COVID-19 Trade Impact Mitigation Facility. COTIFA

Helping Malawian Exporters Recover and Thrive Beyond the Pandemic

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COTIFA Introduction

The world is presently battling a pandemic, Coronavirus (COVID-19) which has posed a threat to the economy and human life. The effects of the virus have an estimated potential of costing the global economy about US$1 trillion which would result in a significant decline of 0.4 percent points in global Gross Domestic Product (GDP) growth. A number of sectors have been affected posing a threat to many African countries, Malawi inclusive Export Development Fund has therefore introduced a “Covid-19 Trade Impact Mitigation Facility (COTIMFA)” towards cushion the effects of the pandemic.

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Product Rationale

EDF’s Covid-19 Trade Impact Mitigation Facility (COTIFA) aims at assisting companies in Malawi to assist companies in Malawi manage the adverse impact of financial economic shocks caused by COVID-19 Pandemic. Such an impact may be directly caused by Pandemic-induced sharp declines in commodity prices, a sudden significant drop in tourism earnings, disruptions in supply chains, and/or closure of export manufacturing facilities.  Under this facility, EDF is intervening through credit and risk bearing instruments by providing support to companies which need direct funding, lines of credit, guarantees and other similar instruments.

The facility is a rapid financial response that will enable companies to continue carrying out business while adjusting to the impacts of the Pandemic, as well as manage effects of the Pandemic during and after situations normalize specifically by:

  • Supporting eligible companies to meet debt payments falling due and prevent payment defaults;
  • Providing trade finance facilities for exports in view of distressed working capital;
  • Assisting companies whose revenues are tied to specific export revenues to manage the sudden declines of export earnings.

Features /Attributes

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 and installation phase of the manufacturing facilities backed by EDF’s “Contingent Guarantee”;

Tranche 2: Refinancing or Relay Facility

Upon completion and certification by the by an acceptable independent engineer, EDF will refinance the Original Facility while supporting the operations of the completed facilities.

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Benefits & Application Process

``Unlock long-term value through risk-sharing and tailored export financing — with a guided, transparent application process designed to support your journey.``

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Product Benefits

  • Promoting the development of agro-processing and related infrastructure in Malawi to international standards.
  • Addressing concerns around agro-processing risks through innovating a structured instrument that will attract financiers in the development of value addition and related activities.
  • The project is afforded the opportunity of achieving a longer financing maturity than EDF or any other entity financing the construction phases will ordinarily be willing to give.

Application Requirements

  • Profiles of the Company/Project promoters, Board and management;
  • Business registration certification and memorandum and articles of association;
  • Market Study report;
  • Feasibility study report;
  • Comprehensive Financial Model;
  • Environmental and Social Impact Assessment report;
  • Business plan covering the financing period;
  • Engineering designs and Bills of quantities;
  • Profile of proposed contractors;
  • Operating service agreement with the suppliers of equipment;
  • Title of the proposed property on which the project will be developed;
  • Owners’ contribution for at least 30% of the total project cost.

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