The African Development Bank (AfDB) has identified Malawi and other seven African nations to benefit from the $3.3 million (about K2.5 billion) Agriculture Fast Track Fund (AFT) to support Small and Medium Enterprises (SMEs) in the agriculture sector.
The funding is expected to carter for 17 new SMEs in the agriculture sector as part of its transformative support for food security, income enhancement, job creation, and improving the livelihoods of smallholder farmers in Africa.
According to a statement from the bank eight African countries will benefit from the funds and they include Ghana, Tanzania, Burkina Faso, Malawi, Mozambique, Ethiopia, Nigeria and Senegal.
The fund will finance a broad range of agriculture infrastructure, spanning the entire value chain-from production to the market, as well as rural feeder roads to irrigation, agro-processing and marketing facilities, and out-grower schemes.
“The AFT Fund is managed by the Agriculture and Agro-Industry Department of the African Development Bank and supports the development of a strong pipeline of bankable agriculture infrastructure projects and assists African agribusiness SMEs in project preparation activities to ease their take-off,” reads the statement in part.
National Small and Medium Enterprises (Nasme) national director William Mwale on Wednesday welcomed the fund, saying the AfDB has over the years supported the country’s SMEs growth.
He said a lot of SMEs have been supported by the bank and are thriving and creating jobs.
“Support to the agriculture sector is strategic as the sector is the one that produce raw materials for manufacturing. We welcome the fund and hope in future SME numbers to benefit will increase,” Mwale said.
In an earlier interview, Chamber of Small and Medium Enterprises executive secretary James Chiutsi said local banks do not favour SMEs because they are mostly looking for quick returns.
“Banks do not aim at partnering SMEs to see them grow evidenced by the absence of no reasonable grace periods before the loan repayment starts. This encourages more SMEs to engage in pure trading than production ventures,” he said.
Bankers Association of Malawi chief executive officer Violette Santhe said most SMEs need long-term loans that allows them to grow.
A number of studies have stablished that access to finance is one of the impediments to the growth of SMEs.
Figures from the Ministry of Industry, Trade and Tourism show that the country has about 987 000 SMEs.
The AFT fund is supported by the governments of the US (through USAid), Denmark (Danida) and Sweden (Sida).