IFC and Illovo Sugar Malawi Partner to Boost Sustainable Agriculture and Cut Carbon Emissions

The initiative is expected to save millions of cubic meters of water, slash energy consumption by over 90 percent, and support thousands of jobs across the country’s sugar industry.

The International Finance Corporation (IFC) has announced a landmark $36 million financing partnership with Illovo Sugar Malawi plc, designed to modernize irrigation infrastructure, improve water and energy efficiency, and strengthen Malawi’s agricultural value chain. The initiative is expected to save millions of cubic meters of water, slash energy consumption by over 90 percent, and support thousands of jobs across the country’s sugar industry.

Transforming Malawi’s Sugar Industry Through Green Investment

The partnership marks one of Malawi’s most significant public–private collaborations in the agriculture sector to date. The IFC loan—structured as a local-currency-linked facility—will be denominated in Malawi kwacha but disbursed and repaid in U.S. dollars, aligning debt servicing with the company’s earnings base. The loan is backed by Associated British Foods plc (ABF), Illovo’s parent company, and supported by the World Bank Group’s International Development Association (IDA) Private Sector Window Local Currency Facility.

This innovative structure aims to mitigate foreign exchange risk and help Illovo maintain financial stability in Malawi’s volatile currency environment.

“The timing of IFC’s partnership with Illovo Sugar Malawi is particularly opportune, given the prevailing foreign exchange scarcity,” said Kondwani Msimuko, Finance Director of Illovo Sugar Malawi plc. “This facility reflects innovation tailored to our local context and shows IFC’s deep understanding of the private sector’s challenges.”

Enhancing Irrigation for Long-Term Agricultural Growth

The financing will support major upgrades to the irrigation systems at Illovo Sugar Malawi’s Nchalo Sugar Estate, one of the country’s largest sugar production sites. The project will connect the estate to the main canal under the World Bank’s Shire Valley Transformation Program (SVTP)—a multi-phase initiative aimed at improving agricultural productivity through sustainable water management, land reform, and climate-resilient infrastructure.

Once Illovo and the Government of Malawi sign the Water Purchase Agreement, the company will serve as the anchor off-taker of the SVTP, ensuring reliable demand and steady revenue to sustain the canal’s long-term operation.

According to IFC estimates, the infrastructure improvements will save approximately 34 million cubic meters of water annually—the equivalent of 13,000 Olympic-sized swimming pools—and cut energy consumption by 91 percent. These energy savings translate to a reduction of nearly 28,000 tons of carbon dioxide emissions each year, reinforcing Malawi’s commitment to low-carbon, climate-smart development.

A Model for IFC’s AgriConnect Initiative

The Illovo project is part of the World Bank Group’s AgriConnect Initiative, which focuses on transforming agriculture in Sub-Saharan Africa by mobilizing private investment in irrigation, logistics, and market infrastructure. AgriConnect aims to create sustainable jobs, raise rural incomes, and strengthen food security while promoting climate resilience.

“IFC’s partnership with Illovo Sugar Malawi reflects our shared strategy to support sustainable agriculture production and job creation in the country,” said Henrik Elschner Pedersen, IFC Regional Industry Director for Manufacturing, Agribusiness, and Services in Africa. “By providing local currency funding, IFC is helping Illovo mitigate currency fluctuations and sustain livelihoods for farmers—contributing to Malawi’s broader economic resilience.”

Supporting Malawi’s Economic and Social Development

Illovo Sugar Malawi is a major pillar of the national economy, employing over 10,000 people directly and another 5,000 through its supply chain, including smallholder farmers, transporters, and suppliers. The company operates two large estates—Nchalo in Chikwawa District and Dwangwa in Nkhotakota District—producing both raw and refined sugar for domestic and international markets, including Europe and the United States.

In addition to creating employment, the company supports rural livelihoods by providing technical assistance to small-scale sugarcane growers and investing in community projects such as schools, clinics, and water systems.

“By combining our different sectors, we are able to support significant development opportunities and drive positive change for local communities and economies,” said Alan Drew, Group Treasury Director of Associated British Foods plc.

IFC’s Broader Work in Malawi

This partnership builds on IFC’s growing engagement in Malawi’s private sector. In the 2025 fiscal year, IFC committed $37.4 million in new investments to Malawi and mobilized an additional $50.4 million from private and regional partners. The institution’s focus areas include agribusiness, energy, infrastructure, and financial inclusion, complemented by advisory services that help businesses and government agencies enhance competitiveness and sustainability.

Through collaborations like this one with Illovo Sugar Malawi, IFC aims to catalyze climate-smart private investment, promote inclusive growth, and strengthen the resilience of Malawi’s agricultural sector—a critical engine for employment and export earnings.

Building a Sustainable Future for Agribusiness

The Illovo-IFC partnership demonstrates how innovative financial solutions can bridge the gap between commercial success and environmental stewardship. By integrating irrigation efficiency, renewable energy savings, and inclusive supply chains, the initiative supports both economic and ecological sustainability.

As Malawi faces mounting challenges from climate change, including erratic rainfall and water scarcity, projects like these are vital for ensuring that the country’s agricultural sector not only survives but thrives—delivering prosperity for farmers, stability for industries, and resilience for future generations.