Bankers Association of Malawi (BAM), a grouping of seven commercial banks, has called for transformation of the agriculture sector from being a source of risk to a driver of opportunities and robust economic growth.
BAM chief executive officer Lyness Nkungula said this during the opening of the Fifth Agrifinance Conference in Lilongwe on Friday and her comments come against a backdrop of Reserve Bank of Malawi (RBM) data showing that commercial banks financing to the agriculture sector is between eight and 15 percent of the total loans.
Data further show that low investment in the agriculture sector is due to risks associated with farming such as climate shocks and volatile commodity prices.
But Nkungula said the coming in of cooperatives is helping to de-risk agri-financing such that in 2024, commercial banks extended K44 billion credit to the agriculture sector, which is a 14 percent increase from the previous year.
“This demonstrates that financial institutions are not only willing, but ready to walk alongside farmers, agri-preneurs and cooperatives in building a resilient and commercially-viable agricultural economy that would transform the livelihoods of the people,” she said
However, Nkungula said the banking sector’s mandate now goes beyond merely expanding access to finance, adding that it is challenged to reimagine how financial resources are structured, deployed and aligned with the country’s long-term development goals outlined in Malawi 2063.
She said: “To unlock this potential, we must embrace a new financing paradigm: Blended financing models that de-risk agricultural lending and crowd in private capital.
“We need digital financial services that improve access, efficiency and transparency; green finance that supports climate-smart technologies and sustainable practices.”
Ministry of Trade and Industry director of small and medium enterprises and cooperatives Limbikani Kachiwaya, speaking in an interview, commended efforts the banks are showing, but said there is need for tailor-made credit facilities for micro and small-scale businesses.
He said: “The issue of access to finance has been there, but as the ministry, we have intervened because we came to know that most of our women entrepreneurs and farmers are not formalised.
“It has been a challenge for them to access financing, so we are grouping them and giving them training on entrepreneurship.”
Farmers Union of Malawi chief executive officer Jacob Nyirongo described the conference as critical, saying it connected the farmers with lending institutions to understand what needs to be done to bridge the existing gaps.
The RBM Monthly Economic Review for April 2025 shows that the credit market remains dominated by the public sector, with banks extending K6.5 trillion credit, which is almost 80 percent compared to private sector’s credit at K1.6 trillion. This shows that banks prefer lending to government.
The report further shows that credit distribution in private sector shows that banks are sceptical to lend to production sectors such as agriculture, preferring to lend to salaried individuals.
Speaking in February this year when he visited his Lomba Farm in Mchinji, President Lazarus Chakwera observed that banks can be instrumental in financing the growth and development of the agriculture sector.
Malawi is an agro-based economy and agriculture contributes about 25 percent to the gross domestic product.
