Forex shortage piles pressure on AIP

Government is yet to unlock significant amounts of Affordable Inputs Programme (AIP) fertiliser under collateral management as it is still struggling to source forex.

Speaking when he appeared before the Parliamentary Committee on Agriculture and Irrigation in Lilongwe on Thursday, Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) chief executive officer Richard Chikunkhuzeni said over 31 000 metric tonnes (MT) of fertiliser in SFFRFM warehouses remain as collateral, after the Reserve Bank of Malawi (RBM) last week released $15 million which has unlocked 16 500MT that is being distributed.

He said: “Forex has really been a key factor which has slowed down the procurement processes. I’m sure the authorities are attending to the same.”

Chikunkhuzeni added that SFFRFM is waiting for Ecobank to provide about $33 million to unlock about 36 000MT of fertiliser.

“This is giving us relief to be able to unlock close to 36 000MT for immediate distribution, immediately the LCs [Letters of Credit] are confirmed. SFFRFM has a $100 million facility with Ecobank, of which the $33 million is being arranged this week,” he said.

Government engaged 13 companies to supply 149 164MT of fertiliser for the 2023-2024 AIP for beneficiaries to access before the start of the rainy season.

In an interview, Ministry of Agriculture Principal Secretary Dickxie Kampani said about 32 000MT to 36 000MT of fertiliser is ready for distribution, while 16 000MT has already been distributed.

He said more fertiliser is being transferred to warehouses, “although it is on collateral”.

The PS was, however, optimistic that government will clear the fertiliser on collateral, saying the ministry is working with the Reserve Bank of Malawi and Treasury to sort out the forex problem.

On his part, Ministry of Agriculture AIP coordinator Justin Kagona said government has already drawn 22 233MT of fertiliser and sent to markets for beneficiaries to redeem.

He said in addition to the 16 000MT that has been cleared after RBM provided $15 million, they are drawing fertilisers from suppliers’ warehouses.

He, however, did not state the tonnage that government is getting from the suppliers’ warehouses.

Asked if government has paid for all the fertiliser in the suppliers’ warehouses, Kagona said government is only clearing the fertiliser for drawing.

He said for the suppliers to release the fertiliser, it depends on how much government pays them.

Said Kagona: “Suppliers are giving release orders slowly and slowly, and we keep on negotiating with them that we keep drawing.”

In his remarks, Parliamentary Committee on Agriculture vice-chairperson Ulemu Chilapondwa called on SFFRFM and the Ministry of Agriculture to seriously engage the banks so that the forex issues are resolved and fertiliser is released for distribution.

“Our wish is to see that the LCs are accessed quickly so that the 40 days that the President gave to the Ministry is adhered to.

Government is targeting to reach 1 490 250 beneficiaries with fertiliser and seed in this season’s AIP, whose other beneficiaries will receive two goats each, leading to a total of 1 500 000 beneficiaries.