More than 600,000 businesses are expected to benefit from the Blended Rural Finance Facility (BRFF), being implemented by the Malawi Agriculture and Industrial Investment Corporation (MAIIC) to expand access to capital and support enterprise growth in rural areas.
The facility, supported by the International Fund for Agricultural Development (IFAD), is one of two major initiatives, alongside the World Bank-partnered eThrive Project, aimed at providing businesses with access to credit in foreign currency.
MAIIC Managing Director Taz Chaponda said the corporation is working with development partners and financial institutions to ensure businesses can access financing to 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.
The Blended Rural Finance Facility (BRFF) will provide K42 billion, which is expected to be complemented by commercial banks’ own resources to mobilise at least K100 billion in financing for rural businesses.
“For commercial banks, we will look for a maximum of 15 percent interest annually, which is significantly lower than what the market currently offers. For MFIs (microfinance institutions), it will be 4 percent per month,” said Chaponda.
The project targets production and supply chain players, with the intention of ensuring robust value chains in the agriculture sector by supporting farmers, aggregators and value-addition businesses, among others.
According to Chaponda, the projects will see enterprises accessing capital in local and foreign currencies through commercial banks and MFIs, spurring the growth of businesses that typically struggle to access financing under commercial terms.
Agriculture Economist Gresham Kamnyamata said in an interview that the facility will help to improve agricultural productivity by supporting crop and livestock farming, increasing household production and raising farmer’s incomes.
Over the past six years, MAIIC has worked with more than 100 enterprises that have accessed financing through loans or equity. The corporation has also provided credit to financial institutions to enable them to offer low-cost loans to businesses.
“For commercial banks, we will look for a maximum of 15 percent interest annually.”
Taz Chaponda
MAIIC Managing Director
