DFID, UNDP launches inaugural fund to boost innovative businesses in Malawi

Apr 23, 2014

Local businesses as these stand to benefit from MICF if they have innovative business ideas. Photo: MICF

The private sector in Malawi has been given a vital boost for development following the launch of the Malawi Innovation Challenge Fund (MICF) at Ryalls Hotel in Blantyre. The function was presided over by Ms Sarah Sanyahumbi, DFID Country Head and Ms Mia Seppo, UN Resident Coordinator & UNDP Resident Representative in Malawi.

The MICF is an US$ 8 million fund supported by UNDP and the UK Department for International Development (DFID), through which businesses within the agricultural and manufacturing sectors of Malawi can compete for grant funding for innovative projects that can deliver large social impact and help the country diversify from its narrow band of exports.

In her opening remarks, Ms Sanyahumbi noted the intrinsic nature of challenge funds and explained how the MICF is poised to bring sustainable social change in the country.

“The challenge fund instrument has been designed to bring real impact, by attempting to change market systems and increasing employment and incomes for the poor people.  Challenge funds aim to harness the strengths of the private sector: its creativity and ambition to innovate; its ability to test new ideas; its capacity to rapidly abandon them if they do not work; and its capacity to implement and scale up those that do work,” said Sanyahumbi.

The MICF will be providing a matching grant of up to fifty percent to innovative business projects to help absorb some of the commercial risk in triggering innovation, and speeding up implementation of new business models and technologies that have high social impacts.

Ideally, the business idea to qualify for a grant must be implemented in Malawi, either by private sector organisations registered in Malawi or externally registered businesses investing in the country.

The facility has been welcomed by local investors as a real opportunity to boost their businesses in the face of a challenging business environment in the country.

“It’s a very good development because it moves off the hurdles of securing finances for investment that we have always gone through. As you know, in Malawi the inflation and interest rates are so high. As such, this funding will help innovate a lot of businesses and help them grow, particularly those that will qualify,” said James Chuma, Chairman of Kings Tin Manufacturing in Blantyre.

The MICF was conceived by UNDP to support the ambitions set out in the National Export Strategy by supporting the economic transformation of Malawi, through broadening and diversifying the productive base of the economy.

It is in line with UNDP’s Global Private Sector Strategy of ‘Inclusive Markets Development’ that aims to deepen support for pro-poor and inclusive market development as a means to contribute to poverty reduction through employment creation, income generation and overall economic development.

“UNDP recognizes that the Millennium Development Goals will not be achieved without sustainable investment by the private sector. It is our earnest hope that the Fund will help companies pursue a number of innovative new projects that will have a real, positive and sustainable impact on the way business is conducted and markets operate in Malawi; and that the results will be of direct benefit to the poor,” said Ms Seppo.

Although challenge funds have never been known to fail, the success of the MICF highly depends on the participation of the local private sector and its willingness to take risks and invest in innovative business ideas. The fund is being managed by Imani Development Consultants and Nathan Associates Limited. The first round of competition for the grants is currently underway and winners are expected to be announced by August this year.

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