Treasury has engaged an international consulting firm Maxwell Stamp plc to come up with an operational framework for the first-ever Agriculture Development Bank by October this year.
In an interview yesterday, Treasury spokesperson Davis Sado said the consulting firm has been in the country for some time and so far is conducting a feasibility study.
He said.”This consultant is working on a feasibility study which is being financed by the African Development Bank [AfDB]. An inception report has already been submitted to us but we expect the final report to be in by October.
“This project is crucial to the economy of the country because it will help our farmers get financing with ease.”
Despite Malawi being an agro-based economy with agriculture contributing about 30 percent to the gross domestic product (GDP) and more than 70 percent of foreign exchange earnings, lack of finance has continued to stifle growth of the sector.
Regional neighbours such as Tanzania, Kenya, Zimbabwe and Zambia have development banks that have made it easy for farmers to access capital at an affordable price compared to commercial banks.
Minister of Agriculture, Irrigation and Water Development Joseph Mwanamvekha said in an interview the bank could help the country grow its agricultural sector.
“A lot of our farmers have failed to grow due to lack of financing. Without loans, the farmers cannot buy enough inputs let alone graduate from subsistence to commercial farming,” he said.
On challenges that come about due to a culture of non-repayment of loans, Mwanamvekha said it depends on the structure of the loan and how legal instruments will be used in the bank.
University of Malawi’s Chancellor College economics professor Ben Kaluwa said Malawi needs not only an agriculture development bank, but a development bank for other sectors that have low returns.
“Agriculture is a sector which we call low return and farmers cannot grow with loans from other banks where interest rates are exorbitant. We need this bank not only for agriculture but other sectors as well,” he said. n