The International Fund for Agriculture Development (Ifad) and Ministry of Finance, Economic Planning and Development on Friday signed a combination of loan and grant agreement valued $125.4 million (about K93 billion) in Rome, Italy.
The money is expected to benefit about 300 000 vulnerable farming families, according to a statement from Ifad.
Ifad said the funds, to be used under Transforming Agriculture through Diversification and Entrepreneurship Programme (Trade), seeks to increase farmers’ productivity and strengthen market access.
Ifad president Gilbert Houngbo signed the agreement on behalf of his organisation while Minister of Finance, Economic Planning and Development Joseph Mwanamvekha represented the Government of Malawi.
The funding includes a $51.1 million (about K37 billion) loan and $18.9 million (about K13 billion) grant from Ifad and $20 million (about K14 billion) in co-financing from the Opec Fund for International Development.
In addition $15.3 million (about K11 billion) is provided by the Government of Malawi, $11.7 million (about K8 billion) will come from the private sector and $8.3 million (about K6 billion) from beneficiaries.
Ifad country director for Malawi Ambrosio Barros said the new programme will consolidate and scale up the success and good practices of the completed Rural Livelihoods and Economic Enhancement Programme.
He is quoted as having said in the statement: “The programme will focus on the commercialisation of smallholder agriculture through strengthened access to markets and financial services while also focusing on adaptation to climate change, which is key for poverty reduction.
“The programme will strengthen the capacity of smallholder farmers, organise them into producers’ organisations and promote partnerships with small and medium enterprises.”
In an interview yesterday, Mwanamvekha said the programme will address production and productivity issues affecting small-scale farmers as yields per hectare is low.
“The programme will boost economic growth because Malawi depends on agriculture as it drives the economy. This investment in agriculture is one of the best programmes that we have, knowing it will address food insecurity for farmers, provide income for households thereby reducing poverty.
Betchani Tchereni, an economics lecturer at the University of Malawi’s the Polytechnic commended the government for the funding, but urged Treasury to sustain the economic gains and trust of development partners.
Agriculture is the country’s mainstay, contributing about 30 percent to gross domestic product and 80 percent of foreign exchange earnings.
At least 55 percent of vulnerable women and 50 percent of young people in the 11 districts will benefit from programme.