Only 15 percent of loans by banks and other money lending institutions go towards supporting agriculture despite Malawi being an agro-based economy.
Minister of Agriculture Sam Kawale disclosed this in Lilongwe on Thursday at the start of the 2023 Agri-Finance Conference organised by Bankers Association of Malawi (Bam) in conjunction with Civil Society Agriculture Network (Cisanet).
Kawale has since challenged financial institutions to step up their support towards the industry, which contributes about 28 percent to the country’s GDP.
He said it is encouraging to see trends where educated people have now started to migrate from towns to villages to embark on farming.
The two-day conference is being held under the theme ‘Decoding Opportunities Amidst Myriad Challenges: Agriculture for Development’.
Bam Vice President Zandile Shaba underscored the need for Malawi to de-risk agriculture to make it more predictable.
According to Shaba, Malawi’s agriculture sector is dogged with many risks which must be addressed to give confidence to lenders that their financing will be paid back.
She was, however, quick to note that banks are offering financial services to farmers, ranging from smallholders to commercial farmers, in order to achieve their financial and sound goals.
She added that banks also provide financing for the agro-processing industries.
“We need to remind one another that agriculture anchors Malawi’s economy and accounts for more than one-quarter of Malawi’s GDP. The sector provides direct and indirect employment.
“By the end of this conference, I am confident that we will have financial institutions linked with farmers and support them. Structured markets will be well understood and help support the agriculture sector and players in the production value chain will be complementing and supporting one another,” Shaba said.
This is the third Agri- Financing Conference that Bam has organised with Cisanet.
Cisanet Chairperson Herbert Chagona said agri-financing conferences are proving to be effective in strengthening linkages between farmers and financial institutions.
