Seeds of reform: Planting money to transform Malawi’s agriculture

By Charles Mpaka:

Macademia has often missed in the agricultural production discourse in Malawi but a study on the production of the crop highlights its potential to become a big player in the economy of the country.

According to the study, Malawi is the seventh top producer of macadamia nuts in the world, with a market share of 3 percent.

In 2018 Malawi was the world’s fourth-largest exporter of macadamia nuts valued at £18.2 million.

Ninety percent of this crop was grown by large commercial estates with smallholder farmers’ production contributing just 10 percent of the total output.

“However, the smallholder sector is vital for the future growth of the macadamia sector in the country,” says the study, published in MDPI journal in February 2021.

Yet, as the study notes, smallholder macadamia production in Malawi has received little attention, despite high demand of the crop on the global market.

The review says boosting production of the crop can be a way out of poverty for many smallholder farmers; but for this to happen, government must raise funds to help drive policies that are designed for improved production of the crop.

There is a widely-held opinion that amid Malawi’s obsession with tobacco and maize as kingmakers of the economy, there is a ‘neglected minority’ of crops that are of high value that can offer Malawi the best opportunity to diversify its agricultural export base.

Government and independent experts agree that while agriculture enjoys the pride of place as the mainstay of Malawi’s economy, it is still too subsistent and too focused on a narrow range of crops such that it does not bring in as much wealth befitting its decorated status.

In the National Agriculture Investment Plan (2018), government admits that the sector is characterised by low productivity, low levels of improved farm input use, limited private investment and low mechanisation levels.

It further says the dominance of maize and tobacco renders the country vulnerable to production and market risks related to these crops, making diversification of production and exports a priority.

Agriculture policy expert, Tamani Nkhono-Mvula, argues that Malawi’s potential to diversification of its crop export base actually starts with the riches of the vast but unused or under-utilised tracts of arable land across the country.

“Then, while our major forex earner to-date, tobacco, is facing challenges on the global market, we have huge potential in these other crops,” he says.

Cash crops such as cotton, coffee, soybeans, macadamia nuts and chillies have been cited as potential export alternatives.

However, to unlock that potential and drive Malawi’s agriculture more towards commercialisation, it requires huge financial investment.

According to the Alliance for Green Revolution in Africa (Agra), Malawi needs at least $6 billion (about K4.8 trillion) annually to realise quick transformation of its agriculture sector.

There have been some recent movements towards increasing investment in agriculture — although it is still a long way to go before Malawi can sufficiently commercialise the sector.

In 2018, government established the Malawi Agricultural and Industrial Investment Corporation (Maicc) which works in partnership with financial institutions and others to mobilise resources for investment in agriculture and other areas to drive Malawi’s industrialisation.

Again, in July 2018, government started implementing the Agriculture Commercialisation (Agcom) project whose objective is to accelerate commercialisation of agriculture in Malawi –also through working with various partners including financial lending institutions.

NBS Bank is one of the local institutions which has partnered Maicc and Agcom in Malawi’s agriculture commercialisation drive.

Head of Marketing and Customer Experience at NBS Bank, Tamanda Longwe, says the Bank sees a large potential in Maicc’s programme.

In partnering with Maicc, the Bank aims to contribute to offering solutions to producers and off-takers that want to strengthen and upgrade their agricultural production facilities.

“Integration of small-scale and emerging farmers into value chains is key for growing the agricultural sector in Malawi,” Longwe tells Malawi News.

On the other hand, the bank’s partnership with Agcom provides an opportunity for small-scale farmers and emerging farmers in Malawi to have a competitive chance against large scale farmers.

This means giving “a fair and equal opportunity for small scale farmers to compete and contribute in an agro-based economy, therefore creating momentum that could in turn enhance see positive growth of the economy”, says the bank.

Besides being involved in construction, energy and telecommunications, NBS Bank has also been involved in tobacco and sugar value chains over the years – now recently introducing an agri-business financing strategy that targets a wider array of agricultural value chains that includes maize aggregation and soybeans and macadamia production.

In the new strategy, aligned to first 10-year implementation plan for the Malawi 2063 agenda, NBS Bank says it is focusing on value chain strengthening and financing of a diverse set of agricultural players –from producers to processors, from SMEs to corporates.

“We are here to have a strategic discussion with these players on how they want to grow their business and where NBS Bank can support them. And these value chains are just an example: our appetite is diverse, and we want to contribute to key impact areas of the agricultural sector of Malawi,” Longwe says.

According to the bank, diversification creates a larger platform for Malawi to produce enough for both the local and export market and enhance the country’s economy and Gross Domestic Product.

But to achieve this, it needs sufficient financing, Longwe observes, hence the bank’s participation in the sector to contribute to the financing needs.

“Strategic and sufficient funding in the sector could pave way for efficient agricultural practices that incorporate modern technology in the agricultural sector, in turn increasing efficiency and productivity to meet the necessary demands in agro-based economy,” she says.

Gracian Lungu, spokesperson for the Ministry of Agriculture, says low productivity in agriculture in Malawi is due to a number of factors, the most important of which is low financial investment by most of the smallholder farmers that make up the bulk of farmers in Malawi.

He says the partnership of NBS Bank and other financial institutions with Agcom and Maicc is in line with government’s vision which promotes participation of private sector players in agriculture development.

“Such financial institutions are playing their proper function in agriculture commercialisation in Malawi,” he says.

Lungu says government is targeting all players in Malawi’s agriculture development with different types of interventions as well as policy orientation and skills development.

Government launched the National Agriculture Investment Plan (NAIP), a 5-year framework, to coordinate and prioritise agricultural investment by various government agencies, development partners and non-state actors in the sector.