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