SMEs thrilled with their consideration to benefit from AGCOM investment programme
Small & Medium Enterprise (SME) agri-business players in the Southern Region, have expressed their enthusiasm towards government’s consideration for them to benefit from the Malawi Food System Resilience Programme under the Agriculture Commercialization (AGCOM) 2 project.
This is after the Ministries of Agriculture and Trade & Industry and their stakeholders have just concluded three sessions with SMEs that were organised in Mzuzu, Lilongwe and Blantyre where they were briefed how they can participate in the AGCOM-SME matching grant facility.
The meetings were presided over by Minister of Trade & Industry, Sosten Gwengwe and in his presentation at Sunbird Mount Soche in Blantyre on Tuesday, Gwengwe impressed on the SMEs that “AGCOM 2 Window 3 brings together a crucial group — the engine that will drive this transformation”.
He describes the off-takers, processors and exporters, as those that provide essential market linkages for farmers most of whom benefited from the World Bank-funded AGCOM 1 and are in mass agricultural production.
He said the Ministry’s special focus is on agriculture commodity off-takers, processors, exporters, anchor farmers, aggregators and SMEs, who need to be unlocked for their full potential.
“As we are all aware, the Malawian agricultural sector employs a significant portion of our workforce and contributes greatly to our national income,” Gwengwe said. “However, we all recognize the need to unlock its full potential.
“The AGCOM project is a pivotal initiative designed to bridge this gap and propel our agricultural sector towards greater commercialization. Anchor farmers, aggregators, and SMEs play a vital role in consolidating production and ensuring quality amongst other things.
“My Ministry’s vision is to expand trade at both local and international levels and to achieve this, the country needs to produce and add value through various manufacturing processes.”
The Minister impressed on the SMEs of the need to add value to agricultural produce in order to compete favourably on the export market and “the AGCOM project is, therefore, a key intervention to drive this change in our country”.
The World Bank accepted to fund the Malawi Food System Resilience Program (MFSRP) under AGCOM 2 — which is a 6-year project worth US$329 million and was launched by President Lazarus Chakwera in Ntchisi in November last year.
Gwengwe said a number of issues were raised concerning implementation of AGCOM 1 — thus there was need for the implementors to engage with their stakeholders unveil a solution to some of those concerns.
From the funding, Gwengwe said US$60 million is earmarked as the matching grant package specifically targeting SMEs in agro-processing, export, aggregation, and anchor farming amongst other agro-enterprises.
“This package aims to expand the anchor farming model by expanding various capacities of SMEs to increase and improve value addition, and also improve SMEs’ capabilities to aggregate their products for export potential.
“SMEs that qualify for this grant can obtain matching grants from US$100,000 to US$500,000 to improve their agri-businesses. The grant amount will largely depend on their concept, ability to match the grant, and viability of their respective businesses.”
He reiterated that AGCOM is aimed at transforming the agricultural smallholder sub-sector from current subsistence to commercial farming — which “consistent with the Government’s policy of moving Malawi from being predominantly an importing to an exporting nation”.
“AGCOM continues to support these efforts in various ways including the provision of matching grants for SMEs in Window 3, cooperatives under Window 1, and value addition in Window 2. AGCOM 2 will further support various regulatory, policy, and administrative reforms notably efforts towards a review of the Cooperatives Act and set up of a cooperatives registry.
“AGCOM 2 will also support the construction of a secondary Malawi Bureau of Standards (MBS) laboratory in Lilongwe to ease laboratory services in the Central and Northern regions in order to promote product quality assuarance and certification of products for farmers and SMEs.
“AGCOM will further continue to support various private, and public dialogue forums with business captains. In fact, the Ministry is planning for a PPD forum dedicated to resolving issues within the SME sector.”
Gwengwe added that the trade-related reforms, “while necessary, are not a panacea for Malawi’s development aspirations [and] to eliminate poverty, we must be inclusive in expanding production and trade”.
“To grow our exports, we must diversify our commodity and product baskets. To ensure stable export earnings, we must broaden our international markets, and to succeed in international trade, we must produce and market products and services competitively.”
He further emphasised that AGCOM is “recognising the importance of encouraging producer-off-taker arrangements to foster commercialisation and putting in place measures to deal with existing constraints through matching grants and partial credit guarantees”.
“From the Ministry’s perspective, off-taker agreements are a tool for fostering business-to-business market linkages. More often, smallholder farmers complain about lack of markets for their produce. For a long time in Malawi, there has been a tendency for farmers to just produce for the sake of producing products, and not necessarily in response to a market demand or requirement. We believe that we can change all this trajectory by ensuring that we focus on market-led production. It is also my considered view that even beyond the life of AGCOM, cooperatives that have participated in the off-taker arrangement will prefer to sustain this model because of the guaranteed market — what an everlasting commercialisation impact that would be!”
At his session in Mzuzu, Gwengwe challenged SMEs to be innovative and think outside the box if they are to change the status quo, saying with Chakwera’s agriculture, tourism and mining (ATM) strategy, “the pace is set, and the sky is the limit for SMEs to explore growth in the various value chains under the strategy”.
A report on Malawi Government official Facebook page said the Minister took a serious jab at SMEs’ tendency to focus on sole proprietorship, which has mostly led to decimal growth of SMEs, saying: “Going solo might look lucrative, but it makes you lose on capacity and financing that comes with partnerships or business alliances.
“Now, I urge you to embrace partnerships with both local and international investors. This will ensure ready markets but also capacity to meet both quality and volume.
“As a country, we have been given a tag as a ‘soya bean or nandolo exporting economy’ but am challenging you, SMEs, that you can actually explore other value chains such as the technological sector and even car manufacturing — and my Ministry is ready to give you the necessary support.
“Toyota is a big brand, but you will be surprised to note how many SMEs feed into it. Importation of toothpicks and screen protectors should be a thing of the past by now,” he impressed.
At Sunbird Mount Soche, Gwengwe took note that while the Mzuzu and Lilongwe meetings attracted a good number of enthusiastic SMEs, the attendance in Blantyre surpassed the two, and he further asked them to contribute favourably during plenary.
The delegates eagerly took the opportunity and in their contributions, they all expressed their excitement for being considered in the positive food system resilience programme, that includes being afforded to purchase the required agricultural equipment and already identified export market.
In an interview, Blantyre-based dairy farmer, Mphatso Jumbe was thrilled with the opportunity to invest her Mafe Diary Farm at Mpemba, saying it was a moment she had been waiting for.
“I have managed my diary farm for over 10 years but we’ve encountered a lot of challenges in as far as capitalisation was concerned,” she said, indicating that once she shall have her business concept approved, she would hit the ground running.
