Accelerating Structural Transformation in Malawi
Hotel Construction Guarantee
and Refinancing Facility
1.0 INTRODUCTION
Tourism is a key diversification sector for Malawi’s
economy and has enormous potential of becoming
the major exporting sector for the country that could
accelerate generation of foreign currency revenues
as well as support the goal to increase job creation
and widen the country’s public revenue base.
However, operators in the sector face limitations
in attracting financing for development of facilities
such as modern hotels, which are required to promote
rapid expansion of Malawi’s tourism industry, due to
risks related to construction and project completion.
EDF’s Hotel Construction Guarantee and Refinancing
Facility is aimed at promoting development of hotel
facilities of international standards in Malawi through
a risk sharing arrangement with other financiers.
2.0 BENEFITS
The Benefits of the Facility are as follows:
• With EDF’s Refinancing undertaking, the parties
financing the construction phase are provided a
sound basis for providing funding to developers as
they are assured of refinancing by EDF upon project
completion.
• The project is afforded the opportunity of achieving
a longer financing maturity than what financiers
who will support the construction phases will
ordinarily be willing to give
3.0 FINANCING STRUCTURE
The Facility is structured as a Dual Tranche Facility:
• Tranche 1: The Original Facility (OF) -
the Construction firm or the bank will fund the
construction phase of the hotel project backed by
EDF’s “Contingent Guarantee”;
• Tranche 2: Refinancing or Relay Facility -
Upon completion of the hotel and certification by
the by an acceptable independent engineer, EDF
will refinance the Construction Facility while
supporting the operations of the completed Hotel.
EDF may also provide working capital facility and
funding for furniture, fittings and equipment.

Hotel Construction Guarantee and Refinancing Facility

Repayments from Operating

LOAN Construction loan Cash Flows
HOTEL AS REAL
PROVIDERS
ESTATE EDF
2 5

Furniture, Fittings &

4 Equipment financing
*Optional

3
Relay/Refinancing facility on project completion

Contingent guarantee 1

Partnerships
Hotel Management Companies
Independent Engineering Companies
Project/ Hotel Developers
Fund & Asset Managers
Commercial Banks

4.0 ELIGIBLE PROJECTS c. Feasibility and Market Study for the Project;
Tourism projects in the following areas: d. Environmental and Social Impact assessment report
• Cities targeting business and conference tourism; e. Business plan covering the financing period
• Resorts targeting leisure tourism; f. Engineering designs and Bills of quantities;
• Ecotourism g. Profile of proposed contractors;
h. Profile of the proposed hotel operator; and
i. Title documents for the proposed property on
5.0 APPLICATION REQUIREMENTS which the project will be developed
An application should contain the following:
a. Business Profile;
b. Company registration certification and
memorandum and articles of association;

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