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Euro 139 million for Malawi road rehabilitation


The European Investment Bank (EIB) and European Union (EU) have agreed a finance package of €139 million for the refurbishment of the principal road across landlocked Malawi. This is said to be the EIB’s largest-ever loan for investment in Malawi.


The plan to upgrade the M1 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 kilometres of the road will be rehabilitated. The upgrade programme will be implemented by the Roads Authority, under the supervision of the Ministry of Transport and Public Works and construction is expected to be completed by December 2021.


The rehabilitation works are expected to result in reduced transport costs, shorter travel times and increased exports. An additional, but vital benefit of the upgrade is the significant improvements in safety for road users which are also expected.


The EIB is financing a total of €139 million out of a €191 million road rehabilitation programme. The agreement was signed during a ceremony attended by Finance minister, Joseph Mwanamvekha; minister of transport and public works 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 EIB.


The EIB loan, to be paid over a period of 20 years, was signed by Mwanamvekha, Matapa, 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 the way is helping us improve this road corridor.” said Mwanamvekha.


Jooma continued: “Improving road links is crucial for 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 close cooperation between the EIB and Malawi has made the signature of the largest ever EIB loan for investment in Malawi possible today.


The EU has previously provided €35 million for the rehabilitation of rural roads in 12 districts throughout Malawi.


Paesen said: “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 43 million of grant financing, through the EU Africa Investment Platform, for the project alongside national, European and international partners.


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 a transformational project that will reduce transport costs, cut travel time and facilitate exports within Malawi, to ports and neighbouring countries.” said Zambon.


Over the last 10 years, the European Investment Bank has provided more than €21 billion for public and private sector investment across Africa, including €2.2 billion for road projects. Projects include 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.