European support to rehabilitate Malawi transport network confirmed: EUR 139m

Works to reduce transport costs, cut travel time and facilitate export

European institutions provide a EUR 139 million contribution towards the towards the rehabilitation of over 347 km of the M1 road; EUR 95.5 million EIB loan combined with EUR 43.1 million European Union grant, to support EUR 191 million total investment; works to reduce transport costs, cut travel time and facilitate export; M1 upgrade will improve international links to Zambia and enhance access to Dar es Salaam as part of the north-south regional transport corridor.

The European Investment Bank (EIB) and European Union have confirmed support for refurbishing the principal road across landlocked Malawi after signing the EIB’s largest ever loan for investment in Malawi. Once carried out, the road works are expected to reduce transport costs, cut travel time and facilitate exports. Moreover, by upgrading the road to modern standards, significant improvements in safety for road users are also an expected outcome of the project.

European financing totalling EUR 139 million (112 billion MWK), in support of the EUR 191 million road rehabilitation programme, was formally agreed at a signature ceremony in Lilongwe earlier today. Finance Minister, Hon. Joseph Mwanamvekha, Minister of Transport and Public Works Hon. Ralph Jooma, EU Ambassador Sandra Paesen, the CEO of the Malawi Roads Authority Eng. Emmanuel Matapa, CEO of the Malawi Roads Fund Administration, Stuart Malata and representatives of the European Investment Bank all attended the ceremony.

The EIB loan, with a tenor of 20 years, was signed by Minister Joseph Mwanamvekha, CEO Emmanuel Matapa, CEO Stuart Malata and Diederick Zambon, responsible for European Investment Bank public sector financing in sub-Saharan Africa.

This road project is crucial for our country because of its high economic importance for our national and regional economies as it provides an important international corridor between Malawi and neighbouring countries. The bulk of our exports and imports are moved through this corridor. Unfortunately, the road corridor outlived its economic life and had deteriorated overtime, resulting in high maintenance and operating costs for users and this had made goods very uncompetitive due to high transport costs. As a country we cannot afford to just wait and see, therefore the loan from EIB and the Grant from the EU have come at the right time and will go along way is helping us improve this road corridor.” said Minister of Finance, Economic Planning and Development, Hon. Joseph Mwanamvekha

Improving road links is crucial for the sustainable economic development of Malawi and the SADC region, as the M1 road forms part of the north-south corridor linking Malawi and other SADC countries to the port of Dar es Salaam. Once work to upgrade the M1 road is complete, farmers in rural districts will benefit from improved access to local markets, and our country will have easier access to international markets. Over the last 40 years the European Investment Bank has helped to improve water supply, agriculture, aviation safety and energy across Malawi and the close cooperation between the EIB and Malawi has made the signature of the largest ever EIB loan for investment in Malawi possible today.” said Minister of Transport and Public Works, Hon. Ralph Jooma

The EU has been involved in supporting the local transport sector for some time. This grant comes on top of an ongoing EUR 35 million programme to rehabilitate rural roads in 12 districts throughout Malawi.

The European Union is a key partner of Malawi and upgrading the M1 road will accelerate economic development across the country and provide new opportunities for agriculture. We are pleased to provide EUR 43 million of grant financing, through the EU Africa Investment Platform, for the project alongside national, European and international partners.” said Ambassador Sandra Paesen, Head of the European Union Delegation to Malawi.

Upgrading the principal road in Malawi will unlock economic and social benefits across the country and beyond. The new European Investment Bank loan represents our largest ever single engagement in Malawi since the start of operations in 1977. The European Investment Bank is pleased to work with Malawian partners, the European Union and World Bank on this truly transformational project that will reduce transport costs, cut travel time and facilitate exports within Malawi, to ports and neighbouring countries.” said Diederick Zambon.

Improving road connections across Malawi
The investment programme to upgrade the M1 road includes rehabilitation of the main road connection to Tanzania, which carries one fifth of national exports and is a key link between eastern Zambia and the Indian Ocean port of Dar es Salaam.

Overall, more than 346 km of road will be transformed, including stretches between Karonga-Songwe (46 km), Kacheche-Chiweta (66.5 km) and Mzimba Turn Off – to Kamuzu International Airport turn off (234km). The Karonga - Songwe portion of the road carries 22% of Malawi’s foreign trade to Songwe, the border point with Tanzania.

All these priority routes are located in agricultural areas and the upgraded road will directly benefit local communities.

International and national financing for strategic road
The European Investment Bank will provide a EUR 95.5 million 20-year loan complemented by a European Union EUR 43.1 million grant, under the EU Africa Investment Platform, for the M1 road upgrade programme. Some EUR 4.5 million of the EU grant funding is earmarked for the technical assistance, to support road construction and monitoring once construction is complete.

Financing for the Karonga-Songwe section of the M1 road project was provided by the World Bank. The M1 road upgrade program will be implemented by the Roads Authority, under the supervision of the Ministry of Transport and Public Works. Construction is expected to be completed by December 2021.

Improving roads connections across Africa
Over the last decade, the European Investment Bank has provided more than EUR 21 billion for public and private sector investment across Africa, including EUR 2.2 billion for road projects. This has included supporting the improvements to the Great North and Great East Roads in Zambia, national roads in Madagascar, Senegal and Uganda, construction of the new Kampala by-pass and motorways and rural roads in Morocco, Tunisia and Egypt.

Background information:
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.