BLANTYRE-(MaraviPost)-Illovo Sugar Malawi has secured approval for a $45 million loan facility from its majority shareholder, SUCOMA Holdings Limited.
The approval was granted during an Extraordinary General Meeting (EGM) held on August 19, 2025, in Blantyre.
The loan facility includes an option to increase the amount by an additional $15 million.
Illovo’s Board Chairman, Jimmy Lipunga, stated that the company is currently facing acute foreign currency liquidity constraints due to limited export volumes and a broader shortage of foreign currency within the domestic market.
“Illovo Sugar Malawi is currently grappling with acute foreign currency liquidity constraints, a situation exacerbated by limited export volumes and the broader shortage of foreign currency within the domestic market,” Lipunga said. “These factors have severely hindered our ability to generate or source adequate foreign currency to meet our short to medium-term obligations,” he added.
The loan facility is designed to alleviate pressure on Illovo’s internally generated and locally sourced foreign currency reserves.
According to Lipunga, the proposed loan facility will ease the pressure on the company’s internally generated foreign currency resources, preserving financial flexibility and enabling the company to focus on long-term strategic investments and initiatives that drive value creation.
“The proposed loan facility will ease the pressure on our internally generated foreign currency resources, preserving our financial flexibility and enabling us to focus on long-term strategic investments and initiatives that drive value creation,” he said.
The loan from SUCOMA Holdings will be utilized to settle intercompany payables, which have accumulated as a result of the constrained foreign currency environment.
This financial maneuver is expected to stabilize Illovo’s working capital and provide the company with the necessary liquidity to sustain its operational momentum.
Frank Harawa, a shareholder of Illovo Sugar Malawi and Secretary General of the Minority Shareholders Association of Listed Companies, noted that the shareholders were made fully aware of the prevailing economic constraints and collectively agreed that obtaining the loan is in the best interest of the company and its stakeholders.
“It is imperative for the company to secure this loan from SUCOMA Holdings as it provides a timely injection of foreign currency that is crucial for Illovo’s operational continuity,” Harawa said, adding that,”The decision to approve the loan was reached after thorough deliberations, ensuring that all members understood the strategic importance of this proposal.”
The financial environment within Malawi has been characterized by a persistent shortage of foreign currency, driven by a combination of reduced export earnings and increased demand for limited foreign exchange reserves. Illovo Sugar Malawi, as a key player in the agricultural sector, has been particularly affected, given its reliance on foreign currency for the procurement of inputs and servicing of cross-border financial obligations.
The loan arrangement with SUCOMA Holdings is aimed at mitigating the adverse effects of these macroeconomic challenges.
By securing this facility, Illovo is positioning itself to better manage cash flows, enhance liquidity, and maintain operational stability.
The $45 million loan, with an option for an additional $15 million, represents a significant capital injection that will provide Illovo with the necessary financial bandwidth to address immediate liquidity needs.
The company expects this move to have a positive impact on its balance sheet and overall financial health, positioning it for sustained growth amid ongoing economic uncertainties.
