EU signs K12bn pact with Ecobank to support Malawi’s agricultural SMEs
The European Investment Bank (EIB) and European Union on Friday announced a new collaboration with Ecobank Malawi to improve access to finance for SMEs in the agriculture sector in the country as the European institutions are set to improve access to long-term finance in agriculture value chain in Malawi with €25 million (K24 bn) credit line for smallholder farms and agricultural cooperatives.
EU’s External Investment Plan supported the EIB in the signing of a €12.5m (K12bn) loan with Ecobank Malawi, which will be complemented by an EU financed risk sharing facility as well as a technical assistance program, to support SMEs in the agri-food sector.
A statement issued on the occasion of the signing says this means that players in Malawi can also get technical support and financing for their investments, and thereby contribute to the integration of smallholder farmers into local value chains.
It further says the targeted financing of projects under these operations amounts to a total of €50 million(K48.1bn), ensuring that agricultural companies across Malawi will be able to access loans with maturities of up to 7 years, longer than commonly available in the market.
“It is expected that the final beneficiaries of this financing will expand, upgrade and modernise their equipment, and thrive as a result,” reads the statement.
Ecobank Malawi Managing Director Dr. Raymond Fordwuo, said Ecobank, they realize that their mission of contributing to the economic growth and financial integration of the African continent would be incomplete without our involvement in the SME sector and especially those involved in Agriculture.
“It is therefore with great excitement that today marks the beginning of a relationship that has the potential to transform one of the most important sectors in Malawi,” he said.
He said this will empower SMEs to fully exploit the agricultural value chain which will ultimately strengthening the economy.
Vice President of the European Investment Bank Thomas Östros said Agriculture plays a key role in the economy in Malawi, yet many smallholder farms have an uncertain existence, due to climate change, diseases and pests.
“This EU-financed project will cover some of that risk, to give players in the agri-food sector in Malawi support for their investments, where they usually did not have access to finance. This means that smallholders can build up their businesses and become an integrated part of the local value chain, ultimately improving people’s lives,” he said.
Speaking at the event, the Minister of Agriculture, Hon Lobin Lowe said “While Government has taken significant policy developments to help agricultural SMEs, limited resources have limited implementation efforts.”
“Therefore what Ecobank Malawi Limited and the European Investment Bank have done is commendable and I applaud their effort, considering that this line of credit will not only give loans but provide technical support that will help smallholder farmers integrate into value chains and food systems,” he added.Follow and Subscribe Nyasa TV :