The Multilateral Cooperation Center for Development Finance (MCDF), with implementation by the African Development Bank, approved a $3.88 million grant in 2025 to support transaction advisory services and due diligence for a hydropower and transmission project on the lower Songwe River — on the border between Malawi and Tanzania.

What the project involves

The Songwe River basin project would develop:

  • A sustainable dam and hydropower plant generating 180.2 megawatts of renewable power
  • Transmission lines integrating the output into both the Malawian and Tanzanian national grids

The project is a joint Malawi-Tanzania initiative, reflecting the cross-border nature of the Songwe River and the shared interest in regional energy integration.

The significance of the planning grant

The $3.88 million is not construction funding — it covers transaction advisory services, environmental and social impact assessment, and due diligence. This is the work that precedes a final investment decision and the mobilisation of construction financing.

For a project of this scale (180 MW is substantial), the preparation phase typically takes 2–4 years and costs tens of millions. The MCDF grant de-risks this phase by bringing in the African Development Bank as implementing agency and funding the analytical work that private investors and development finance institutions require before committing.

Regional energy integration context

The Songwe project is part of a broader trend of regional electricity market development in East and Southern Africa. The Southern African Power Pool (SAPP) framework envisions interconnected grids that allow countries to trade power — a model that reduces each country’s dependence on its own generation capacity.

For Malawi specifically, regional interconnection is a strategic priority. The Mozambique interconnection (50 MW import) is the near-term piece; the Tanzania Songwe project is a longer-term component of the same strategy.

What it means for investors

180 MW of additional capacity on the grid — beyond Mpatamanga’s 358 MW and the Mozambique interconnection — would fundamentally change Malawi’s energy balance. A country currently running a 40 MW deficit at peak demand would, with these projects complete, have significant generation surplus.

Energy surplus changes the economics of energy-intensive industries dramatically. For agro-processing, manufacturing, and cold chain logistics — all sectors identified as investment priorities under Malawi’s ATM strategy — reliable, affordable power is the missing piece.

The Songwe project’s timeline extends well into the 2030s. But the planning grant represents real progress in a pipeline that is taking shape.

Sources: MCDF press release, African Development Bank, World Bank Malawi energy overview.