Minister of Finance Alfred Sosten Gwengwe on Friday signed MK128 Billion financing agreements for the M1 rehabilitation project.
The Malawi Government also receives in the form of an additional grant amounting to K51 billion to the rehabilitation of the same M1 Road.
Speaking during the signing ceremony, Gwengwe said he was pleased to have signed, on behalf of the Government and people of Malawi, with the European Investment Bank the Rehabilitation Investment Grant Agreement worth €38.5 million, approximately MK41 billion).
Gwengwe said the Grant Agreement forms part of the planned financing of the M1 Road Rehabilitation which has a total cost of €191Million.
Gwengwe said on 23rd September 2019, the Government of the Republic of Malawi entered into a Financing Contract with European Investment Bank on the M1 Road Rehabilitation project amounting to €80 million.
Gwengwe said financing was later increased to €95.5 million which included other financiers of the project such as the World Bank and indeed a contribution from the Government of Malawi.
Gwengwe said: “The project is designed to rehabilitate 347km of the M1 Road. The target road is part of the North-South Corridor that links two port cities of Dar-es-Salaam in Tanzania and Durban in South Africa.
“As we are all aware, the country is facing serious challenges due to deteriorating road conditions, including increase in travel time, increase in the rate of fatalities and higher vehicle operating costs, just to mention a few. The grant will therefore contribute to the development of the country by addressing these challenges.
“In addition, during the construction phase, the project will create over 2000 jobs.The project comprises six components and European investment Bank, through the Investment Grant Agreement, will cover part of four components. The four components include civil works and construction supervision for the 66.5km of Chiweta-Kacheche section, 102km of Kasungu–Kamuzu International Airport Section, 85.5km of Kasungu–Jenda Section and 46.5km of Jenda-Mzimba Section,”
Gwengwe expressed gratitude to the European Investment Bank for this support on behalf of the Government and people of Malawi, and assured EU Ambassador and Vice President of the Bank, that the Government of Malawi will implement the project as per the agreed terms.
“Specifically, we will ensure proper financial management and effective project implementation in order to achieve the intended outcomes. At this juncture, let me call upon the implementing institutions, Malawi Roads Authority and Roads Fund Administration to ensure that all the resources are withdrawn and spent only as laid out in the project’s agreements.”
Also speaking, European Union Ambassador to Malawi, Rune Skinnebach said he was delighted for signing the grant component of the Malawi M1 Road Rehabilitation project. He said the agreement is an important milestone in the collaboration between the European Union the European Investment Bank and the Government of Malawi.
“This is why the EU decided to join forces with the EIB to upgrade the North South Corridor , which is part of Malawi’s transport master plan. This project, comprises the rehabilitation of over 300 Km of priority road sections which have been identified as having the highest impact in facilitating trade eliminating bottlenecks and reducing road fatalities,” said the Ambassador.
The European Investment Bank (EIB) furthers the objectives of the European Union by providing long term project funding, guarantees and advice. It supports projects both within and outside the EU.
Its shareholders are the Member States of the EU. The EIB is the majority shareholder in the European
Investment Fund (EIF), and the two organisations together make up the ElB Group. Within the Commission’s Investment Plan for Europe, the EIB Group is part of a broader strategy aimed at overcoming the large investment gap by relieving investors of some of the risk inherent in projects.