Documentof The World Bank

FOROFFICIAL USE ONLY

X> ,kii 4 ' I/IIA

Public Disclosure Authorized Report No. P-5412-MAI

MEMORANDUM AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE Public Disclosure Authorized EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

OF SDR 22.3 MILLION (US$32 MILLION EQUIVALENT)

OF THE

GOVERNMENT OF MALAWI

FOR A Public Disclosure Authorized FINANCIAL SECTOR AND ENTERPRISE DEVELOPMENT PROJECT

FEBRUARY 25, 1991 Public Disclosure Authorized

This documenthas a restricteddistribution and may be used by recipientsonly in the performanceof their official duties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. CURRENCYEQUIVALENTS

CurrencyUnit = Malawi Kwacha (MK) US$ 1.00 - MK 2.65 (January1991) MK 1.00 = US$ 0.38 MK 1.00 - 100 tambalas

FISCAL YEAR

April 1 - March 31

GLOSSARYOF ABBREVIATIONS

ASAC AgricultureSector AdjustmentCredit ECMAC Entrepreneurshipand CapitalMarket Adjustment Credit CBM CommercialBank of Malawi CDC Commonwealth Development Corporation DEMATT Developmentof Malawian Traders Trust DEVPOL Statementof DevelopmentPolicy DFI DevelopmentFinance Institution EDC Export DevelopmentComponent EEC EuropeanEconomic Community ECGF Export Credit GuaranteeFacility ESAF Enhanced StructuralAdjustment Facility FIAS Foreign InvestmentAdvisory Services INDEBANK Investmentand DevelopmentBank of Malawi IMF InternationalMonetary Fund ITPAC Industrialand Trade Policy Adjustment Credit LFC Leasing Finance Company MDC Malawi Development Corporation MEDI Malawian Entrepreneurs DevelopmentInstitute MEPC Malawian Export Promotion Council NIM Malawian Instituteof Management MIGA MultilateralInvestment Guarantee Agency MTIT Ministry of Trade, Industryand Tourism NBM National Bank of Malawi NBFIs Non-banksFinancial Institutions PFIS ParticipatingFinancial Intermediaries PPF ProjectPreparation Facility POSB Post Office SavingsBank RBM Reserve Bank of Malawi FOR OFFICIALUSE ONLY

MALAWI

FINANCIAL SECTOR AND ENTERPRISE DEVELOPMENT CREDIT

CREDIT AND PROJECT SUMMARY

Borrower: Republic of Malawi

Beneficiaries: Reserve Bank of Malawi (RBM), participating financial intermediaries (PFIs), Ministry of Trade, Industry and Tourism, the Post Office Savings Bank (POSB), the Chamrber of Commerce and Industry, Malawi Development Corporation (MDC), Investment and Development Bank of Malawi (INDEBANK), and various local Snall and Medium Enterprises (SME) support institutions.

Amount: SDR 22.3 million, US$32 million equivalent

Terms: Standard IDA terms, with 40 years maturity

Onlendinz Terms: RBM would through an Apex Unit onlend US$27.4 million equivalent of the IDA Credit to eligible PFIs in local currency at a pre-determined reference rate. The reference rate would be determined by RBM as the prevailing average cost of term borrowing in the financial system (about 13.625 percent in December 1990, calculated as a simple average of all prevailing interest rates on term deposits in Malawi). PFIs would relend the funds at market rates to finance viable subprojects in the productive sectors. RBM would pass to the Government the interest received from PFIs, less a 0.5 percentage point fee to cover RBM's administrative costs for operating the Apex Unit. The Government would bear the foreign exchange risk out of the interest received from PFIs. The Government would provide US$4.6 million equivalent through RBM for institutional capacity development to beneficiaries on a grant basis.

ESTIMATEDCOSTS: LOCAL FOREIGN TOTAL ------US$ Million------

IDA 2.4 29.6 32.0 Government 0.4 - 0.4 Co-financing 0.1 0.0 0.1 Project Sponsors 14.7 - 14.7

Total 17.6 29.6 47.2

Economic Rate of Return: Not Applicable Staff Appraisal Report : Report No. 9096-MAI Map: IBRD 20924

This document has a restrioed distribution and may be used by recipients only in the perfo iaric' Lt their official dutlie Its contents mas not otherwise be disclosed without World Bank auth Tr7oii&'n MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALAWI FOR A FINANCIAL SECTOR AND ENTERPRISE DEVELOPPMENTPROJECT

1. The following memorandum and recommendations on the proposed IDA Credit to the Republic of Malawi for SDR 22.3 million (S32 millicni equivalent) are submitted for approval. The proposed Credit would provide, through a combination of investment credit and technical assistance, term resources through the country's financial intermediaries for investment 4n all productive sectors.

2. Background. Malawi's economic record has been mixed because of a narrow resource base and small domestic market, both of which make the country very vulnerable to external shocks. Stable growth between 1964 and 1978, with an average annual growth rate of over 5 percent, was followed by stagnation between 1979 and 1981 and limited recovery between 1982 and 1985. In the late 1970s, the economy faced a series of exogenous shocks and domestic policy weaknesses that substantially reduced per capita income growth. The shocks included adverse -erms of trade, high oil prices, and a civil war in Mozambique that disrupted external transport routes and led to higher transport costs. A prolonged drought in the early 1980s, an influx of 800,000 displaced persons from Mozambique, rising fiscal deficits and introduction of controls on imports and the rationing of foreign exchange further exacerbated the problems. Since 1987, the Government has been implementing a new economic strategy, with the support of the IMF under the Enhanced Structural Adjustment Facility (ESAF) and the World Bank's Industrial and Trade Adjustment Credit and the Agricultural Sector Adjustment Credit (ASAC). The macroeconomic objective of the strategy is the resumption of higher levels of economic growth on a sustainable basis. Under this strategy, Government is committed to the maintenance of an appropriate framework in: (i) fiscal policy; (ii) the external sector; (iii) pricing, especially agricultural pricing and in smallholder agriculture; (iv) the financial sector; (v) the public sector, with emphasis on the parastatal reform; and (vi) the exchange rate regime. The economy has begun to respond positively to these policy measures. Real GDP grew by 2.9 percent in 1988, is estimated to have grown by 4.3 percent in 1989, and is projected to grow by 4.8 percent in 1990. Despite the breadth of the reforms, Malawi's future growth faces some uncertainties because of several structural weaknesses, especially in the industrial sector, that impede development of a sustainable response.

3. The Government's objectives for the industrial sector are to increase and diversify industrial output, especially in the small and medium enterprises (SMEs) sector, and maintain efficiency of industrial production, while protecting the environment. These objectives are being pursued through general macroeconomic and sectoral reforms, that have been supported by IDA through ITPAC, which was approved by the Bank in June 1988 and has so far been successfully implemented. Reforms under ITPAC have included deregulation of pricing, liberalization of trade and of foreign exchange allocation, and a reduction in industrial licensing. The industrial sector, which accounts for 12 percent of GDP, still faces several constraints in maximizing its contribution to economic development. Government with support from the Foreign Investment Advisory Services (FIAS/IFC), has reviewed the investment climate and identified several necessary reforms, which include: (i) streamlining the regulatory and administrative procedures for business incorporation and licensing; (ii) providing the institutional and incentives framework for promoting private foreign and domestic investment; (iii) improving access to credit, especially for SMEs; (iv) promoting exports by encouraging dtversification into non-traditional exports, and providing adequate export finance; and (v) streamlining the allocation of industrial lar.d leases, and involving the private sector in the development of industrial sites and factory shells. The proposed project will support initiatives in these areas. The Government, with FIAS support, has already drafted an Investment Policy Statement that clearly articulates its policy on private investment in Malawi Establishment of an investment promotion agency will be supported under the proposed IDA Credit. The Bank has also coordinated significant donor assistance and external resources for Malawi. In industry, several donors are already involved (UNDP, USAID, UNCDF, KFW, FMO, IFAD and the EEC), most visibly in the SME sector.

4. The major issue in Malawi's financial sector, which is small and fairly unsophisticated but with few distortions, has been its inability to respond with flexibility to investor financing needs. The Government with IDA support reviewed the financial sector and identified necessary policy reforms to deepen financial markets, improve efficiency in resource mobilization and allocation. Several of the reforms have already been implemented including interest rate deregulation (rates are now positive in real terms), and a revision of the regulatory and prudential supervisory framework. To further improve the performance of the sector, Government proposes to: (i) remove credit ceilings; (ii) encourage competition by allowing entry of new financial institutions and diversification of existing financial institutions; (iii) rationalize tax incentives on financial instruments; (iv) provide adequate financing and ease access to credit for private sector investment; (v) encourage the development of money and capital markets; and (vi) establish market mechanisms for monetary policy management. These policy reforms have been agreed letween the Government, IDA and the IMF and are reflected in the Third-Year Policy Framework Paper. The proposed project would support implementation of these reforms. The IMF has provided technical assistance to the RBM to strengthen its regulatory and supervisory capabilities and to help introduce a Capital Market Development Act (enacted in 1990).

5. Previous Bank Operations. In industry the Bank has approved three projects for Malawi (totalling US$81 million): (a) ITPAC (US$70 million equivalent) to support policy reforms; (b) the INDEBANK Loan No. 1610-MAI (US$2.76 million) to support investment; and (c) the Industrial and Agriculture Credit No. 2646-MAI (US$7.8 million) also for investment. The credits in industry have all been successfully implemented and are either closed or nearing completion, with a minimum of cancellations. A Project Completion Report (PCR), No. 6334-MAI of June 27, 1986, was prepared for the INDEBANK loan. One of the most important lessons learnt from previous operations is to avoid separate treatment of financial institutions in Malawi through different onlending terms and conditions. Experience from the Industrial and Agricultural Credit (Loan 2646-MAI) found that INDEBANK's borrowers were reluctant to assume the foreign exchange risk in an 3- environment of major currency depreciations and no mechanism f.r c1.':ng against such risks. Lessons learnt have been incorporated in t1ii, prcjti't through the equitable treatment of DFIs and by Covernment ascumran thle foreign exchange risk.

6. Rationale for Bank Involvement. The proposed Project is defsig%t'd to support Malawi's ongoing refoL.n program that seeks to diversify the economy, generate employment, and alleviate poverty. IDA has playcd a We) role in assisting Government to restructure the economy, formulate strategiec in the industrial and financial sectors, and in mobilizing significant external resources. The support has been underpinned by substantive economic and sector work - an Industrial Sector Memorandum and a Country Economic Memorandum were prepared by the Bank in 1989, and a Green Cover Frriancial Sector Report was issued in February 1991. The impact of the policy changes on the industrial and financial sectors have been impressive during the period 1987-1990. The proposed project will enable IDA to assist the Government in further improving the investment environment and strengthening institutions engaged in term finance and promoting investment. The Project would be complementary to a proposed IDA-supported Entrepreneurship and Capital Market Adjustment Credit (ECMAC), which would focus on policy issues in both sectors, and the activities of other donors in providing support for economically viable production activities.

7. Proiect Objectives. The objectives of the project are to support Government efforts to expand exports and improie the policy and institutional framework relevant to private sector investment. These objectives would be achieved by: (i) encouraging commercial banks and non-bank finance intermediaries to engage in term financing of viable enterprises in the productive sectors, including SMEs and enterprises owned by women; (ii) improving the institutional framework for export finance and investment promotion, including support for a proposed investment promotion agency and an industrial land and factory shell development program; (iii) supporting the strengthening and operational diversification of financial institutions; and (iv) improving monetary policy management.

8. Prolect Description. The IDA Credit amount (US$32 million equivalent) would provide resources to finance investment and institutional capacity development in key institutions. The project would have three components. The investment finance component (US$20.4 million equivalent) would be onlent to eligible participating finance intermediaries (PFIs) through an apex arrangement at the RBM to finance projects in the productive sectors promoted by foreign and indigenous entrepreneurs. PFIs would provide term financing through mechanisms such as leasing, equity finance and term loans. To qualify as PFIs under these two components, financial institutions would have to be in compliance with the provisions of the revised Banking Act and meet additional eligibility criteria acceptable to IDA. The industrial sites component (US$7 million equivalent), would ensure timely availability of industrial infrastructure to industrial sites and factory shells to facilitate investment by indigenous and foreign investors, especially those investing in export-oriented activities. The institutional capacity development component (US$4.6 million equivalent) would provide technical assistance and training to: (i) strengthen RBM's monetary policy management capability; (ii) assist Government develop the institutional framework for -4 - the promotion of foreign and domestic investment; (iii) support programs for reorientation of the Malawi Development Corporation (MDC), and INDEBANK's diversification into merchawntbanking and; (iv) restructure the Post Office Savings Bank (POSB) into an autonomous and efficient financial institution; and (v) train local financial institutions' staff in project appraisal- related issues, especially the institutions that support SMEs and women entrepreneurs.

8. A breakdown of costs and financing is shown in Schedule A, Amounts and methods of procurement and disbursements, and disbursement schedules are shown in Schedule B. Parallel co-financing by other donors (EIB, USAID, and EEC) is estimated at US$35 equivalent. A timetable of key project processing events and the status of Bank Group operations in Malawi are given in Schedules C and D, respectively. The Staff Appraisal Report, No. 9096-MAI, dated February 25, 1991, is also attached.

9. Environmental Assessment. The Malawi Government has established a special unit to integrate assessment of environmental issues into ics planning process. The proposed project would use the unit to assess the potential environmental impact of subprojects to be financed. The unit would provide to PFIs and investors guidelines outlining the investments that would require its endorsement before a licence to operate is issued.

10. Actions Agreed. During negotiations, agreement was reached on the following: (i) implementation arrangements, onlending interest rates to be market determined and exchange rate risk to be covered by Government for a fee implicit in the onlending market interest rate; (ii) mechanisms for assessing the impact on the environment of subprojects financed; (iii) management of the institutional capacity development component; (iv) terms of reference for the establishment of an investment promotion agency; (v) a draft Investment Policy Statement; (vi) a letter of Government commitment to reforms in the financial sector; and (vii) a draft statement on the future development program for MDC. To avoid gaps in financial intermediary onlending operations and to maintain the momentum achieved during project preparation, an allocation was made for US$1 million equivalent for retroactive financing of expenditures incurred up to 90 days before credit signing. Reimbursement would be restricted to expenditures incurred under the investment finance component. Conditions of Effectiveness would be: (i) adequate staffing of an apex unit in the RBM for the management of Credit funds; and (ii) appointment of a committee to be chaired by the Principal Secretary to the Department of Economic Planning and Development to oversee the setting up of an investment promotion agency. Conditions of Disbursement would be: (i) that disbursements to each PFI, under the investment finance and industrial sites components would require the signing of a participation agreement between the RBM and that PFI; and (ii) that disbursements for investment promotion activities would require the establishment and full staffing of an investment promotion agency. Dated Covenants would include: (i) development of an action plan for POSB restructuring by September 30, 1991; and (ii) establishment of a steering committee by September 30, 1991, to coordinate the development of capital markets. - 5 -

11. Benefits. The proposed IDA Credit would fill a major gap in term financing for the productive sectors in Malawi. Using the existing intermediaries, including the commercial banks and NBFIs, the project would help strengthen institutional capabilities to promote, appraise and supervise viable projects. By increasing competition and the range of financial instruments, the project would enhance efficiency in term resource mobilization and allocation. Broader access to credit for investment will encourage real sector supply response and contribute significantly to the Government's growth and adjustment strategy. Investment promotion would help diversify Malawi's base for foreign exchange earnings by encouraging investments in export oriented activities. Initial investments are likely to be in labor intensive productive activities that would help alleviate the unemployment problem. Support for SMEs will also benefit women, three quarters of whom engage in some form of off-farm income generating activities.

12. Risks. The major risks are the possibility of an economic slowdown, (which would discourage new investment), the conservative attitude of banks and large enterprises, and Government slackening on reforms. Malawi has in the past achieved high rates of growth, primarily through a steady expansion in agriculture. Government's continued emphasis on the development of agriculture as the mainstay of the economy, recent adjustment measures, and its strong commitment to implementing the reform program should help alleviate the risk of economic slowdown. Recent industrial and financial sector reforms have introduced competition in both sectors, which is changing conservative attitudes and making banks and enterprises more responsive to market forces. Another risk is the possibility of low investor response. This risk is mitigated by the favorable investment climate which is being created by the Government and the increased emphasis being placed on investment promotion.

13. Recommendation. I am satisfied that the proposed Credit would comply with the Articles of Agreementof the Associationand recommendthat the Executive Directors approve the credit.

Barber B. Conable President

Washington D. C. February 25, 1991 -6- Schedule A Page 1 of 1

HALAWI

FINANCIALSECTOR AND ENTERPRISE DEVELOPMENT CREDIT

ESTIHATEDCOSTS AND FINANCINGPLAN

Project Cost Summary

Estimated Costs: LOCAL FOREIGN TOTAL (USD Millioa)

InvestmentFinance Component: 11.9 20.0 31.9 IndustrialSites Component 2.9 7.0 9.9 InstitutionalCapacity Development 2.8 2.6 5.4

Total 17.6 29.6 47.2

FinancingPlan

IDA 2.4 29.6 32.0 Government 0.4 --- 0.4 Co-financing(EEC) 0.1 0.0 0.1 Project Sponsors 14.7 --- 14.7

Total 17.6 29.6 47.2 Schedule B Page 1 of 2

MALAWI

FINANCIAL SECTOR AND ENTERPRISE DEVELOPMENTCREDIT

PROCUREMENTMETHOD AND DISBURSEMENT

Procurement Method (US$ million) Total Project Component ICB LCB Other N.A. Cost

Investment and Industrial Sites 7.0 a/ - 34.8 - 41.8 Subloans (3.4) (24.0) (27.4)

Equipment and Vehicles - 0.7 b/ - - 0.7 (0.4) - - (0.4)

Consultants and - - 2.5 d/ - 2.5 Training and Technical (2.4) (2.4) Assistance

Incremental Operating Expenses - - - 1.6 1.6 (1.2) (1.2)

PPF Refinancing - - - 0.6 0.6 (0.6) (0.6)

TOTAL 7.0 0.7 33.7 5.8 47.2 (3.4) (0.4) (24.4) (3.8) (32.0) a/ Standard Commercial Practice. Contracts for goods exceeding US$1,000,000 equivalent would be procured through ICB. Figures in parenthesis represent procurement methods for IDA funds. b/ At least three quotations. c/ Utilities include electricity, water, telecommunications, and roads. d/ In accordance with IDA guidelines. Schedule B Page 2 of 2

MALAWI

FINANCIAL SECTOR AND ENTERPRISE DEVELOPIENT CREDIT

DISBURSEMENTS SCHEDULE

Disbursements of IDA Credit (US$ Million) Category Percentage

Investment and Industrial Sites Components 27.4 up to 702 of total subproject costs for new operations and 80% for expansion operations and civil works.

Equipment and Vehicles 0.4 100% of total costs.

Consultants, Training and Technical Assistance 2.4 1002 of total foreign and local costs.

Incremental Operating Expense 1.2 80% of total cost PPF Refinancing 0.6

TOTAL 32.0

Estimated Disbursement Schedule

IDA Fiscal Year 1991 1992 1993 1994 1995 1996 1997

Annual 0.5 2.9 6.3 7.3 6.1 5.1 3.5 Cummulative 0.5 3.4 9.7 17.0 23.4 28.5 32.0

NOTE: The project disbursement schedule is based on the disbursement schedule for industria' development and finance projects in the Africa Region. It is £Dected that the Investment Finance and Industrial Sites Compone..zswould be disbursed in seven years and the institutional capacity development component over a four year period. Funds would be available for commitment until December 31, 1995, while disbursements would be completed by June 30, 1997 (the credit Closing Date). Sc1i*du1e C Page 1 of 1

MALAWI

FINANCIAL SECTOR AND ENTERPRISE DEVELOPtENT CREDIT

TIMETABLE OF KEY PROJECT PROCESSING EVENTS

(a) Time taken to Prepare Project 12 months

(b) Project Prepared by: Government with IDA assistance

(c) First IDA mission: November 1989

(d) Appraisal Mission June 1990

(e) Negotiations February 1991

(f) Planned Date of Effectiveness June 30, 1991

Relevant PCRs and PPARs

Investment and Development Bank (INDEBANK) - Loan No. 1610-MAI, Project Completion Report (Report No. 6334), dated June 27, 1986. - lo - Sche dule 1) Iage I ot 3 StatusOt BankGroup Ooerations In NALAUI PFDBR2S- SusearyStatement Of Loansand IDA Credits 'LOA ddta ds of '130!91- MIS datd dS of 0.1/2/91)

Amountin US)eillion ilesscancellations LOaPor Fiscai Undis-Closing CreditNo. fear borrower Purpose Bank IDA bursed Date

oredits

b6Creditsis, closed 463.66 C13430-NAL 1983 hALAii NROPIV 10.60 2.77 0403U/91(Rl C14230-MAL 1984 MALANI HIGHWAYSV 13.10 .62 01/31/91(R) C15280-MAL 1985 flALAWI URBANI 15.00 12.7406130/91 C15490(-MAL 1985 MALAWI A6RIRES. 23.80 16.33 04/30/91(Rh C16260-MAL 1986 MALAWI EXT.PLANNING 11.60 7.32 09/01/91 C17420-MAL 198? MALAWI LILON6tEWATER (WTR 20.00 4.93 06/30/93 C17670-MAL 1q87 MALAWI ED.SECTOR CREDIT I 27.00 19.69 12/15/93 C17680-MAL 1987 MALAWI HEALTH/POP.II 11.00 2.10 06/30/93 C18510-fAL 1988 NALAWI AGRICULTURECREDIT 5.90 4.88 06/30/95 C18790-NAL 1988 IALAWI TRANSPORTI 13.40 6.49 06/30/94 C19200-NALfS)1988 MALAkI IND/TRADEPOL.ADJ.CR 70.00 .26 12/31/90 C19660-NAL 1989 NALAWI AGRI.IARKETINGi EST 18.30 17.8506/30/96 C19900-MAL 1989 MALAWI ENERGY1 46.70 40.28 12/31/94 C20360-NAL 1989 NALAaI INSTIT.DEV. 11.30 8.86 12/31/94 C20690-NAL 1990 NALAWI INFRASTRUCTUREI 28.80 27.03 12/31/95 C20830-NAL 1990 NALAWI EDUC.SEC.II 36.90 39.6906/30/96 C21210-NAL(S)1990 MALAWI A6RICSECTOR 70.00 38.77 12/31/91 4 C19203-MALIS)1991 MALAWI IND/TRADEPOL.ADJ.CR 7.20 7.34 12/31/91 TOTALnueber Credits z 18 440.60 257.95 Loans

8 Loans(s)closed 80.65 L23630-MAL 1984 MALAWI H16HWAYSV 18.00 .14 01/31/91lR' L26460-MAL 1986 MALAWI IND.& A6RIC.CR. 7.80 2.81 06/30/93 TOTALnuober Loans = 2 25.80 2.95

TOTALttt 106.45 904.26 of whichrepaid 31.11 16.07

TOT4Lheld by Bank6 IDA 75.34 888.19 Amountsold of whichrepaid

TOTALundisbursed 260.91 :__:_z:=_

Notes:

I Notvet effective It Notvet sioned titTotal Approved. Repayments, and Outstanding balance represent bothactive and inactiveLoans and Credits. (RIindicates foreally revised Closina Date. (SIindicates SAL/SECAL Loans and Creaits. TheNet Approved ard Bank Repavyents are historicalvalue. all others are sarket value. TheSigninq, Effective, and Closing dates are based upon the Loan Department offical data and are not taken frowthe Task Budoet file. -~~~~~~~~~~ lid Ic-I l'.igte2 t 3 Status 01 BankGroup Operations In RAL41l PFDBR25B- Listof Closeo SALsand Secals

Aeourt in US$sil Ilon (less cancelIations) Loanor Fisc3l Undis- Closing Credit No. Year Borrower Purpose Bank IDA bursed Date C13520-lAL1983 MALAWI FERTILI1EPCR.IfAD 4.98 .00 03/31/88 C14270-MAL1984 NALAOI STR.ADJ.LN,Il 55.00 .00 06/30/85 CA09Q0-MAL1986 MALAWI SAL III 40.00 .00 03/31/881R) C16440-fAL1986 MALANI SAL III 29.94 .00 09/30/988Rl CAQ091-MAL1987 MALAWI SAL III 10.00 .00 09/30/88fRt C19201-hAL1989 MALAWI IND/TRADEPOL,ADJ.CR 5,20 .00 12/31/90 C19202-NAi1990 MALAWI IND/TRADEPOL.ADJ.CR 4.70 .00 12/31/90 L'0260-MAL1981 MALAUI STR.ADJ.LOAN 45.00 .00 12/31/82 TotalNALAWI 45.(0 149.82 .00 I.:- Schedule D Page 3 of 3

MALAWI

FINANCIAL SECTOR AND ENTERPRISE DEVELOPMENT PROJECT

Statement of IFC Investments as of December 31, 1990

Investment Loan Equity Total Number FY Obligor Business ----US$ million----

326-MAI 1976 618-MAI 1982 D. Whitehead & Sons Textiles 10.8 - 10.8

362-MAI 77/81/95 Dwanga Sugar Corp. Sugar 11.3 - 11.3

434-MAI 1979 INDEBANK Devt. Finance - 0.6 0.6

502-MAI 1980/84 Malawi Hotels Ltd. Tourism 2.1 - 2.1

543-MAI 1981 614-MAI 1982 Ethanol Co. Ltd. Chem/Petrochem 2.3 0.2 2.5

832-MAI 1986 Leasing & Finance Co. Money/Cap. Mkt. 0.7 0.2 0.9

741-MAI 1987 872-MAI 1987 Viphya Plywood Plywood 3.9 0.5 4.4

Total Gross Commitments 31.1 1.5 32.6

Less: Cancellations, terminations, exchange adjustments, repayments, write-offs, and sales 19.5 - 19.5

Total Commitments held by IFC 11.6 1.5 13.1

Total Uncommitted Investments 34 34 MALAWI cg*Kza\iADMINISTRATEV DIVISIONS P %*t,sv ( I . Regions - v t 9 - and QJv#tgsto¢-, Districts

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