Announcement of IFC Supports Nineteen Million Ten Thousand US Dollars Textile Expansion and Modernization Project in Malawi on June 17, 1982

IFC Press Release No. 82/31 Thursday, June 17, 1982 IFC Supports a $19.10 Million Textile Expansion and Modernization Project in Malawi The International Finance Corporation is making a loan of $5 million equivalent in Deutsche Mark and Swiss francs to help finance a $19.10 million expansion and modernization of David Whitehead & Sons (Malawi) Limited (DWM), Malawi's only integrated textile mill. Other sources of finance for the project include local and international development institutions and the Company's own cash generation. Located in the industrial area of Blantyre, DWM currently supplies Malawi's entire domestic demand for all-cotton fabrics. The expansion will enable DWM to produce polyester-cotton blended fabrics for the first time, thereby substituting for a major part of Malawi's existing imports of blended fabrics, and saving substantial amounts of foreign exchange. It will expand DWM's capacity to 34 million yards per annum from 30 million yards. The project will also introduce modern European textile machinery to DWM, allowing it to more compe- titively produce a wide range of fabrics for local and export markets. In addition, the project will establish a waste reprocessing plant to recover about 1 million pounds of cotton a year to be respun into coarse yarn, freeing up additional cotton for export. David Whitehead (Technical Services) (DWTS) a Malawian company wholly-owned by the UK-based Lonrho Group, is a major shareholder in DWM and also provides the Company with technical services. Other share- holders in DWM include the Malawi Development Corporation, a Malawian development institution, and Press Holdings Limited, a local investment company. IFC's investment will consist of two subloans, one denominated in Deutsche Mark and the other in Japanese yen, in approximately equal proportions. Also participating in the project financing are the Commonwealth Development Corporation (U.K.), providing a loan of $5.3 million equivalent, the Investment and Development Bank of Malawi Limited, with a loan at $1.1 million equivalent, buyers' credits of S3.8 million equivalent and cash generation of 33.7 million equivalent. The project is IFC's second investment in DWM. IFC provided a 36 million loan in 1976 which helped finance an expansion of the company's annual capacity to its present 30 million yards from 24 million yards. The first project was successfully implemented and resulted in a signi- ficant foreign exchange savings for Malawi. (Any inquiries strictly relating to IFC's participation in this project should be directed to the IFC Information Office, 1818 H Street, N.W., Washington, D.C. 20433, Telephone (202) 676-0393.)