Group to invest K163bn in agriculture warehousing
USaid Southern Africa Trade Hub has set aside $35 million (about K177 billion) to catalyse large-scale investment by private sector into agricultural warehousing.
The fund, Agricultural Storage Investment, is an outcome of an investor conference held in South Africa in September this year to initiate the new fund for Malawi and subsequently the rest of the region.
In an e-mailed response to questions, USaid Southern Africa Trade Hub agriculture director Gerrit Struyf said the focus of the fund is to support new warehousing in areas closer to farmers and production areas, highlighting that high quality warehousing provides key to reducing high post-harvest losses in the region.
He said there are currently a number of development finance institutions (DFIs) that are in the process of developing direct credit lines to Malawian banks earmarked for agricultural warehouse construction.
“Once the credit lines with the Malawi banks are in place, the banks will solicit proposals for actual warehouse construction from storage operators, commodity traders and small and medium enterprises through a transparent open call procedure,” said Struyf.
He said Usaid Southern African Trade Hub has built a strong foundation with the Agricultural Commodity Exchange for Africa (ACE) to achieve a common understanding.
“Through these relationships, an outline structure has been developed around which investors are being engaged to unlock the necessary funding for warehouse development in Malawi.”
According to Struyf, the fund will benefit are agribusinesses whether large or small with interest in building out new storage facilities, especially in rural areas.
He said the fund will also indirectly benefit commodity value chain participants through access to storage, finance, markets and information.
“Access to storage will also boost food security through reduction of post-harvest losses which, having been estimated variously between 20 and 40 percent, have been historically high in Malawi,” said Struyf.
“We are hopeful that the new warehousing investments will create the basis for new and diversified revenue streams as Malawian agri-marketing evolves and advances, driven by the success of ACE in creating modern market mechanisms for commodity finance and trading,” he said.
New revenue streams could include storage, handling, receipting, input supply, general retail, broker age, insurance, and extension services.
Experts say additional capacity will also improve efficiency of value chain players to perform the aggregation and arbitrage functions that are important components of functional value chains. n
