European institutions set to improve access to long-term finance in agriculture value chain in Malawi with €25 million credit line for smallholder farms and agricultural cooperatives
EIB and European Union cooperate with local financial intermediary Ecobank to make available loans with advantageous conditions to local SMEs in the agri-food sector
Project involves technical assistance to develop local intermediaries’ capacity to identify, assess and monitor agri-food value chain projects and develop new financial products
The European Investment Bank (EIB) and European Union today announced a new collaboration with Ecobank Malawi to improve access to finance for SMEs in the agriculture sector in the country. Supported by the EU’s External Investment Plan, the EIB signed a €12.5m loan with Ecobank Malawi, which will be complemented by an EU financed risk-sharing facility as well as a technical assistance program, to support SMEs in the agri-food sector. This means that players in Malawi can also get technical support and financing for their investments, and thereby contribute to the integration of smallholder farmers into local value chains.
The targeted financing of projects under these operations amounts to a total of €50 million, ensuring that agricultural companies across Malawi will be able to access loans with maturities of up to 7 years, longer than commonly available in the market. It is expected that the final beneficiaries of this financing will expand, upgrade and modernize their equipment, and thrive as a result.
Dr. Raymond Fordwuo, the Managing of Ecobank Malawi said: “At Ecobank, we realize that our mission of contributing to the economic growth and financial integration of the African continent would be incomplete without our involvement in the SME sector and especially those involved in Agriculture. It is therefore with great excitement, that today marks the beginning of a relationship that has the potential to transform one of the most important sectors in Malawi. This partnership with the Government of Malawi, the European Union, and the European Investment Bank to extend a credit line to Malawian SMEs in the agricultural sector will empower SMEs to fully exploit the agricultural value chain ultimately strengthening the economy.”
“Agriculture plays a key role in the economy in Malawi, yet many smallholder farms have an uncertain existence, due to climate change, diseases and pests,” said Thomas Östros. “This EU-financed project will cover some of that risk, to give players in the agri-food sector in Malawi support for their investments, where they usually did not have access to finance. This means that smallholders can build up their businesses and become an integrated part of the local value chain, ultimately improving people’s lives.”
“Team Europe delivers! Today the EU and the EIB, in partnership with Ecobank, come together to offer financing that will support smallholder farmer’s integration into SME businesses. Malawi 2063, here we come!” said Aurélie Valtat, Chargé d’affaires of the Delegation of the European Union to Malawi.
Speaking at the event, the Minister of Agriculture, Hon Lobin Lowe said “While Government has taken significant policy developments to help agricultural SMEs, limited resources have limited implementation efforts. Therefore what Ecobank Malawi Limited and the European Investment Bank have done is commendable and I applaud their effort, considering that this line of credit will not only give loans but provide technical support that will help smallholder farmers integrate into value chains and food systems.”
The signature is the latest in a series of projects financed by the EIB and the EU in support of Malawi, following a loan in 2019 and an earlier credit line in 2016 specific for the agriculture sector, with other local financial intermediaries.
The EIB and FDH Bank today formally agreed their first loan agreement that will support private sector investment across Malawi. Entrepreneurs and private business across the country will benefit from a new EUR 7 million credit line managed by the leading local financial services provider and backed a EUR 3.5 million loan from the long-term lending institution of the European Union. Plans for a pioneering financing programme to promote sustainable agriculture investment across Malawi have also been confirmed.