FINANCING GAP IN THE DEVELOPMENT OF MEDIUM AND LARGE-SCALE PRIVATE SECTOR FARMS FOR INCREASED PRODUCTIVITY AND COMMERCIALIZATION

Project description

The Malawi Agricultural & Industrial Investment Corporation (MAIIC) is seeking capitalization to support Mega Farms interventions in Malawi. MAIIC is a quasi-government private sector-led development finance entity established to bridge the financing gap in Malawi's agricultural and industrial sectors, promoting private sector development.

As a quasi-government financial institution, MAIIC operates independently with a commercially driven approach, governed by a board of directors primarily comprising private sector representatives. This structure enables MAIIC to effectively address the needs of the agricultural and industrial sectors.

A key challenge for anchor/mega farmers in the Mega Farms programme is their limited agricultural borrowing capacity and lack of history with conventional financial institutions. To address this, the government has designated MAIIC to administer agricultural loans. This partnership aims to provide affordable financing options.

Within the Mega Farms Programme, MAIIC's capitalization will enable it to become the primary financing institution for anchor medium and large-scale farms. This will offer subsidized borrowing interest rates of less than 15%, significantly lower than commercial banks' rates of 31%. The investment will provide:

• Long-term, patient financing
• Affordable costs tailored to the value chain and investment size
• Coverage for capital investment and working capital

By supporting MAIIC, the project aims to increase access to finance for Malawi's agricultural and industrial sectors, driving growth and development.

Capitalising MAIIC for mega farms investments is closely aligned with Malawi's Vision 2063 which seeks to achieve inclusive wealth and self-reliance by 2063 through three interdependent pillars: commercial agriculture, industrialization, and urbanization. Boosting agricultural productivity is critical to supply raw materials and labour for industrialisation and urbanization, while also driving value addition, job creation, and economic growth, and accessing the huge market opportunities from the African Continental Free Trade Agreement (AfCFTA).

Financial requirements

The required capitalisation is EUR 112 million (USD 120.7 million), which will be strategically allocated over three years to address priority financing gaps, as outlined below:

Essential requirement

Farm mechanisation:

• Quantity: 250
• Unit cost: 25,714
• Total: 6,428,571

Supply irrigation:

• Quantity: 2,500
• Unit cost: 42,857
• Total: 107,142,857

Farm management training:

• Quantity: 2,500
• Unit cost: 2,857
• Total: 7,142,857

TOTAL (US$): 120,714,286

Contact

The Chief Executive Officer

Malawi Agricultural & Industrial Investment Corporation

Private Bag 307

Lilongwe 3

Malawi

Lloyd Banda, Chief Executive Officer:

• lbanda@maiic.mw
• exco@maiic.mw
• info@maiic.mw