger term.Furthermore, investors can look to protect their investment against significantadverse currency movements by hedging their positions accordingly.SUPPLY CHAIN RISKThe investment prospects presented in this document cover various prioritysectors; this is in support of efforts to diversify Malawi’s economy from anAgricultural base.A diversified product export base will help reduce supply risks associated withthe significant dependency on the agriculture sector.It is acknowledged that the shift from an Agricultural base cannot beinstantaneous. Investment prospects being promoted cover priority export9

clusters such as agro-processing and manufacturing products where Malawianproducers may realise their local and export market opportunities. Thisapproach can enable a smooth transition whilst taking advantage of currentagriculture sector strengths.Additionally, Malawi also excels at organising small holder farmers throughvarious associations and cooperatives. This in turn enables effectivecoordination of support for the farmers through various market-focusedorganisations operating at the National or Regional level (e.g. NASFAM and SelfHelp Africa).MARKET RISKThe aim of the majority of the investment prospects presented here is to eitherfacilitate import substitution or increase exports. This is coherent with the recentcurrency flotation and subsequent devaluation which has made imports moreexpensive and exports much more competitive. Malawi is now well placed tosignificantly increase its exports by taking full advantage of its COMESA andSADC membership, AGOA signatory, and eligibility for preferential exports to theEU. This therefore mitigates any potential market risk.Furthermore, a growing middle class in Malawi means that the market demandfor goods and services is also growing rapidly.PORTFOLIO RISKAs Malawi may represent a new market for some investors, a diversified portfolioof investments can mitigate against any risks associated with single projectinvestments. In this regard, a Malawi based financial institution is currentlyconsidering establishing a Malawi focused investment fund that can enable acoordinated approach to managing investment funds on behalf of investors.Such an investment fund model would help to spread investors’ risk exposureacross several project investments, as well as the priority sectors of Malawi’seconomy.SUCCESSFUL INVESTMENTS IN MALAWIIn addition, Malawi has excellent examples of long-standing successful inwardinvestments in locally based SMEs and large international companies operatingin Malawi (e.g. Press Corporation, Standard Bank, Illovo Sugar, UniversalIndustries Ltd, Globe, and Candlex). Malawi Mangoes and Limphasa Sugar arerecent examples of significant inward investment into the country’s agroprocessingsector. New investments are now beginning to flow in, with MalawiMangoes recently securing a multimillion dollar investment from BXR (for furtherinformation please contact MITC and/or the Technical Team).10

3. Key SectorsAgricultureThe primary economic activity for around 85-90% ofMalawi’s population, contributing 30% of GDP, andcomprising the main input for much of the manufacturingsector’s foodstuffs and agro-processing production.Malawi is now exploring diversification away from tobacco(traditionally its main export) into other crops where there issignificant potential.ManufacturingThe manufacturing sector provides scope for high growthand there are several well-documented opportunities,particularly in agro-processing, some of which arecontained in the profiles in this document.Other manufacturing sectors are textiles, plastics,packaging, soaps, steel production, pottery and ceramics.EnergyThe critical input for industry across Malawi, in particular theeffective growth of manufacturing. The development impactof energy projects is therefore significant, and the Scottishacademic and industry consortium, the Energy TechnologyPartnership (ETP), the EU and DfID are now investigatingwhat opportunities there are for value addition andinvestment.Large energy infrastructure projects are being planned,including increasing the supply of hydroelectric power.However, as many Malawians are off-grid, there arenumerous opportunities for micro-hydro, solar and biofuelenergy supply.MiningAn important sector for Malawi to generate foreignexchange-based income, which is critical for fundingimported inputs such as fuel and machinery, for example foragro-processing and other high-growth industries.In addition to the high-profile uranium mining operations byPaladin Energy in the north of Malawi (Karonga region),there are a number of mining opportunities currently beingexplored (e.g. precious and semi-precious stones – theseare often mined in the informal sector operated byassociations of small producers). There are furtheropportunities in the wider extractive industries which may beexplored through the Ministry of Mines and with MITC.11

TourismAn important cluster in Malawi and one that has significantpotential, because a) there is scope for further investment intourism to meet increasing demand, and b) a growingappreciation of Malawi as a ‘hidden gem’ tourist destination,particularly Lake Malawi, known as the ‘Lake of Stars’.Malawi has one main chain of hotels (Sunbird) whichprovides good quality hotel accommodation in key cities(Mzuzu, Lilongwe, Blantyre) and holiday destinations (LakeMalawi, Zomba Plateau). However, there is scope for otherhoteliers to enter the market. Niche and more informalaccommodation is also available at various tourist locationsacross the country. As such, there is further potential to offerunparalleled and unique holiday experiences.Secondary services to the tourism sector such as car hireand internal transport options also provide opportunities forfurther investment to enable integration of services in thesector.InfrastructureLarge infrastructure projects (including energy, above)along with water and sanitation, national and regional grainstorage silos, warehouse systems, roads and rail, are allunderway with scope for additional investment.Further innovative financing models to provide funding forsilos, schools, hospitals and other infrastructure would bewelcomed.12

7 RABProcessorsAgro-processing Soy beans 6.08 MpatsaHoldings LtdFinancial servicesCommercialbank5.09 NASCOMEXLTDAgro-processingInput/outputmarketing5.010 Pride Malawi Financial services Micro-finance 3.211 Skyband Infrastructure / ICT Fibre opticcables3.012 Company X Agro-processing Groundnuts 2.213 BERL Energy Bio energy 1.314 ParagonCeramics LtdTourism/ManufacturingLodge &pottery1.015 MpatsaHoldings LtdAgriculture Fish cages 1.016 Beta Television ICT CommercialTV station0.917 EqnonElectricityKiosksEnergyMobileelectricity0.418 Tafika Milling Agro-processing Maize 0.319 Ink It Design &Print PressServices Printing press 0.320 Naturals Agro-processing Baobab juice 0.321 Waste WaterEnvironmentInfrastructureWater/wasteservices0.322 NamiashiLodgeTourism Lodge 0.123 FES Agriculture &constructionPurchase ofBusinessTBCOther investments which are more suitable for a mix of public, donor and privatefunding, rather than direct private investment, have been identified and areavailable on request.14

Investment Prospect 1CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationOpen – Sugarcane opportunity (USAID)The investment opportunity is a green field sugarcaneproduction and processing venture. It is founded upon theGovernment of Malawi’s Green Belt Initiative (GBI) and thedevelopment of 6,000 ha of irrigated land set aside for theproduction of sugarcane. In addition to developing the landfor sugarcane production, a processing facility will beestablished. Malawi’s potential to achieve high sugarcaneyields of excellent quality provide the investment withstrong profit generating potential. As a public-privatepartnership (PPP) the investor can be assured ofgovernment support in all aspects of the investment. Thereis high potential for social impact due to the plannedengagement of smallholder farmers (SHFs) as out-growers,as well as the expected job creation from the processingplant.Sugar to be supplied to the local market and, takingadvantage of Malawi’s exceptional yields and favourableagro-climactic conditions, the regional and internationalmarkets.TBCThe government of Malawi is seeking new producers andprocessors to secure sufficient volumes of sugarcane forthe local market while also expanding the competitivelandscape in the sugarcane sub-sector.Agro-processingChikwana in Salima15

ProposedInvestmentAs part of the Green Belt Initiative (GBI) the Government ofMalawi is looking for a strategic partner to form a publicprivatepartnership in the development of a 6,000hasugarcane estate.− 4,000ha of the land is to be made available to theinvestor to develop a sugar plantation, whilst theremaining 2,000ha will be developed for SHFs whowill operate as out growers.− The produce from both the anchor farm and theoutgrowers will supply a processing plant to be builtby the Government of Malawi within the productionarea.An Indian company will be contracted to build theprocessing plant and to run it for the first year or two ofoperation, after which the investor will take over to run theplant under the public-private arrangement. The choice ofcontractor stems from Malawi having been granted aUS$40m line of credit by the Indian government.InvestmentrequirementsInvestmentconsideredFurther infoUS$70m in total. Breakdown:Development of Irrigated Land: US$42mAgricultural Machinery and Equipment: US$19mInputs, Training and Market Development: US$9mPublic-private partnershipA comprehensive Monitor Group / USAID analysis of theopportunity is available. Please contact MITC or thetechnical support team (see Section 6).16

Investment Prospect 2CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentOpen – Pigeon peas (USAID)The investment opportunity is a Greenfield investment intopigeon pea production through an anchor farm andaccompanying out-grower scheme. The anchor farm willconsist of 2,000 ha of land with an additional 1,000 haservicing has land for smallholder out-growers.Excellent market opportunities exist for the supply of pigeonpeas, both domestically, to local processors for valueaddition, and globally, due to high demand in Asia,particularly India whose supply gap is increasing. As theworld’s third largest producer, Malawi is in a good positionto further increase its volumes and serve this demand.TBCThe aim is to produce close to 12,300 MT/annum (~6% ofnational output), making the investor a major actor in theMalawian pigeon pea production landscape, particularlygiven the absence of any commercial competitors.AgricultureSouthern MalawiInvestment opportunity is to establish a 2,000ha pigeon peaanchor farm with an accompanying 1,000ha out-growerscheme. Expected annual production volumes of~12,300MT.In summary:− 3,000 ha cultivated area, of which 2,000ha are underirrigation.− Average yields of 2MT/ha− Two harvests/annumEquivalent to ~6% of national outputInvestmentrequirementsUS$33m in total. Breakdown:Land Development: US$21mAgricultural Machinery and Equipment: US$8mInputs, Labour and Training: US$4m17

InvestmentconsideredFurther infoVarious options would be considered. However, it isanticipated that the investor would have full control over alloperation.A comprehensive Monitor Group / USAID analysis of theopportunity is available. Please contact MITC or thetechnical support team (see Section 6).18

Investment Prospect 3CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsAfriseed Limited CompanySeed multiplication using social entrepreneurship modeland working with rural women farmers.Legumes seed productionQuality seed distributionGrading service and packagingHiring out of farm equipment to farmersUS$5m-US$20mOne year: value chain seed developmentTwo years: value addition (processing)Five years: exportsSectorLocationProposedInvestmentInvestmentrequirementsInvestmentconsideredAgricultureLilongwe in Malawi, Chipata in Zambia, Tete Mozambiqueand South AfricaAfriseed is seeking for equity financing. The local companywill contribute land, labour and market (ready market forprocurement of seed by government through subsidyprogramme).The equity funds are for purchasing of breeder seed and allrequired farm inputs, purchasing of farm mechanizationand construction of warehouses for seed storage anddistribution and construction of packaging space andpurchase of packaging equipment.Required investment: US$20mInternal company capital: US$2mBoth equity and donor financing. Donor funding under thewomen groups for training, sourcing of private sectorextension services, mobilization of women groups and skilltransfer to the women groups.19

Further infoPlease contact MITC or the technical support team (seesection 6).20

Investment Prospect 4CompanynameCompanydescriptionSunbird Tourism Limited.Sunbird Tourism Limited, (STL) incorporated in 1988, is apublicly quoted company, listed on the Malawi StockExchange. The major shareholder at 71% is MDC Limited, adormant company, owned by the Malawi Government.STL is a leading operator in the hospitality industry inMalawi and has as its main activity, the ownership,operation and management of seven hotel properties inMalawi. Catering Solutions Limited, a 65% ownedsubsidiary, is involved in the provision of catering services.With this portfolio, STL is by far the largest single hospitalityand tourism enterprise in Malawi employing about 1,000people and commanding 33% of the total market share.Products/ServicesBusiness Concept:The Company’s business can be summed up into threemain categories.• The provision of accommodation to business andleisure travelers.• The provision of meetings and convention facilitiesto various user segments.• The provision of food and beverage services toguests staying on premises and or conductingbusiness (meetings and convention) at the hotel.TurnoverGoals2012 Annual Turnover was US$14m.One year:Improve shareholders wealth: improve the return on CapitalEmployed.Capital restructuring: inject additional equity capital inSunbird.Two years:Expansion. Develop two eco lodges in Malawi’s GameReserves.Five years:Manage other hotels under the Sunbird Brand.21

SectorLocationTourismThe company’s registered office and head office is, SunbirdMount Soche, Glyn Jones Road, Box 376, Blantyre.The group has a total of 7 hotels, all strategically located inMalawi’s key business hubs and resort locations.ProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther info1. Develop a 25 room/unit eco lodge within LiwondeNational Park on the Upper Shire River.2. Develop a 25 room/unit eco lodge within MajeteGame Reserve.Required investment for the two eco lodges amounts toUS$8m.The proposal is to have equity finance. The equity capitalhas not been mobilized yet.A full business plan is available on request.22

Investment Prospect 5CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoMpatsa Holdings LtdThe investment arm of Mpatsa Trust has several businessinterests throughout Malawi.In addition to cash crops, products and services currentlyoffered include real estate, distribution, hospitality, andadvertising.US$1-US$5mThe aim of the current proposed investment is to increasethe productivity and environmental efficiency of existingagricultural land in various locations around Malawi byinvesting in modern irrigation equipment.AgricultureBlantyre, Zomba, Thyolo, Mangochi and SalimaIrrigation equipment for cash crop farmingUS$7mAll options to be consideredPlease contact MITC or the technical support team (seesection 6).23

Investment Prospect 6CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationUniversal Industries LtdUniversal Industries Ltd for the past 55 years has alwaysbeen synonymous with biscuits, confectionery and snacks,being the biggest manufacturer of these products in thecountry.Over the last decade the company evolved, moving awayfrom being just a pure food manufacturer and turning itselfinto a dynamic entity actively engaged in the supply chainof its raw materials. This strategy entailed backwardintegrating its processes and thereby creating itssubsidiary, Universal Farming and Milling Ltd (UFML)based at Njuli in Chiradzulu district.UFML spearheads the Universal Groups mission of addingvalue to Malawian crops in addition to its mandate ofbringing about innovation in Agriculture/Agro-processing.The company has identified 3 major crops that it currentlyworks at every level of the supply chain, right from growingit to adding value to packing for the supermarket shelf.Quality Biscuits, Confectionery, Savoury Snacks,Beverages, Pre-packs of Bakery Ingredients, Anchor milkpowder, Nutri Gluco Phala (NGP).Maize milled products, High Quality Cassava flour (HQCF),Green Coffee, & Potatoes.Turnover >US$30mOne year: To encourage innovation and through Inclusivebusiness model link smallholder farmers to UFML (Thusdevelop reliable supply chain).Two years: Production to meet agreed targets, and Salesgrowth by 10% of previous yearFive years: To provide shareholder returns and Advancefood security and Nutrition.Agro-processingHead Office,Universal Industries Ltd (UIL),Ginnery Corner,Masauko Chipembere Highway,P.O. Box 507,Blantyre, Malawi, Central Africa24

ProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoThere are 3 new value chains projects that the companyhas embarked on. These projects are;High Quality Cassava Flour (HQCF), Potato MultiplicationProject & Nutritional Projects (Soya based, Soyaincorporated Projects [3]). The [3] projects are;• Soy oil by using Extrusion process,• Soy Chunk by using defatted soya cake from Soyaoil,• Corn-Soy Blend (CSB) prepared from heat-treatedMaize and Soya beans, sugar, vitamins and mineralsfor adult and children over than 6 months.And Nutri Gluco Phala (NGP) containing 40% Soya is doneat head office UIL.The Projects will start in March 2013 (HQCF), Soya ProjectsJuly 2013 -2014.US$5m capital requirement.US$2m working capital requirement.Debt finance or equity – hence intention to list on stockmarket.Full business plans for each of the three projects areavailable on request.25

Investment Prospect 7CompanynameCompanydescriptionProducts/ServicesRAB Processors Ltd- Soy beans (USAID)Rab Processors Ltd was founded in 1983 and is a leadingcompany in Malawi’s agro industry, specializing in valueaddition and the trading of local produce to act as aconduit between producers and global customers.The company offers a broad range of agriculture-relatedproducts, including farm inputs, raw commodities andnutritional food products.Non-food goods: The company is a key regional supplier ofbasic non-food household and agricultural items such asfertilizer, bicycles, paraffin and cement. The sourcing,storing and sale of Rab’s products is facilitated by thecountry-wide network of Kulima Gold depots allowingservice to local, regional and international markets.Raw Commodities: Rab’s also specializes in the tradingand export of locally grown produce. Examples of whatthey trade include: groundnuts, faya rice, corn soya blend(CSB), maize, pigeon peas, soya beans, sugar beans andtea.Food Products: Rab’s have a broad product offering suchas flour, milk powder, nuts, peanut butter, rice, salt, tea andother consumer products. They also supply the World FoodProgram with nutritional products and have two in-housebrands: Likuni Phala (CSB) and Sibusiso Ready FoodSuplement (high energy food supplement).TurnoverGoalsSectorAvailable on request.Key organizational goals are to:− Provide farm inputs and basic needs to supportsmallholder farmers (SHFs)− Create a market for SHFs to sell their produce− Maximize the value of Malawi’s agricultural outputsAct as a conduit between local producers and globalcustomersAgro-processing26

LocationProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoLimbe, MalawiRab Processors Ltd are looking for a strategic partner todiversify into the production of textured soy protein whichrequires investment into plant, equipment and workingcapital. Equipment is needed for oil extraction and refinery.US$6mRab is looking for debt or equity financing from a financialor operational investor.A comprehensive Monitor Group / USAID analysis of theopportunity is available. Please contact MITC or thetechnical support team (see Section 6).27

Investment Prospect 8CompanynameCompanydescriptionMpatsa Holdings Ltd – Proposal to establish a commercialbankThe Mpatsa family would like to set up a retail commercialbank whose overall objective is to assist most economicallyactive Malawians achieve sustainable livelihoods andcontribute to poverty reduction by increasing access tofinancial services (loans, savings, payment services, moneytransfers, and/or insurance) for the under-banked, unbanked(missing middle) and vulnerable populations, withpriority given to increasing access to the “missing middle”such as SMEs and those living just below the poverty lineand whose demand for services is greatest.The bank will focus on the middle to low end mass marketin delivering its services. These are estimated to be around4.2m people.Products/ServicesTurnoverGoalsLoans, savings, payment services, money transfers, and/orinsurance.The bank is expected to breakeven in year 2 of operationsand become fully and consistently profitable by the end ofyear three.Mpatsa Bank has purposefully chosen to be a differentiatedprovider of financial services for most Malawians. Itscompetitive advantage will come from delivering theservices based on the Critical Success Factors (CSF) for itstarget market of middle and lower class and clients of thevarious development projects run by NGOs such as:• Access to financial services at fair prices (cost offunds, loan loss, interest and fee rates)• Respectful staff• Operating close to homes of its clients andworkplaces• Fast turnaround time on client dealings• Profitable linkages with both suppliers and clientsand particularly those organizations runningdevelopmental projects.SectorFinancial services28

LocationProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoSuitable premises in Blantyre, Limbe and Lilongwe arealready owned by Mpatsa Holdings Ltd.In order to capitalize the bank, support lending growth anda standby liquidity to ease seasonal liquidity crunches, atleast US$5m in long-term loans is required.US$5mDebtA full business plan is available on request.29

Investment Prospect 9CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentInvestmentrequirementsInvestmentconsideredNASCOMEX LIMITEDCommercial arm of the National Smallholder FarmerAssociation of Malawi (NASFAM), which is the largestsmallholder association in Malawi with a combinedmembership of over 100,000 smallholder farmers.NASCOMEX is involved in input and output marketingmainly involved in commodity trading and agro processingInput marketing: Supply of fertilizer and various seedincluding legume seedOutput marketing and agro processing of variouscommodities such as groundnuts, rice, chillies, peas,sunflower, soya, beans, maize and other commoditiesFor year ending Feb 2013: US$5m-US$20mImmediate: Continue with the provision of stable andreliable markets for the farmersOne year: Explore possibilities of expanding the agroprocessing and volumes handled by the CompanyTwo years: Introduce additional processing and valueaddition to produce handled by the company withindividually or through JVFive years: Increase processing capabilities and exportpotential to achieve higher percentage of processed goodssales and export salesAgro-processingNASFAM is present in 19 districts in Malawi. Nascomexoperates from Lilongwe, MalawiGroundnut oil productionApprox US$5mMixture of equity and donor grants30

Further infoPlease contact MITC or the technical support team (seesection 6).31

Investment Prospect 10CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsPromotion of Rural Initiatives and Development EnterprisesPRIDE Malawi Ltd. A Company limited by guarantee andlicensed by Reserve Bank of Malawi as Non Deposit TakingMicrofinance Institution.PRIDE Malawi (PM) is a first microfinance company. It hasoperational establishments throughout the country withrobust microfinance products tailor-made to serve theSMEs in Malawi.PM uses two distinct lending methodologies based onservicing an individual client as a unit and servicing clientsunder group based loans product.Audited accounts for 2010 and 2011, and unauditedaccounts for 2012 are available on request.Interest income in 2012 was MK 253,232,119 (US$660k).Balanced Score Cards for years 2 – 5 are available in theBusiness Plan and Strategy document upon request.One year: increase capital base to MK500m (US$1.3m) andLoan Portfolio to MK650m (US$1.7m). OSS>200%, FSS>140%Two years: increase capital base to MK800m (US$2.1m)and Loan Portfolio to MK900m (US$2.35m). OSS>280%,FSS >180%Five years: increase capital base to MK1.8bn (US$4.7m)and Loan Portfolio to MK2.2bn (US$5.7m). OSS>370%, FSS>200%SectorLocationFinancial Services - Microfinance SectorThroughout Malawi.32

ProposedInvestmentLoan Fund and limited systems infrastructure upgrade.Loan portfolio growth is limited due to limited loan funds.PM extends loans to largely women. Currently 65% of theactive clients are women. Penetration is limited due tounavailability of capital. PM has Prudential regulatedlicense for Microfinance. Further capital injection wouldenable PM to upgrade to deposit taking status which wouldmake the company fully sustainable as portfolio growthwould be derived from customer deposits. PM is committedto grow the company as detailed in its current businessplan.PM is seeking debt financing phased over three years. Thisinvestment would increase finance available to SMEs, inparticular those run by women, and improve PM’s ITsystems. The overall result for the company is expected tobe a trebling of active client numbers.InvestmentrequirementsInvestmentconsideredFurther infoPM requires a three tranched investment of US$1m each inthe space of 18 months. US$150k is also required forsystems upgrade and institutional development.PM is awaiting approval for transformation to a shareholderownedregulated financial institution. It is likely to begranted within 2013 and this would enable PM to seekequity investment as well as debt financing. PM would alsoappreciate grants towards the systems upgrade andinstitutional development.A full business plan is available on request, together withaudited financial statements.33

Investment Prospect 11CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSkyband Corporation LtdSkyband Corporation Ltd at its core is a communicationstechnology company providing internet services in Malawiwith a product suite geared primarily (but not exclusively)towards the enterprise/corporate market and includes, butis not limited to, corporate Internet, MPLS, VPNs and widearea networks, VSAT and remote support, email and webhosting and basic data centre services; and privateconsumer internet, including Wi-Fi hotspots and nomadic3G dongle services. Skyband has two main offices beingBlantyre and Lilongwe and a third smaller office in Mzuzu. Ithas a point of sale in over 140 hotspot locations acrossMalawi. There are approximately 80 members of staffemployed of which all are local Malawians except oneexpatriate. Skyband pride itself in offering the premierinternet service in Malawi.As stated above Skyband has a wide range ofenterprise/corporate connectivity packages, as well asmanaging over 140 hotspots across the country and a 3Gnetwork. Skyband also provides a range of other productsand services such as 2-way radios, WAN’s (wide areanetworks), data center, hosting facilities and others.2012 – 2013 US$7.7mImmediate: to commission multiple metro fiber ringsthroughout the cities of Blantyre and Lilongwe in order toincrease the capacity and reliability of services available toSkyband’s growing customer base.This investment will also allow Skyband to increase marketshare by expanding its coverage to segments of the marketthat it is currently unable to serve.SectorLocationInfrastructure / ICTSkyband currently has two main offices in Blantyre andLilongwe and also has a third smaller branch office inMzuzu. Blantyre covers services offered in the South of thecountry, Lilongwe covers the Center and Mzuzu covers theNorth. This proposed investment would be for the two maincenters being Blantyre and Lilongwe.34

ProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoTo commission multiple metro fiber rings throughout thecities of Blantyre and Lilongwe.An investment of US$3m is required for this project.Any investment option will be considered.Please contact MITC or the technical support team (seesection 6).35

Investment Prospect 12CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationCompany XCompany X is a groundnut processing facility producingpeanuts and peanut paste. It was founded as a commercialand development joint venture and started full operations in2011. Its domestic market share is ~4%.− Shelled, high quality peanuts that meet stringent EUmarket standards (includes Fairtrade certification).− Blanched peanuts and roasted kernels, as well aspeanut paste for peanut butter and nutritionalsupplements.Available on request.Key organizational aims are to:− Move smallholder groundnut producers up the valuechain (i.e., link them to output markets).− Expand the volume of Fairtrade and other valueaddedpeanuts for international, regional anddomestic markets.− Maximize potential for groundnut trade in Malawi forthe benefit of smallholders and the economy atlarge.Agro-processingAvailable on request.36

ProposedInvestmentCompany X is seeking investment to purchase newequipment and increase capacity to 20,000 MT by 2016.Plans for future growth:Expansion Plans− Supply growing market demand by increasingcapacity from 6,000 to 20,000 MT / annum by 2016.− Take over post-harvest handling and further reducethe risk of aflatoxin contamination.− Cover full spectrum of groundnut processingoperations (i.e., peanut paste, oil, animal feed).Equipment Needed− Total value of equipment needed is ~US$1.2m,which covers: Shelling plant, color sorter, improvedpeanut paste processing equipment and oilextraction machinery.− ~US$1m to purchase own processing site instead ofrenting.InvestmentrequirementsInvestmentconsideredFurther infoUS$2.2mNot specified whether debt or equityA comprehensive Monitor Group / USAID analysis of theopportunity is available. Please contact MITC or thetechnical support team (see Section 6).37

Investment Prospect 13CompanynameCompanydescriptionProducts/ServicesTurnoverBio Energy Resources LimitedBio Energy Resources Ltd (BERL), founded in 2006, is adual product company. Similar process technology is usedto produce bio fuel from jatropha – a non-edible crop – andcooking oil from sunflower. The company holisticallysupports the value chains for both oilseed crops. The BERLteam implements a business model with the Malawiancontext at heart; jatropha is only grown with smallholderfarmers as a boundary hedge, ensuring that the fuel cropdoes not compete with food crops. Sunflower, which wasadopted by BERL in late 2011, is procured from the samesmallholder network. Combined, these crops are providingan annual income to smallholder farmers and their families.The jatropha nuts are processed into jatropha straightvegetable oil and seedcake. The oil is blended with bothdiesel and paraffin, for fuelling diesel engines and paraffinlamps respectively. The seedcake is sold as bio-fertiliser foruse on Maize, Sunflower and Tobacco. The sunflower seedsare processed into cold pressed virgin sunflower oil andseedcake. The oil is sold as high quality cooking oil and theseedcake is sold as a component of animal feed. All ofBERL’s products are sold on the domestic market thusreducing the country’s import bill and trade deficit.As an agro-processor, BERL’s financial year runs from 1 stAugust to 31 st July. The turnover for the 2012 – 2013 yearcurrently stands at US$173,630. It is projected that the totalturnover for the financial year will be US$825,296. Furtherfinancial details can be found in the supporting documenttitled “2013-2017 Cashflow Forecast”.38

GoalsImmediate2013To install a second press and additionalprocessing equipmentYear One2014To be cash positiveYear Two2015To have 30,000 smallholder farmers with 12mtrees producing 3235 tonnes of Jatropha and4250 tonnes of sunflowerYear Five2018To have 60,000 smallholder farmers with 20mtrees producing over 4750 tonnes ofJatropha and 4250 tonnes of sunflowerSectorEnergyLocationProposedInvestmentOperational in 10 Districts of Malawi, with the head officeand oil processing facility located in Lilongwe.To date, US$8.4m of equity finance has been invested. Thisproposal requests debt financing in the tune of US$1.25mfor further development of BERL’s oil processing facility.The long-term loan will finance further seed / oil cleaningand storage equipment, an additional oil press and initialworking capital for the procurement of increased volumes ofsunflower feedstock.InvestmentrequirementsInvestmentconsideredOil Press $ 300,000Seed and Oil Cleaning Equipment $ 200,000Seed and Oil Storage Equipment $ 100,000Initial Working Capital $ 650,000$ 1,250,000Preferably debt but equity is possible.Further infoA full business plan is available on request.39

Investment Prospect 14CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentInvestmentrequirementsParagon Ceramics Ltd – Dedza Pottery (& Lodge) BranchParagon Ceramics Ltd is the owner of Dedza & NkhotakotaPotteries which manufacture high quality ceramics frommainly locally found raw materials, and 4 Lodges at Dedza,Nkhotakota, and Likoma Island which provide mid-rangeaccommodation and restaurant services for both Local andoverseas visitors.The potteries manufacture a wide range of ceramicsincluding handcrafted pottery, quarry tiles, firebricks andelectrical insulators. The Lodges are busy with tourists,business people, conferences, and school groups.Annual Turnover for Dedza BranchPottery Manufacturing US$250k-US$350kLodge & Restaurant US$110k-US$130kImmediate: To handover all responsibilities for the DedzaBranch of the business. Ideally both the pottery productionunit and the lodge.Tourism & Manufacturing.Outskirts of Dedza Town, District Headquarters for DedzaDistrict. The Pottery and the Lodge have stunning views ofthe mountainous Dedza landscape.Current shareholders, Christopher & Charity Stevens wouldlike to sell the business to a buyer who would be interestedto continue to develop the enormous possibilities of thisunique company that they have built up over the past 25years. If required, advice and consultations fromChristopher & Charity for up to 24 months can be writteninto any sale agreement.Required investment would be in the order of US$1m + andwould probably require a professional valuation of theproperties and business before any sale. The companyhas no significant loans or debts and staff pensions arefully paid up in line with the new Pension Act.40

InvestmentconsideredAny of the following would be considered:-- Sale of Site and Business of Pottery Production andLodge.- Sale of majority Shareholding to an investor whowould take full executive responsibility for thebusiness.- Sale of the Business with the Site and Buildings on along term repairing lease.- The Pottery, Lodge & Restaurant very muchcomplement each other but we would considerselling the businesses separately.The site is on 99 year lease from government which hasover 80 years of lease remaining.Further infoPlease contact MITC or the technical support team (seesection 6).41

Investment Prospect 15CompanynameCompanydescriptionMpatsa Holdings Ltd – Nkhonjeni Integrated Fish FarmingProjectThe Mpatsa Fish farming is a project that Mpatsa Trust willimplement in a 23 hectare dam that lies within 700 hectarefarm (Khonjeni Estate) about 15 km from East of ThyoloBoma.Fish will be reared in cages and fingerlings and breedingwill be done in hapa. In addition the project will rear pig tosupply manure. The project will target to have 36 cagesconstructed in the water body. Pig houses will beconstructed in strategic places of the dam.Stocking fish in the dam has other synergetic advantagesas the dam will be utilized for other ecotourism activitiessuch as sport fishing. In fact, stocking fish in the dam willbe in-situ fish conservation and improve productivity of thewater through fish production there by increasing the valueof the dam.Products/ServicesData indicates that nominal demand for fish is very high inboth urban and rural areas while nominal supply isdeclining such that gap of fish demand and supply isbecoming larger in the domestic market. Fish productiongap is likely to increase with increasing population of thenation.The project will target four tilapia fish species: makumba,chilunguni, chambo and mlamba. Mlamba will be reared infuture after getting proper source of fingerlings.The fish will be sold in strategic markets within the domesticmarkets as follows; selling at farm gate, selling in teaestates, selling in peri urban and urban markets. Asproduction increases, some fish will be sold throughsupermarkets.TurnoverGoalsFinancial projections will be made available on request.To maximize the productivity and profitability of the existing23 hectare damn by selling fish in various strategic marketswithin Malawi where demand currently outstrips supply.SectorAgriculture42

LocationProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoKhonjeni Estate about 15 km east of Thyolo Boma.Although the project has commenced, further financing isrequired to construct new dams and fish cages in order tofully realize the potential of the business plan.US$750k - US$1m.Debt is preferred but other forms of financing may beconsidered.A full business plan is available on request.43

Investment Prospect 16CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentInvestmentrequirementsBeta TelevisionBeta Television Limited is a wholly Malawian ownedtelevision company. It aims to provide superior factcheckednews coverage, edutainment infotainment,programs and business services to people of all ages inMalawi and beyond, using Beta Television channel as amedium of communications.Broadcasting of content including entertainment, news &current affairs, educational, health, good governance,environmental, human interest, political, awarenessprograms etc.Advertising space for companies and organisationsoperating in Malawi.US$1m-US$5m (projected)One year: Acquisition of Studio/Transmission/supportEquipment, Human Resource, Training of HR, Installation ofEquipment, Acquisition of foreign content and production oflocal contentTwo years: Expansion program of the TV station i.e.Infrastructure, personnel, national coverage area, localcontent production, and radio station license acquisitionFive years: Expansion program continue to print mediaequipment acquisitionICTLilongwe (Headquarters)Financing is sought for studio broadcasting andtransmitting equipment plus support equipment such asstudio furniture, motor vehicles, air-conditioners, officeequipment and desks. Human resource training, wagesand salaries plus operating costsUS$850k44

InvestmentconsideredFurther infoDifferent options will be considered.Current owners’ equity invested is US$230k.A full business plan is available on request.45

Investment Prospect 17CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoEqnon Electricity Kiosks - MalawiIncreasing access to electricity by installing and operatingelectricity kiosksOperating electricity kiosks where people can rent batteriesfor their basic electricity needs, such as lighting, mobilephone charging and listening to the radio. Batteries withmore capacity are offered allowing people to start a newbusiness, e.g. a barbershop, video hall or a cooled drinksstore.Available on request.Current: Renting 300 batteries (pilot funded by ScottishGovernment)Immediate: Renting additional 1,600+ batteriesOne year: Renting additional 10,000 batteriesTwo years: Renting additional 100,000 batteriesFive years: Renting additional 1,000,000+ batteriesEnergyRural areas with no direct access to the electricity grid andnot being part of a planned grid expansion planThe investment requested will scale up the existing pilotand rent an additional 1,600+ batteriesRequired equity investment: US$0.4m40% equity, 60% debt / donor finance (US$0.6m donorfunding has already been requested)Please contact MITC or the technical support team (seesection 6).46

Investment Prospect 18CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentInvestmentrequirementsInvestmentconsideredTafika Milling – Maize (USAID)Tafika Milling Company is a 100% Malawian owned andoperated corn soya blend (CSB) processor with a growingreputation for its high quality products. The company wasfounded in 2010 and is owned and operated by RhodaMisomali, a Malawian woman.Under its Zathanzi brand, Tafika offers three main products:− Likuni Phala Porridge (CSB)− Cream of maize (maize flour)− Fat soya cakeZathanzi has not publicly launched for general retail and isonly sold in bulk, but plans are in place to launch the retailbrand this year.Available on request.Plans for future growth:− Increase processing capacity from current 20MT/dayto 60MT/day− Increase level of mechanization to become acertified supplier to WFP, Mary’s Meals and UNICEFLeverage regional market potential and start exporting toSADC countriesAgro-ProcessingMalawiEquipment needed to upgrade the plant include, amongstothers: supplements to cleaning section (e.g. cleaner withcyclone), dry extruder, cooling system, electrical plantcontrol panel, conversion kit for starch.US$300kDebt or equity not specified, Tafika wants to leveragetechnical and strategic expertise from an investor.47

Further infoA comprehensive Monitor Group / USAID analysis of theopportunity is available. Please contact MITC or thetechnical support team (see Section 6).48

Investment Prospect 19CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentInk It Design Print and PressThe company is a unique design and print company that isenvironmentally focused and gender bias. It provides fordesign and printing solutions on recyclable paper onlymaking it a green printing press, the only one of its kind inMalawi. The company advocates for both technology andservices to help organization’s print less as ultimately noprinting is the most ecofriendly solution, to this end thecompany explores unique and inexpensive approaches toinformation dissemination that limit the amount of paper thatneeds to consumed by companies. At present thecompany only employs female staff as a conscious way toprovide formal employment to Malawian women.Communication strategy developmentConsultancy services in limiting paper consumptionProviding print alternativePrinting on recyclable paperAdvocacy for greener solutions to communicationEducation and training in design, print and pressPeer to peer conversation programUS$0-$250kOne year: Procure a digital heavy duty recyclable paperprinter,Recruit and train additional staff.Two years: Roll out the peer to peer conversationprogram in schools and formal private and public sectorProcure a heavy duty recyclable packaging and brandingpressFive years: Replace all thin plastic paper carrier bagswith recyclable paper bags in MalawiServicesHeadquarters are in Lilongwe but project has a nation wideoutreachThe investment required is solely for the procurement ofcapital equipment over a three year expansion period.49

InvestmentrequirementsInvestmentconsideredFurther infoCapital Investment of US$300kUS$250k Required investmentUS$50k Internal Company capitalDebt and Donor financingPlease contact MITC or the technical support team (seesection 6).50

Investment Prospect 20CompanynameCompanydescriptionNaturals, P.O. Box 31927, Blantyre, MalawiTel: 265 212 956 246Email: Naturals@teecs.netThe business is a duly registered owned by two Malawianladies Mrs Towera Jalakasi and Mrs Ntchindi Masamba.Established in 2006, the business manufacture and sellsbaobab juice to wholesalers and Retailers in Malawi, Mainlythrough chain stores such as Peoples and Shoprite.Products/ServicesThe product is baobab juice marketed under the brandname Khathi Khathi. It is available in 250ml, 500ml and Ilitre bottles.TurnoverGoalsSectorLocationAvailable on request.One year: Improve raw material resource and add otherproducts such as baobab oil, baobab soap.Two years: Building the capacity of delivery of productsto consumers including exportsFive years: Up grading & Up rating current ProductionProcesses to meet quality requirements and demandAgro-processingBlantyre, Malawi.51

ProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther info• Acquisition of machinery for Extraction of powderfrom baobab fruit• Acquisition of machinery for Extraction of oil fromseeds• Acquisition of new vehicles for distribution• Acquisition of coolers for display is shops• Acquisition of modern processing machinery andbuilding for the factory.US$300kEquity currently stands at US$30k.There is financial obligation that is winding up in March2013. Looking at the asset requirement of the business, itwill be necessary to secure long term facility to finance longterm assets. Different options will be considered.Please contact MITC or the technical support team (seesection 6).52

Investment Prospect 21CompanynameCompanydescriptionWater Waste and EnvironmentWater, Waste and Environment Consultants is a privateconsulting firm, registered under the Business NamesRegistration Act (Cap. 46.02), and with the NationalConstruction Industry Council (NCIC). The firm hasextensive experience working with and for internationalorganizations.The firm has six full time consultants with relevant expertisein Water and Wastewater Engineering, Social Sciences,Environmental Management, Civil Engineering, ForestryManagement, Agricultural Engineering, Water ResourcesManagement and Irrigation Engineering. In addition, thefirm has an extensive network with other consulting firms aswell as individual consultants working in specialized fieldsto offer a wide range of services.Main clients of WWEC include, among others, theGovernment of Malawi through various Ministries, the WorldBank, European Union, other donors; and other foreigngovernments such as the Government of Mozambique,Tanzania and Uganda.Products/ServicesTurnover(a) Project Designing(b) Baseline Socioeconomic including Health andGender Studies(c) Water Supply and Sanitation(d) Wastewater Engineering(e) Solid Waste Management(f) Project Monitoring and Evaluation(g) Development of Monitoring and EvaluationFrameworks(h) Process Design(i) Environment Management and Impact Assessment(j) Development of Environmental Management Toolsand(k) Provision of related services.US$250k-US$1m53

GoalsSectorLocationProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoOne year: Advertise and Build Customer BaseTwo years: Build Capacity and meet market demandsFive years: Maintain being the leading manufacturer ofBiosand filtersInfrastructureMalawiInvest in staff, infrastructure and dissemination ofknowledge of Biosand filter productionUS$290kDebt, Equity and donor financePlease contact MITC or the technical support team (seesection 6).54

Investment Prospect 22CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsNamiashi LodgeNamiashi Lodge is a family owned lake-side lodge andcamping ground, that has been in operation for over 15years.Namiashi Lodge offers customers four double bedrooms,two single rooms, and a two double bedroom chalet – allrooms are self-contained. The lodge has a full servicerestaurant, bar, a twenty person conference facility, asecure camping ground and ablution facility.US$0-US$250kImmediate:• Design, renovate and expand the infrastructure toreflect the local natural and cultural environmentusing sustainable designs which incorporate minimaluse of natural resources and promote renewablealternatives.One year:• Work in collaboration with Women Forum (anestablished grassroots women communityempowerment program) and involve them in theplanning of the Sima Singing Safari ecotourismprogram.• Train a team of competent staff committed toexcellence in ecotourism.Two years:• Complete construction.• Increase exposure locally and internationally througha well designed evidence based marketing strategy.• Increase occupancy 10% every year, exceedclientele expectations.Five years:• Investigate the economic, cultural and environmentimpact of the Sima Singing Safari on the localcommunity.• Continue to maintain ecotourist excellence and highoccupancy rates at 80%.• Consider other ecotourist programs e.g.conservation research.55

SectorLocationProposedInvestmentInvestmentrequirementsInvestmentconsideredFurther infoTourismNamiashi Lodge is located on the northern lakeshoreChiweta, near Chitimba, Rumph. Namiashi lodge is locatedon a main throughfare along the M1 motorway. 120km fromMzuzu, 80km from Karonga, 60km from Rumphi and 15kmfrom Livingstonia.Be the premier destination in Malawi for a locally ownedecotourism lodge committed to local communitydevelopment and the ideals of preserving culture andsupporting a sustainable environment. Sima Singing Safariis proposed as a program that will expand accommodationassets, create community wealth while providingopportunities to promote and preserve Malawians culture.This will involve (1) designing and redeveloping NamiashiLodge as an ecotourist facility (2) developing a communityprogram.US$100kEquityPlease contact MITC or the technical support team (seesection 6).56

Investment Prospect 23CompanynameCompanydescriptionProducts/ServicesTurnoverGoalsSectorLocationProposedInvestmentInvestmentrequirementsInvestmentconsideredFarming and Engineering Services LimitedDistributor of mechanized agricultural and constructionmachinery and agricultural contractor.Sole franchise holders for Massey Ferguson (tractors andgenerators), Komatsu (construction machinery), ToyotaForklift& Baldan implements. We also do lease hire and machinerycontracting.Year ended 30/09/2012 – US$11m.Financial statements for years 2010, 2011 and 2012available on request.Immediate: Increase tractor market share by 10% &maintain contract obligationsOne year: Expand the contracting business opportunitieswithin the sugar industryTwo years: Capitalise on current mining exploration withKomatsu franchiseFive years: Be well positioned for agriculturalcommercialisation (enabling MW to feed the expandingnation). Likewise be market leader within the constructionmachinery market, in anticipation of the numerous miningexplorations coming to fruition.Agriculture & ConstructionThroughout Malawi (Head Office in Blantyre)Sale of businessTo be based on valuation of the businessEquity57

Further infoPlease contact MITC or the technical support team (seesection 6).58

5. Next steps5.1 Investment forum in MalawiCurrent considerations include the hosting of an in-country investment forum inMalawi possibly later in 2013. Such a forum would provide an excellentopportunity for investors to meet with project sponsors in order to get a betterfeel of the investment prospects on the ground.5.2 Establishing a Malawi-focusedfundA Malawi based financial institution is currently considering a proposal toestablish a private equity fund in which the principal investors can include DFIs,institutional investors and private investors. Such an investment fund canprovide investors with an opportunity to diversify their investment, and ensure acoordinated approach to managing investments.The objective of the fund is to invest equity or debt capital in a portfolio of privatecompanies identified and researched by the fund manager across varioussectors (e.g. agriculture, energy, manufacturing, tourism, infrastructure, ICT),including as a starting point those presented above. The fund would aim tomaximize their operational performance, ensure social and developmental goalsare achieved, and generate capital profits from the sale of its investment in theprivate companies.5.3 Exiting investmentsIn the case of equity investments, the most likely exit options available toinvestors in Malawi will include:1. Floatation on the Malawi Stock Exchange or other regionalexchange. CDH Investment Bank has experience of performingsuch transactions, and an objective of the investment fund is towork closely with the Malawi Stock Exchange to increase its sizeand capabilities with the overall aim of increasing market activityand share ownership amongst Malawian citizens.59

2. Trade sale to a third party. This would comprise a full sale of thebusiness to a third party either within Malawi or abroad. Theincreasing appetite of South African multinationals for expansion inthe region makes this a very viable option.3. Management buyout. This would comprise a full sale of thebusiness to the existing management.60

6. Further InformationFurther information on the investment prospects contained in this portfolio isavailable on request. We have provided key contacts and reference documentsbelow.6.1 Contact detailsMr. Clement KumbembaChief Executive OfficerMalawi Investment and Trade Centre (MITC)Address: P/ Bag 302, Capital City, Lilongwe 3, MALAWITel: + 2651770800Fax: +265 1771781Email: mitc@mitc.mwwww.malawi-invest.netTechnical Support TeamLutamyo MtawaliManaging Director, LBM Consultants LtdE: Lutamyo@Lbm.uk.comW:www.lbm.uk.comAndrew ParkerPrivate Sector Development Economist,Imani DevelopmentE: andrew@imanidevelopment.comW: www.imanidevelopment.comJohn McGrathManaging Director, Imani DevelopmentE: john@imanidevelopment.comW: www.imanidevelopment.comIan FosterPartner, Foster Lewis Consulting LLPE: foster@fosterlewis.comW: www.fosterlewis.com61

6.2 Further referencesQuery Reference Document Where can I find it?Where can I view Malawi’s Malawi National Export Strategy USB storage providedpolicies on the economy? Malawi Growth and Development USB storage providedStrategy II (MGDS II)Economic Recovery PlanUSB storage providedWorld Bank Overview of Malawi http://www.worldbank.org/en/country/malawi/overviewWhere can I find key metrics Doing Business in Malawi 2013on doing business in reporthttp://www.doingbusinesMalawi?s.org/data/exploreeconomies/malawi/62

Glossary of termsInstitutionsCOMESADfIDMIGAMITCNASFAMRBMSADCCommon Market for Eastern & Southern AfricaDepartment for International Development (UK)Multilateral Investment Guarantee AgencyMalawi Investment & Trade CentreNational Smallholder Farmer’s Association of MalawiReserve Bank of MalawiSouthern African Development CommunityKey documentsERPMGDS IINESEconomic Recovery PlanMalawi Growth & Development Strategy IINational Export StrategyOtherAGOABlantyreDFIAfrica Growth & Opportunity Act (USA)Malawi’s main commercial cityDevelopmental Finance Institution63

EPZFDIGDPGNIKwachaLilongweSMEExport Processing ZoneForeign Direct InvestmentGross Domestic ProductGross National IncomeMalawi’s national currencyMalawi’s capital citySmall and Medium Enterprise64

Notes65

Notes66