Commercial farmers can now easily access start-up credit or working capital from local commercial banks under the recently launched $3 million Partial Credit Guarantee Scheme by the government.
The money will be used as 70 percent collateral when the farmers intend to access the loans.
The funding window was launched in Blantyre over the weekend.
Speaking during the launch, Minister of Agriculture Lobin Lowe said the scheme is part of the government’s drive towards agriculture commercialisaion in line with aspirations embedded in the Malawi 2063.
“My message to banks is that they should be fair to farmers by processing these loans fast because agriculture is seasonal, it will be unfair to give a loan to a farmer in January or February while the farming season starts around October,” he said.
The project is being financed by the World Bank.
World Bank Country Manager Hugh Riddell said as agriculture remains Malawi economy’s backbone, the project is aimed at scaling up production.
One of the beneficiaries, Mwandama Corporative Union, has already accessed K79 million from FDH Bank through the window.
The cooperative’s Manager Bornwell Kaunga said the scheme has relieved them from the stress of access to finance.
“Apart from helping us with easy access to loans, this scheme will help banks to have confidence in us because they will see how we will be able to repay the loan and I believe in future they will be willing to offer credit even without government guarantee,” he said.
The first pillar of the Malawi 2063 blue print is agriculture productivity and commercialisation where the country’s goal is to see improved agriculture for the economy.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.