Accelerating Structural Transformation in Malawi
Export Packing Credit
Facility
1.0 INTRODUCTION capacity of other economies to offer efficient and
A key challenge faced by Malawian exporters is lack of affordable financing to their exporters that help
appropriate export financing that could support them deliver goods of comparable quality into the continent
to compete against exporters from other countries at competitive pricing.
in Africa and overseas. Most developed economies
offer their exporters export credit schemes and other 2.0 PRODUCT RATIONALE
forms of financing which, in many instances, provide Export Packing Credit Facility aims to bridge the gap
support either to African importers of such exports in financing towards Malawian exporters particularly
or African financial institutions in their regions. The with regards to meeting costs related to procurement
extent to which Malawian exporters face competition of raw materials, processing, packaging and other direct
from other regions is therefore magnified by the expenses related to the exports with a view to:
• Increase access to financing for Malawian exporters, • to the Borrower or third party service providers
particularly, as a significant constituent of these for meeting costs such as transport/shipping/
exporters may not easily obtain banking facilities handling etc.
from their bankers for a number of reasons.
• Support Malawian exporters to compete with peers ii. Lines of Credit as follows:
from other regions with regards to pricing; • Short-term Line of Credit extended by EDF to
• Increase participation by SMEs in production value intermediary financial institutions.
chains; • Refinancing of pre-shipment export finance
• Promote the use of trade instruments including facilities already extended by financial institutions.
Domestic Letters of Credit (DLC) and similar trade
instruments and thus deepening trade finance iii. Tenor and Final Maturity
system; • Tenors of up to 360 days for the facility’s
• Grow the number export of manufacturers from transactions with simple trade cycles and up to
Malawi, beginning with light manufacturers and 24 months for complex export transactions
increased processing and value-addition of
agricultural commodities iv. Sources of Repayment
Export Packing Credit Facility exposures will be
3.0 ELIGIBILITY paid off from:
• export proceeds assigned to the Fund under an
i. Qualifying/Eligible Entities
LC or other trade instrument; and
• Malawian based and/or owned entity registered
• For EPC Lines of Credit, a collection account will
under the company Act 2013.
be opened through which all export proceeds
• must demonstrate that at least 30 per cent of goods
of sub-borrowers shall be assigned.
or services produced are exported or are destined
for export.
5.0 COLLATERAL ARRANGEMENTS
ii. Eligible Costs: Collateral for the Facility may include a combination of:
Preference shall be given to costs related to the • Assignment of Export Contracts;
following export value chain processes: • Assignment of export proceeds and/or cash flows
• Procurement of raw materials/ intermediate from the Exporter;
goods and/or other inputs; • Promissory Notes issued by Financial Institutions
• Manufacturing process or other forms of obtaining Export Packing Credit Facility’s Lines of
transformation of Malawian goods and/or services; Credit;
• Wages and salaries for production staff; • Charge over Collection Accounts; and
• Direct costs including transportation/ shipping/ • Any other collateral as may be mutually agreed
handling/ insurance etc.; and between the Fund and the Borrower.
• Packaging and/or branding.
6.0 APPLICATION REQUIREMENTS
4.0 QUALIFYING INSTRUMENTS a. Business/owners profile
i. Direct advances as follows: b. Nature of business and funding requirements.
• to the Borrower and/or the Borrower’s suppliers c. Audited financial statements for three years.
of raw materials/intermediate products and other d. Financial projections.
inputs; e. A summary of borrowing history and bank
• to the Borrower to meet working capital references.
requirements including salaries/wages/utility bills
etc.; and
EXPORT DEVELOPMENT FUND
1st Floor - Pamodzi House, Presidential Way Drive • P. O. Box 30063, Lilongwe 3, Malawi
Tel: +265 (0) 882 415 633 Fax: +265 (0) 1 772 219 E-mail: edf@edf.mw
www.edf.mw
