Minister of Industrialisation, Business, Trade and Tourism Simon Itaye has asked commercial banks to increase lending to the agriculture sector, saying that more credit is needed to help small and medium‑scale farmers grow into larger enterprises.
The minister, speaking during an agrifinance conference in Lilongwe on Wednesday, said while agriculture contributes about 25 percent to Malawi’s gross domestic product, most players remain stuck at small and medium enterprise (SMEs) level.
He said: “There must be some credit lines offered by the commercial banks, especially for the agriculture sector because this sector is the backbone of our economy.
“We need to ensure that SMEs, especially those involved in agriculture value chains, are upgraded.”
and value addition. | Nation
Itaye said that many SMEs fail to make a significant impact in production and value addition and urged banks to engage directly with farmers and agribusiness leaders.
Farmers Union of Malawi president Maness Nkhata told the conference that stringent collateral requirements keep small-scale
farmers from accessing loans.
“Most of the challenges we face are about how to access financing. Most of the things they demand from farmers are things that farmers do not have,” she said.
Taking her turn, Bankers Association of Malawi (BAM) chief executive Lyness Nkungula said banks have become more open to financing agriculture unlike a decade ago, though challenges remain.
She said: “The only concern we have is that smallholder farmers don’t keep records.
“Banking works with records, so we need to educate them more to keep records so that they can access the loans that are there.”
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 which seeks to turn Malawi into a lower middle-income economy by 2030 and an upper middle income economy by 2063.
“To unlock this potential, we must embrace a new financing paradigm: Blended financing models that de-risk agricultural lending and crowd in private capital,” she said.
Held under the theme ‘From plot to profit: Unlocking Malawi’s agribusiness potential through sustainable finance and resilient value chains’, the conference brought together policymakers, financial institutions, farmers, agribusiness leaders, development partners, researchers and the private sector.
Reserve Bank of Malawi data show that commercial banks’ financing to agriculture accounts for between eight percent and 15 percent of total loans, with low investment linked to risks such as climate shocks and volatile commodity prices.
In 2024, banks extended K44 billion in credit to the agriculture sector, a 14 percent increase from the previous year, which BAM attributed to cooperatives, which are helping to de‑risk agri‑financing.
Agriculture remains the main driver of the Malawi’s econo my, with more than 80 percent of foreign exchange derived from the sector, according to National Statistical Office data.
