The World Bank Board of Directors has approved an
International Development Association (IDA) grant of US$40 million for an
Infrastructure Services Project in support of Malawi's Economic Growth Strategy
(MDGS).

The project will support Malawi Government efforts to strengthen economic
growth and improve its distributional impact by providing coordinated
infrastructure services necessary for expanding social and economic activities
outside the country's major cities. The coordinated infrastructure services
will cover one or more of the following sectors - electricity,
telecommunications, water and sanitation, and roads.

The project will provide core infrastructure services in about thirty market
centers located within five economic corridors along the country's main road
system. These corridors, which span the country's three geographical regions,
are:
1. Rumphi-Nyika-Chitipa (northern region)
2. Ntcheu-Tsangano-Mwanza (central/southern region)
3. Mangochi-Cape Maclear (southern region)
4. Zomba-Phalombe-Mulanje (southern region)
5. Bangula-Tengani - Nsanje- Makoko (southern region)

The choice of the five corridors to participate in the project hinged primarily
on their significant potential for economic growth in three priority areas of
the MDGS - agro-business, mining, and tourism. The selection of the market
centers within these corridors took place in consultation with the relevant
District Assemblies.

The key concept underlying the project is that the lack of one or more
essential infrastructure services (water, electricity and telecommunications)
limits business opportunities outside of agriculture. It also constrains
social and public institutions, such as clinics and schools, from delivering
the full range of services necessary to meet the objectives of Government
programs for health and education.

The project will also assist the Government of Malawi in developing a
coordinated approach to planning and implementing infrastructure development in
these areas.

This project is testing an innovative approach to infrastructure services
provision. A suite of water, roads, electricity, and telecommunications
provides a platform for competitive economic activity and provision of social
services, says Constantine Chikosi, the World Bank's Acting Country Manager
for Malawi.

The project's main focus will be the removal of infrastructure barriers to
small and medium-scale business development. The project will also identify
non-infrastructural barriers, such as the lack of financing, which need
attention from other sources of donor assistance. The proposed project will not
cover large infrastructure such as electricity services for mines and other
large enterprises that may develop in the corridors away from the market
centers.

"However, the potential development of these larger businesses in the selected
economic corridors has played a role in the selection of the project areas
because of the additional infrastructure that market centers near these large
projects may require to take advantage of increased business opportunities,"
explains Paivi Koljonen, the World Bank Task Team Leader of the project.

The project will also provide institutional strengthening and capacity building
to the various governmental agencies and the private sector engaged in
infrastructure service delivery. Of particular importance is the project's
support to the district authorities in each of the economic growth corridors
who will be key partners in project implementation.

The project is likely to directly affect about 160,000 people living in the
targeted market centers. In addition, the feeder roads that the project will
construct are likely to have an even larger impact, bringing the market centers
within closer access of people living in the hinterlands.