European Investment Bank, First Capital Bank sign €12.5m loan facility

European Investment Bank (EIB) and First Capital Bank (FCB) have signed a €12.5 million (approximately MK13 billion) loan facility to support sustainable agriculture for socioeconomic development and poverty alleviation in Malawi.

The facility, which has been provided through the Kulima Programme, aims to enable the Malawi Government and the private sector to better tackle challenges triggered by Covid-19 and the global energy shocks, among others.

Kulima Programme supports transformation of the agriculture sector from production to commercialization, including enhancing access to medium and long-term financing by small and medium producer organizations and agribusinesses.

Speaking after the signing ceremony, which took place at the Bingu International Convention Centre (BICC) in Lilongwe on Friday, EIB Vice President, Thomas Ostros, said the loan demonstrates his institution’s commitment to supporting high-impact private and public investment across Malawi.

“And this includes improving access to finance by smallholders and business and addressing the challenges of a changing climate. Malawi is a key country of operation for the EIB in African and the excellent cooperation with Malawian partners has transformed lives and strengthened priority infrastructure investment,” said Ostros.

He added, “My financial and technical colleagues and I look forward to discussing how to strengthen economic resilience to existing and new challenges, and enhance the impact of future EIB engagement in Malawi.”

European Union (EU) Ambassador to Malawi, Rune Skinnebach, said support to sustainable agriculture is an important driver for development and poverty alleviation in Malawi and this should be central to all efforts towards sustainable rural development and inclusive growth nation.

Skinnebach stated that agriculture will remain at the core of the EU efforts to contribute to a greener and more resilient Malawi.

“We are, of course, aware of the economic challenges that Malawi is facing, which, in some instances, require decisions on public funding allocations that will inevitably affect the performance of the agriculture sector. In that, I agree with President Dr. Lazarus McCarty Chakwera’s view expressed earlier this week, namely, that private sector investment in agriculture are essential,” he said.

Added Skinnebach, “This is recognized under pillar one of the Malawi 2063, seeking an optimally productive and commercialized agriculture sector. But for this to be achieved, agricultural entrepreneurs in Malawi need practicability and financial products that take into consideration the specificities of the agricultural production cycle. I am confident that through the Kulima Access to Finance Package, First Capital Bank will be able to respond to their needs and to expand its portfolio of agriculture investments.”

In his remarks, the Director of Aid and Debt at the Ministry of Finance and Economic Affairs, Nations Msowoya, commended the EIB for providing unwavering support to the Malawi Government in its efforts to transform lives of smallholders.

Msowoya expressed the government’s assurance to provide necessary checks and balances throughout the implementation phase of the programme.

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