The World Bank on Thursday approved a $30 million (about K5.01 billion) loan to Malawi to shore up diversification fromÂ maize and tobacco-based production systems, and engagement in more market-oriented agriculture.
The loan, according to a statement from Washington, is expected to enable 200 000 smallholder farmers improve their incomes and become more food secure.
The bank said agricultural diversification will also help Malawi improve its export base which is currently mainly based on tobacco.
The $30million credit is additional financing (AF) to the Agriculture Sector Wide Approach Support Programme (ASWAp-SP). The funds are additional to an initial $32 million (about K5.4 billion) credit provided in 2008 to what was then the Agriculture Development Programmeâ€“ Support Project (ADP-SP), now ASWAp-SP.
â€œMalawiâ€™s agriculture sector is dominated by smallholder farmers. The World Bank, therefore, found it appropriate to respond to a government request for more funds to extend to these farmers interventions in support to agricultural diversification and productivity increase, as well as access to markets,â€ said World Bank country manager for Malawi Sandra Bloemenkamp.
The additional funding will expand the number of farmers receiving technical advice from extension services to help them adopt innovative technologies and cropping practices to improve the productivity and resilience of the maize-based farming system.
These extension activities are also intended to enhance the results of the government financed subsidy programmes through improved utilisation of the inputs. The additional funding is expected to increase the number of smallholder farmer households benefitting from project interventions from 300 000 to 500 000, translating to 2.5 million people.
â€œApart from extension services, the AF will also finance a new rural roads component that will improve and maintain unpaved roads to facilitate market access. To promote agricultural diversification, the AF will support public-private agribusiness partnerships and a programme of activities designed to improve legume crop production, processing and marketing. The AF will also support on-going government efforts to implement agricultural risk management,â€ said the bank.
Some other donors, such as the European Union (EU) and the Flanders International Cooperation Agency (Fica), Department for International Development (DfID), Irish Aid and Usaid, will also provide additional support to the ASWAp-SP through a Multi-Donor Trust Fund to be established by the World Bank.
With the additional funding, the closing of the ASWAp-SP financing by the World Bank will be extended from September 15 2013 to June 30 2015.
ASWAp-SP is implemented through the Ministry of Agriculture, Irrigation and Water Development.