Malawi: What’s The Truth On China Money? Is It A Donation Or A Loan?

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In his state of addressing the nation on Friday, the president of Malawi Peter Mutarika said  that the much-touted $600 million kam’mwamba coal fired Power Project will be funded by a loan from a Chinese Bank called Exim.

The government has not been transparent on the nature of the financial arrangements for this project and this left the whole nation thinking that it’s a donation from People’s Republic of China.

In December last year, MBC news reported that the governments of Malawi and People’s Republic of China have signed $600 million pact for the development of the 300 megawatts kam’mwamba coal fired plant generation.

The finance minister Godall Gondwe filed the project which he noted will have a huge impact on Malawi’s economy looking at the electricity problem the country has. At the signing of the memorandum of understanding in South Africa, Gondwe said he was happy with the trust and confidence China has in Malawi and expressed that there is hope for improvement in the electricity issue in Malawi.

President of China Gezhouba Group company limited Lu Zexiang hoped the project would help in meeting Malawi’s electricity generation gaps. Lu reiterated his organisation’s commitment on the use of local man power in their projects and looked forward to more cooperation with Malawi.

From the above, it sounded as if this money is a donation from one government to another, not a loan. However, the President said its a loan from Chinese bank.

The country is already reeling from the abuse of $156.5 million Malawi borrowed from Export-Import bank of India between 2007 and 2014 which had never been fully accounted for.

The blame is totally not on the President Peter Mutarika rather the whole government machinery as it lacks mechanism for properly accounting for the numerous loans it takes from India, China and elsewhere.

On Friday Mutarika promised that his government will ensure that foreign loans are obtained primarily to finance development projects that are thoroughly  appraised and are of strategic importance to the country.

The whole nation has put their trust in this new government he speaks of and are hopping for the best ad their tired of poverty.

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