Commercial Banks in the Malawi have been asked to participate in the Warehouse Receipts System (WRS) which agriculture experts believe has the potential to transform Malawi through increased farmers’ incomes and reducing poverty levels in the country.
The call has been made by Principal Secretary in the Ministry of Industry and Trade, Alex Gomani, who recently opened a consultative workshop for up-scaling of the WRS in Lilongwe.
The workshop was organised by the ministry with support from Usaid, World Bank and the International Finance Corporation (IFC).
The Agricultural Commodity Exchange for Africa and the Auction Holdings Limited Commodity Exchange have pioneered the warehousing receipts system in Malawi.
The system enables producers and traders to obtain financing from financial institutions using receipts issued on products stored in certified warehouses as collateral.
Currently, only First Merchant Bank, National Bank of Malawi, Standard Bank and Malawi Savings Bank are involved in the WRS.
“I would like to encourage more financial institutions to [adopt the system], as it presents an opportunity for financial inclusion of the rural population while generating a profit for both banks and insurance [companies],” said Gomani.
Gomani also encouraged the commodity exchange companies to increase the number of crops they trade to increase the number of beneficiaries and the sectors that can profit from the system.
Currently, the products that are traded on the commodity exchange include maize, pigeon peas, soya beans, sugar beans and groundnuts.
The principal secretary said the Agricultural Commodity Exchange for Africa and the Auction Holdings Limited Commodity Exchange have provided a platform that link farmers to buyers and hence increase the efficiency of the market and improve the outcomes for all participants.
“They have made warehouses available to farmers, either by themselves or through third parties, leading to significant reductions in post-harvest losses,” said Gomani.
Currently, the warehouses are located in areas such as Lilongwe, Limbe, Mzuzu, Mponela, Kasungu, Karonga, Balaka and Bangula.