The United States funded Global Communities says lack of proper financing and structured markets continues to stifle growth of small and medium agribusinesses in the country.
Global Communities Country Director, Nobel Moyo, made the observation on Wednesday at a day-long interface meeting for lending institutions, grain traders and farmers, hosted as part of the business to business meetings at the Malawi International Trade Fair underway in Blantyre.
According to Moyo, despite positive strides registered by stakeholders in addressing the challenge, funding concerns remain rampant among small and medium scale producers.
Moyo said most commercial banks are still skeptical of investing in the agriculture sector.
“Some of the reasons include the perception that agriculture is a risky business and that most small and medium scale producers do not have required capacity to manage the loans,” said Moyo.
He also said unavailability of properly structured markets for local products is frustrating the efforts of most small scale farmers.
Moyo further added that the cost of production remains high in the country, a situation which he said leads to a reduction in the returns made by the growers.
“To enhance structured markets, we need to be aggressive and once we have a structured market, then it becomes easier and more motivating for the banks to provide loans because at the end of the day, the produce would have a guaranteed market,” said Moyo.
Recent statistics show that the agricultural sector, which is the backbone of the economy, supports about 85 percent of the population.
And just recently, the Farmers Union of Malawi Executive Director, Prince Kapondamgaga, warned that the input of agriculture to the Gross Domestic Product will continue to decline if Malawi continues its over-reliance on tobacco as a major foreign exchange earner.
Kapondamgaga said that already, the sector’s contribution to the economy continues to go down due to natural calamities, lack of stable markets and lack of funding for small scale farmers, among other challenges.