More than 600,000 rural businesses are expected to access financing under a K42 billion facility aimed at helping enterprises grow and overcome difficulties in securing affordable loans.
The Blended Rural Finance Facility (BRFF) seeks to unlock at least K100 billion in financing by combining government-backed resources with funding from commercial banks, giving farmers and other rural businesses access to cheaper capital.
The facility, being implemented by the Malawi Agriculture and Industrial Investment Corporation (MAIIC) with support from the International Fund for Agricultural Development (IFAD), is one of two major initiatives targeting businesses struggling to access credit in foreign currency. The other is the World Bank-supported eThrive Project.
MAIIC Managing Director Taz Chaponda said the corporation is working with development partners and financial institutions to make financing more accessible and help businesses expand their operations.
“MAIIC plays a key role in the financial sector, not only by providing long-term loans to enterprises but also by influencing lending conditions to make financing more accessible to businesses,” he said.
Chaponda said commercial banks participating in the facility would be expected to charge a maximum annual interest rate of 15 percent, while microfinance institutions would charge four percent per month.
The facility targets farmers, produce aggregators and value-addition businesses, with a focus on strengthening agricultural supply chains and supporting enterprises that often fail to secure loans under normal commercial lending conditions.
Agriculture economist Gresham Kamnyamata said the financing could improve agricultural productivity by supporting crop and livestock farming, increasing household production and raising farmers’ incomes.
Over the past six years, MAIIC has worked with more than 100 enterprises through loans and equity investments. It has also extended credit to financial institutions to help them provide affordable financing to businesses.
