Spinning of Cotton Lint Into Yarn

PROJECT DESCRIPTION:

Cotton Spinners is a locally owned, limited liability company owned by Malawian entrepreneurs Richard Kazembe, Stewart Malata and Anderson Kulugomba. The company is not yet operational but the promoter has done a number of assessments to establish the potential of the proposed venture.

On average, Malawi produces cotton on about 200,000 Ha of land. The Lower Shire Valley accounts for about 50% of production, the southern region uplands about 36% and the lakeshore areas the remaining 14%. There are currently 11 ginning companies in Malawi with a combined capacity of more than 150,000 MT per annum, and only one spinner of cloth.

The objective of the project is to produce yarn from lint for export. At a later stage, it intends to add weaving and knitting to produce finished garments for export.

PROJECT LOCATION:

Liwonde, Balaka District, close to the Nacala rail line. The location was chosen for its proximity to cotton farms, which will provide a readily available supply of raw materials

LEAD AGENCY/ PROJECT PROMOTER:

Cotton Spinners

ACTIONS REQUIRED/ IMPLEMENTATION ARRANGEMENTS/ CONTRACT TYPE:

Joint Venture Partnership

INVESTMENT REQUIRE:

Capital Expenditure Requirement:

• USD 27 million

Working Capital Requirement:

• USD 3 million

REMARKS:

Internal Rate of Return – 11% (Based on 10-year cashflows and 10.45% discount rate)
Net Present Value – $19,130,900 (Based on 10-year cashflows and 10.45% discount rate)
Payback Period – 10 years