Business experts have proposed that government should establish a collateral registry to enable farmers and small-scale agri-based businesses access to loans from financial institutions.
Speaking in Lilongwe during a roundtable discussion on private sector involvement in policy making on access to agriculture financing in Malawi organised by the South Institute International Affairs (SIIA), experts further called for more radical steps in new legislation frameworks and policies to aid agriculture financing.
The proposal comes at a time when lack of access to capital has been cited as one of the key challenges small-scale farmers and other small and medium enterprises (SMEs) face in the sector.
Tradeline corporation business development manager Gedion Mwenifumbo, said the proposal for collateral registry and the enactment of the proposed new Land Act will help farmers grappling with access to loans due to collateral challenges.
Making a presentation on underutilisation of financial institutions by the sector, Mwenifumbo suggested that a collateral registry will enable farmers who have assets currently illegible to be used as collateral to be admissible legally as dead capital.
“But some of these challenges can be dealt with by improved technology, policies and regulation. For example, on the issue of collateral, we can borrow a leaf from colleagues in Ghana who have a collateral registry and this has enabled farmers to have other assets which would not normally be considered as collateral be accepted,” said Mwenifumbo.
Head of economic diplomacy for Southern African Institute of International Affairs (SAIIA) Catherine Grant, said the agriculture sector in the whole Southern Africa Development Community (Sadc) region was facing financing challenges.
“We are trying to see how to address these barriers so that we make a big push for inter-regional trade, as access to information remained a challenge,” said Grant.