Business News

NBS Bank injects capital in agriculture

Agriculture remains Malawi’s economic backbone and that is likely to remain in the years to come. But experts bemoan low productivity in the sector, arguing that without commercialisation, optimum productivity cannot be achieved. NBS Bank plc recently introduced agri-finance facilities and Nation Publications Limited journalist CHIKONDI CHIYEMBEKEZA spoke with the bank’s head of marketing and customer experience Tamanda Longwe to expound more on the facility. Excerpts:

Longwe: NBS Bank is active in a wide variety of sectors

Tell us more about how NBS Bank is financing the agriculture value chain?

As one of the key sectors, agriculture is an important contributor to the country’s economy. With pressing issues such as climate change and the need for sustainable agriculture, diversification of income streams is necessary for the economy to thrive. NBS Bank has always been passionate about supporting the agriculture sector and those who help to feed our nation. The bank wants to be part of this transition in the agricultural value chains by working with both the public and private sectors to create an enabling environment for a strong and resilient agriculture sector. A key aspect in our strategy is, therefore, to focus on value chain strengthening and financing a diverse set of agriculture value chain players from producers to processors and from small and medium enterprises to corporates. We want to establish long-term relationships with strong actors in the value chain.

There are specific crops being targeted under this programme. Why these other crops and not tobacco or maize?

NBS Bank is active in a wide variety of sectors from agriculture to construction, and from energy to telecommunication. The bank’s appetite in the agriculture sector is diverse as we see agriculture as the backbone of the economy and a sector in need of improved productivity and increased access to financial services. While we have traditionally been involved in tobacco and sugar value chains, NBS Bank is currently servicing actors in a wide array of agricultural value chains. Are you a maize aggregator, soya bean producer or macadamia farmer? We are here to have a strategic discussion with you on how you want to grow your business and where NBS Bank can support you. These value chains are just an example. Our appetite is diverse, and we want to contribute to key impact areas of the agriculture sector in Malawi.

Diversification of produce creates a larger platform from which both consumers and suppliers will be able to select from and is a more innovative approach which incorporates larger variety of produce that can be exported and sold locally, thus enhancing the economy and gross domestic product.

What will be involved in terms of those in the value chain accessing the financing and what are the targets set?

For us, it is key to be able to serve you in the best way possible. Before granting a credit, the bank will ensure a sufficient understanding of the borrower or counterparty as well as the purpose of the credit and the source of repayment. A good understanding of the value chain in which a client is operating, taking forward and backward linkages into account, forms an important part of building our client-bank relationship.

Malawi is an agro-based economy, but we all know that productivity levels are not high. Should we say NBS Bank is about to give this country a defining moment in agriculture?

NBS Bank is there to support the agro-based economy of Malawi to be a facilitating partner in the necessary transitions the agricultural sector needs to undertake. We are convinced the momentum is there to drive the agricultural sector of Malawi to the next level, to strengthen it and to increase access to finance for agricultural value chain players. NBS Bank is poised to be a leading food and agriculture bank in Malawi.

Strategic and sufficient funding in the sector could pave the way for efficient agricultural practices that incorporate modern technology in the agricultural sector, in turn increasing efficiency and productivity to meet the necessary demands in agro-based economy.

Tell us more about this bank’s partnership with Agricultural Commercialisation?

One way NBS Bank is supporting the agricultural sector is by forming strategic partnerships with public and private sector actors. An example of such a partnership is with Agricultural Commercialisation [Agcom] Project, a flagship programme of the Malawi Government for transforming smallholder agriculture from mostly subsistence to commercial. NBS Bank is one of the financial institutions that are participating in the Partial Credit Guarantee that is being managed by Malawi Agricultural and Industrial Investment Corporation [Maiic]. Our reasoning for joining this programme is that we want to offer solutions to producers and off-takers that want to strengthen and upgrade their facility. The partial credit guarantee is covering 70 percent of the loaned amount to producer organisations and 50 percent to off-takers or buyers who have accessed grants from Agcom Project and they need additional financing. NBS Bank sees large potential in this programme as integration of small-scale and emerging farmers into value chains is key for growing the agricultural sector in Malawi.

The bank’s partnership with Agcom provides opportunity for small-scale farmers and emerging farmers to have a competitive chance against large-scale farmers thus giving a fair and equal opportunity for small-scale farmers to compete and contribute in an agro-based economy, therefore, creating momentum that could in turn enhance positive growth of the economy.

How long are we looking at this lending facility operating?

The agricultural sector is characterised by seasonality, which requires a need for tailored financial products. We offer facilities that match your production cycle and operations because we understand the characteristics of your business. We look forward to discussing your needs with you and to become your sparring partner in growing your business.

Related Articles

Back to top button