Nacala Corridor project handholds SMES

For a long time, small and medium enterprises (SMEs) have lamented lack of capacity to participate and compete in the regional markets.

This concern is shared by a majority of the SMEs along the regional Nacala Corridor, which Malawi, Zambia and Mozambique have been investing to revamp it with support from development partners.

From 2017 to 2021, the Government of Malawi has been implementing the Nacala Rail and Port Value Addition Project through the Malawi Investment and Trade Centre (Mitc) funded by a grant of $1 million (about K820 million) from the Fund for African Private Sector Assistance (Fapa) through the African Development Bank (AfDB).

The objective of the $1 million technical assistance project is to improve the efficiency and competitiveness of local businesses situated along the Nacala Corridor to enable them to better exploit the newly available transport infrastructure and achieve accelerated economic and social development.

The Fapa project complemented the Nacala Rail, Port and Road projects. Its main focus was on the agriculture sector to ensure inclusive growth along the Nacala Corridor given the underdeveloped SMEs sector.

The intervention has helped to create innovative and competitive rural agro-processing small and medium businesses.

Building capacity of SMEs, smallholder famers and cooperatives is an important strategy in ensuring that they are efficient and competitive on the market.

Through the project, farmer groups and SMEs received training and coaching sessions to equip them with necessary skills for the market.

One of the project’s beneficiaries is the Machichi Cooperative in Mchinji, which has 170 members, comprising 83 women and 87 men. It was founded in 2008.

The cooperative produces and sells unrefined cooking oil made from groundnuts and sunflower in Mchinji and the surrounding districts.

Since its establishment, the cooperative lacked good business management skills. This affected its operations until they received training from the Malawi Nacala Rail and Port Value Addition and Inclusive Private Sector Development project.

The cooperative’s chairperson Paul Mtumodzi said the project’s leadership and governance training has helped the cooperative to be more transparent and efficient.

He said: “Everyone in the group now knows what is going on and we are able to generate monthly reports that we give to the Ministry of Trade so they can see how far we have come as a cooperative.

“Furthermore, the project has taught us the significance of expanding our individual shares. We now value the importance of increasing the shares so that our business can grow and this has really helped us”.

Joyce Mangani, a mother of five and a member of the cooperative, explained that she has seen tremendous changes in the way the cooperative is being run after Fapa project intevention.

She said in the past, they were operating without proper record keeping, but the training has helped them to distinguish capital and profits earned from their investment, including individual’s best utilisation and savings from earnings.

She said: “We have been trained in business management skills and that we are applying not only here but also in our individual [households]. So, this was a good project and we wish it continued for a few more years.”

In Salima, Talimbika Cooperative also shares goods news of Fapa project.

The cooperative, which is into cooking oil production, has 106 members, 46 men and 60 women.

The cooperative hailed the Fapa project for the guidance on how to access markets, finance and building capacity in business management, governance, leadership and marketing.

Maxwell Hajira, the cooperative’s accountant said they have been taught product management, how to do a product or market research and feasibility studies, among others.

He said: “We have been taught skills in marketing such as the importance of labelling and packaging.

“This has helped us as a cooperative because we were behind in that area.”

Through the Fapa project, smallholder farmers and SMEs were also trained on how they can identify markets for their products and the requirements for various markets.

Khamalathu Cooperative in Machinga, is one of the beneficiaries that has managed to identify new profitable markets for their crops.

The cooperative’s secretary Eliot Chamveka said they are now supplying their various produce to companies such as Sungold, Sunseed and ETG, among others.

He said: “This project has really opened our eyes on how best we can access markets.

“In the past, we used to struggle in finding profitable markets for our products. But right now, we are able to identify markets.”

It is not always easy to connect smallholder farmers or SMEs to markets or to ensure their produce meets market standards.

Eunice Nambala, a member of Talimbika Cooperative in Salima, said the project has helped them to identify new markets for their cooking oil.

She said: “We used to sell our cooking oil just around here, but now we are able to sell to far areas like Lilongwe.”

Smallholder famers and producers continue to face a myriad of challenges, including limited access to finance.

Although agriculture remains the key economic activity in the country, farmers, producers and SMEs have limited access to financial services.

Financing is a critical aspect in funding farm investments aimed at improving productivity, enhancing best post-harvest practices, ensuring smooth household cash flow, enabling better access to markets and promoting better management of their businesses/enterprises

Adequate financing for smallholders and their producer organisations help them to move towards market-quality standards, improved yields and growth opportunities.

Mitc public relations manager Deliby Chimbalu said the project has helped local SMEs to take advantage of the road and rail infrastructures by improving on the efficiency and competitiveness of their businesses.

Chimbalu explained that the project involved two main interventions such as building the capacity and providing access to market and finance to growth oriented agribusiness entrepreneurs in selected rural and semi-rural areas along the Nacala Corridor.

She said the project also built the capacity of smallholders to catalyse change of mindsets in growing food and cash crops as a business; support farmer support institutions in Malawi in advocacy, providing relevant services to their members for sustainable management of the support institutions.

Chimbalu said: “As Mitc, we are happy that the project has realised its immediate objectives. For example, on capacity building component, we have managed to transfer some skills and knowledge in modern farming technologies to smallholder farmers through this project.

“Some SMEs have now gained information on export marketing and other cooperatives have managed to access finance to boost their operations.”

She said one unique factor about the project was the emphasis on the provision of technical skills to the farmers other than direct financial aid.

“We believe this will go a long way in enhancing competitiveness and productivity of these farmer groups even after the end of the project,” she said.

The target beneficiaries included micro to medium SMEs involved in processing and operating along the Nacala corridor region.

Other beneficiaries include crop farmers, including smallholder farmers, and cooperatives in the Nacala corridor; extension service workers, through improved skills, SME support institutions, financial institutions through training of loan officers and business development services providers.

The targeted high- value crops for the project include groundnuts, soya beans, sunflower, cassava, chillies, rice, beans, pigeon peas and paprika.

The development objective of the Nacala project is to contribute to regional integration and trade facilitation for Malawi, northern Mozambique and Zambia.

The Nacala Road Corridor is the shortest route to the sea for Malawi, northern Mozambique and Zambia.

The catchment area of the Nacala Road Corridor extends from Lusaka in Zambia through Malawi and northern Mozambique to Nacala Port.

The beneficiaries include an estimated population of over two million people who use the Nacala Road Corridor for personal travel and economic activities.

Other beneficiaries include import and export firms in Malawi, Zambia, and northern Mozambique as well as tourists who use the corridor to reach desired sites in the three countries.