Sugarcane Smallholder Outgrower Project

PROJECT DESCRIPTION:

The Government of Malawi sought USD 15.42 million in financing from the African Development Bank (AfDB) to develop sugarcane under irrigation. This was in recognition of the industry’s potential, both in terms of export opportunities resulting from Malawi’s relatively low cost of sugar production and the expanding domestic and regional demand for sugar and related products.

The successful exploitation of the sector’s potential will enable the country to increase the size and reliability of export earnings, and substitute fuel imports by using cane sugar by product, ethanol. Sugarcane production will also boost smallholder farmers, including women, and enhance the government’s policy goal of alleviating rural poverty.

To this end, the AfDB project developed Liwaladzi 550 Ha and Kazilira 780 Ha under centre pivot irrigation, also using sprinkler irrigation systems. After the two projects were successfully implemented, The Dwangawa Cane Growers Trust (DCGT), the executing agency, received a Euro 3 million grant from the EU to implement another sugarcane project, 650 Ha at Kasitu North, also under irrigation. The project promoters seek financing to complete the Kasitu project and resuscitate the Liwaladzi and Kazilira projects.

Business Model

The existing model is that DCGT secures funds, implements the projects and hands them over to management companies. DCGT allows turnkey arrangements whereby the financier implements and manages the project until it recovers the investment in full.

PROJECT LOCATION:

The project location is Dwangwa, Nkhota-kota, about 270km north-east of Lilongwe.

LEAD AGENCY/ PROJECT PROMOTER:

Dwangwa Cane Growers Trust

ACTIONS REQUIRED/ IMPLEMENTATION ARRANGEMENTS/ CONTRACT TYPE:

The projects require a financier to provide a long-term loan, possibly combined with a PPP implementation model.

AVAILABILITY OF PRE-FEASIBILITY STUDIES, FEASIBILITY STUDIES, AND OTHER STUDIES:

All studies, including technical feasibility and designs, environmental impact assessment, licences and a market feasibility study have already been done by government.

ESTIMATED COST OF THE PROJECT:

The total capital requirement needed to resuscitate the three schemes will not be less than USD 3 million