Funding bonanza expected as Malawi switches allegiances from Taiwan to China

The People's Republic of China is working on arrangements to start pouring millions of dollars to finance development projects in Malawi following the Southern African country's decision to switch allegiance from Taiwan and embrace the mainland as a diplomatic ally.

The Malawi government, which has had 42 years of diplomatic ties with Taiwan, announced on December 28 that it had switched its allegiance in favour of the People's Republic of China, forcing Taiwan to abandon several projects it had been financing.

Malawi's Minister of Transport and Public Works, Henry Mussa, says the People's Republic of China, which reportedly dangled a $6-billion financial package for Malawi to persuade the Malawi government to make the landmark decision, has indicated that it will start financing all the projects which Taiwan has stopped funding.

Taiwan has been assisting Malawi in different areas, including health, agriculture, transport, and public works, and the uncompleted major projects that it has been financing in Malawi include the $45-million construction of the Karonga–Chitipa road, in the northern region, and the construction of the new parliamentary complex in the capital city, Lilongwe.

Mussa says the People's Republic of China has assured his government that it will take over funding of all these projects, in addition to funding new development projects.

"A delegation of engineers from the People's Republic of China has already inspected the Karonga–Chitipa road. The delegation included structural engineers, who have assessed the nine bridges that are to be constructed on the road. People should not be worried because we are optimistic that construction of the road will resume soon with the support of the People's Republic of China," says Mussa.

The Malawi government last year entered into an agreement with Taiwan for the latter to finance the construction of the Karonga–Chitipa road, spurning a $45-million loan for the project that was offered by the African Development Bank (AfDB), allegedly because the AfDB tender evaluation team insisted on contracting a firm from the People's Republic of China, which had emerged the preferred bidder during a tender-evaluation process.

The Malawi government proceeded to contract Taiwanese firm Chaser Construction to carry out the project – which started in June last year – but several Cabinet ministers, chiefs, members of parliament and other concerned parties have been complaining about the slow progress on the project, saying it is affecting progress on other projects, notably the uranium-mining project at Kayelekera.

Australian miner Paladin Resources is involved in the mining venture at Kayelekera, where the Karonga-Chitipa road, which is in very poor condition, is the vital link to Malawi's urban centres.

"Part of the equipment cannot be moved to the mining site because of poor transport infrastructure and Paladin wants the assurance that the road would be completed soon. The agreement with the People's Republic of China has given us a sigh of relief," comments Mussa.

Former British secretary for international relations Baroness Lynda Chalker, whose company, Africa Matters, deals with the management of the interface between the public and private sectors in Africa, urges the Malawi government and its partners to ensure that the road is completed as soon as possible for the benefit of the Kayelekera mining project, which is vital for Malawi's economic development.

"Our primary focus is on building closer relationships between the private sector and governments with a view to creating stronger, longer-term partnerships, and that is why we are interested in the role of government as regards Paladin's investment in Malawi. Completion of the road and the mining project will turn the Karonga–Chitipa corridor into a hub of economic activity," says Chalker.

Mussa comments that the agreement with the People's Republic of China will ensure urgency in the completion of all the projects that were previously financed by the Taiwanese because it does away with long processes, such as the retabling of the projects in Malawi's parliament.

"As the government of Malawi, we have negotiated thoroughly on that issue for the benefit of the nation. You will experience a smooth takeover and can rest assured that construction of the Karonga–Chitipa road and the new parliament buidling in the capital, Lilongwe, would be completed even faster," says Mussa.

The Republic of China has also been facilitating the setting up of a fertiliser factory in Lilongwe, which is meant to supply the local market, which depends of imported fertiliser.

Malawi's Foreign Affairs Minister, Joyce Banda, says Malawians should not worry if the Taiwanese abandon such investments because the establishment of diplomatic ties with the People's Republic of China will ensure that investors from the Asian economic giant flock to the country to undertake different ventures.