World Bank approves US$380m financial support to Malawi & Mozambique to facilitate trade

MALAWI – The World Bank, through the International Development Association (IDA), has approved US$380 million in financing to support Malawi and Mozambique increase regional trade coordination, reduce trade costs and time, develop regional value chains, and improve access to infrastructure.

The new Southern Africa Trade and Connectivity Project (SATCP) seeks to benefit the two countries through investments that will facilitate trade, strengthen regional coordination, and increase diversified economic opportunities along the Nacala and Beira corridors, connecting Mozambique to Malawi, and along the Maputo Corridor, connecting Mozambique to South Africa through Ponta Do Ouro.

The north and central parts of Mozambique and central and southern Malawi, where poverty levels are the highest, and the region near Ponta do Ouro will benefit most.

The project will ensure that youth and women are well represented among its beneficiaries.

The project investments are expected to bring about increased regional trade, income growth, and job creation.

By improving trade competitiveness and regional connectivity, the project will help reduce costs incurred by the exporting firms to the importing market, thereby reducing costs of goods for the consumers.

This will include addressing behind-the-border costs, such as improving standards compliance and increasing the institutional capacity of authorities; at-the-border costs, including accelerating border procedures and reducing trade restrictions; and other costs involved in trade across borders.

Additionally, the development of regional value chains would help increase trade integration and private sector investment, including in agribusiness, logistics, and storage infrastructure.

On the other hand, upgrading road infrastructure to be climate resilient in most potential areas along the Nacala corridor will further improve trade connectivity and lead to increased opportunities for firms and farmers. 

“Regional integration can play an important role in helping Southern Africa recover sustainably from the current economic crisis”

Deborah Wetzel – WB Director of Regional Integration SSA,ME & Northern Africa

The World Bank’s International Development Association (IDA) helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth and reduce poverty.

“Regional integration can play an important role in helping Southern Africa recover sustainably from the current economic crisis. We are pleased to support Mozambique and Malawi in building upon recent regional infrastructure developments by working on reducing trade costs and improving their competitiveness. The project’s support for developing regional value chains could drive the creation of jobs and more incomes for communities”, said Ms. Deborah Wetzel, World Bank Director of Regional Integration for Sub-Saharan Africa, the Middle East, and Northern Africa.

The project activities also integrate an immediate response to the COVID-19 crisis, and support will be provided to keep borders open during the crisis while modernizing border practices, policies, procedures, systems, and facilities that will ensure process integrity during climate, health, and other emergencies.

The coordination activities between countries can also be used to develop standard operating procedures for future emergencies and pandemics.

The SATCP brings trade facilitation, regional value chains, and transport infrastructure in one project to address key constraints to regional integration. Small scale producers and cross-border traders – predominantly women– will benefit from improved facilities and value chain development, mechanisms to reduce harassment, and further access to skills and finance,” said Mr. Ankur Huria, Senior Trade and Private Sector Specialist and the project’s task team leader.

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