Auction Holdings, New Finance Bank sign MOU on warehouse receipt financing facility

The Auction Holdings Commodity Exchange (AHCX) and the New Finance Bank (NFB) on Monday signed a Memorandum of Understanding (MOU) on the warehouse receipt financing facility, a loan package that is on offer to farmers that will sell their produce to the holdings.

AHCX, NFB officials announcing the deal at a news conference

Speaking during the signing ceremony in Lilongwe, AHCX General Manager Davies Manyenje said the facility will not only increase benefits to the farming community but also to improve market access and addressing financial inclusion.

“Farmers will have little problems when accessing the market and also will be able to get loans from the bank. We want the community to to get their fair benefits from their products,” he said.

The partnership, according to Manyenje will provide an avenue for Malawi to grow the smallholder commodities market by providing immediate access to finance for farmers .

The financing facility is targeting farmers and commodity traders who are members of AHCX who will have immediate access to funds after they deposit their crop.

“Famers will no longer have to wait for months to sell or get paid for their produce,” he said.

NFB Chief Executive Officer Zandile Shaba said once a farmer deposits his crop with the exchange, the issue of collateral that has hindered access to finance for the farming community falls away.

She said “the crops that we that have been lodged with the exchange will act as collateral” and that the facility also improves liquidity on the exchange for commodity traders who wish to take part in the secondary market.

The crops that are covering under this facility are groundnuts, beans, soya beans and rice among others.

“We believe that our support contributes to the development of a more inclusive commodities market, which ultimately creates an opportunity to leverage private sector resources to bring smallholder farmer into a well-functioning, growing and sustainable agricultural economy.

“Our approach encourages financial inclusion because it requires farmers to open an account with NFB, bring receipts the exchange and access finance of up to 75 percent of total value while enjoying attractive interest rates on our savings account and all banking facilities that they were previously excluded from,” she said.

Any farmer who simply deposits their farming produce with AHCX and obtains a warehouse receipt and after opening an account with NFB can apply for short term loan which can be approved and disbursed within a period of 24 hours upon authenticating the receipt.

Recently, NFB also unveiled a K1 billion structured agriculture value chain facility called Project 100 which targets smallholder farmers through anchor farmers to acquire agriculture machinery for improved crop production.

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