19/03/2007: Signature of a Loan Agreement of KD. 4,000,000 for financing the Thyolo-Bangula Road Project in the Republic of Malawi

A Loan Agreement was signed today in Lilongwe between the Republic of Malawi and Kuwait Fund for Arab Economic Development, whereby the Fund will make a Loan of KD. 4,000,000 (equivalent to about US$ 13.6 million), to assist in the financing of Thyolo-Bangula Road Project Project.

The Loan Agreement was signed on behalf of the Republic of Malawi by H.E. Goodall Gondwe, Minister of Finance and on behalf of the Fund by Mr. Ghanem Al-Ghenaiman, Deputy Director-General of the Fund. 

The Project aims at the upgrading of the existing gravel road that connects "Thyolo-Bangula" to a bituminous road with a total length of about 91 Kilometers, of about 6.7 meters carriage way and asphalted shoulders of about 1.5 meters on each side, and will thus help the integration of the road network and further improve potential of social and economic development in the Project areas. The Project consists of the Civil Works for the upgrading of the above road, including earthworks, pavement layers, drainage facilities, bridges, erosion controls, bus bays, access roads, relocation of utilities and traffic safety measures. The Project also includes the Consulting Services for the Supervision of Construction. The project is expected to be completed by the end of the year 2009. 

The total cost of the Project is estimated at about 7 billion Kwacha (equivalent to about Kuwaiti Dinars 15.6 million), of which about KD 13.2 million is in foreign exchange, which represents about 84% of the total cost of the project. The Fund's Loan will cover about 28% of the total cost of the project. It is also expected that the Arab Bank for Economic Development in Africa (BADEA) will assist in the financing of the Project with a loan which will cover about 20% of the total cost of Project, and the OPEC Fund for International Development will also assist in the financing of the Project with a loan which will cover about 20% of the total cost of the Project, while the balance of the Project's cost will be covered by the Government of Malawi. 

The Loan will be extended for a term of 24 years including a grace period of 4 years and will be amortized by 40 semi-annual installments, of which the first installment will be due on the first day when interest and other charges on the loan will be due after the expiry of the afore-mentioned grace period. Interest on the Loan will be at the rate of 1.5% per annum in addition to a service charge of 0.5% per annum to cover administrative costs and expenses of implementing the Loan Agreement. 

By signing this Loan, the Fund will have extended 5 loans to the Republic of Malawi of a total amount of about KD 18.62 million (equivalent to about US$ 64 million) for financing projects in the sectors of Road and Telecommunications, in addition to 2 Technical Assistances totaling KD 181,600 (equivalent to about US$ 617,400), which have been extended for financing feasibility studies in the sectors of Resettlement and Roads.