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The African Development Fund (ADF) has approved a loan of 13.67 million units of accounts (UA), equivalent to US$19.54mn to finance a roads rehabilitation and upgrading project in the Karonga and Chitipa districts of Malawi.

The objective of the project is to improve accessibility and mobility of the rural population in Karonga and Chitipa districts to markets, social and economic facilities, and promote economic integration between rural and urban areas.

The sector goal of the project is to improve the capacity and level of service of the transport system to support economic, social development, and poverty reduction programmes in Malawi. In addition, the project will contribute towards regional integration between Malawi and Zambia.

The project is expected to produce a two-lane 46km bitumen surfaced road from Karonga to Lufilya as well as the rehabilitation of five rural roads totalling 200km.

The project will support the Government’s policy for improving rural road infrastructure and support the local economies of Chitipa and Karonga districts by reducing transportation costs of agricultural and industrial products, reducing travel time, and improving mobility and accessibility in the two district.

At project completion, it is estimated that overall transport costs and access time to socio-economic facilities would be reduced by respectively 60% and 70%.

The ADF loan will be used to finance 76% of the foreign exchange cost amounting to UA11.60mn, equivalent to UA16.58mn and 49% of the local currency cost amounting to US2.07mn, equivalent to US$2.95mn.

The operations of the bank group in Malawi commenced in 1969. To date, the bank’s total commitment in Malawi is estimated at UA490.35mn, equivalent to US$701.10mn on 71 operations.