Malawi risks losing about $75 million (about K148.8 billion) due to low funding absorption for the Transforming Agriculture through Diversification and Entrepreneurship (Trade) Programme meant to improve sustainable livelihoods in rural areas.
The project, which came into force on August 28 2020, for six years up to September 30 2025, has a total funding of $125.844 million (about K220.3 billion), yet five years down the line, Malawi has just utilised about $40 million (about K70 billion). It is funded by the International Fund for Agricultural Development (Ifad) and other partners.
The programme aims to improve sustainable livelihoods of rural people focusing on seven value chains, namely groundnuts, soybean, sunflower, dairy, beef, honey and potatoes.
Minister of Local Government and Rural Development Ben Phiri, under whose ministry the programme falls, confirmed that on Tuesday he met Ifad officials who lamented delays in the procurement processes and decentralisation of procurement to local councils.
In an interview yesterday, he said other challenges related to financial literacy levels among farmer based organisations, but also vacancies within the Trade itself.
“We have set up a task force immediately, which will be reporting weekly. Our target and goal is that by the 1st of January, as we open, all the challenges will be ironed out. Our target is that we should not lose the money,” said Phiri.
In its progress report issued in June, Ifad noted several procurement challenges, including procedural non-compliance in bid evaluation and award, staff shortages, lack of procurement audits and that cost estimations were often inaccurate.
Reacting to the development, agriculture economist Steve Kayira said the situation reflected inefficiencies in public sector implementation and leads to rural communities losing time-sensitive opportunities for income generation and improved resilience.
He said reforms should focus on simplifying and standardising procurement procedures, building capacity at council level, and introducing digital procurement systems to enhance transparency and speed.
“Prioritising value chains with existing infrastructure can yield quick and visible results before project closure,”suggested Kayira.
Mzuzu University-based economist Christopher Mbukwa said the low absorption could be due to negligence, and deep-rooted tendencies amongst project implementers to always do work only if they can get the benefits from it.
“It’s even more disheartening that the forex that is already committed cannot be utilized because we are unable to use the funds quickly enough, and we risk losing them next year,” he said.
On the other hand, agriculture policy expert Tamani Nkhono-Mvula suggested that the project itself, Trade, should be allowed to centralise procurement and support farmers directly as the local governance system seems to be dragging its feet.
“It would be better that the conditions that are there for the farmers to access these loans or these resources be lessened so that farmers are able to access them much, much easier,” he said.
In February 2024, local councils lost about K25 billion in performance-based grants under Governance to Enable Service Delivery (Gesd) because they failed to fully utilise the resources.
