Agriculture
US$95-M AGCOM sets pace for Malawi’s agricultural industrialisation
February 02, 2021 / Bester Kayaye
Malawi’s multi-million dollar Agricultural Commercialization Project (AGCOM) is on course leveraging local agriculture through the promotion of agricultural value chain products.
Using an approach known as the Productive Alliance (PA), the US$95 million World Bank credit facility project links together producers, service providers and off-takers in different value chains.
AGCOM National Coordinator Dr. Teddie Nakhumwa said the project’s development objective is to increase commercialization and competitiveness of agricultural value chain products in crops, livestock and fisheries.
Dr. Nakhumwa explained that the project was developed to respond to some of critical problems facing the small and medium scale farmers such as poor access to organized markets, poorly organized farmers and farmer groups, poor access to competitively priced finance and poor market infrastructure.
AGCOM provides 70% matching grants for the purchase of capital equipment and also insures that farmers lend from commercial banks to finance operations by guaranteeing 70% of their loans. The project also provides public infrastructure through connecting producer organisations to power, irrigation and road infrastructure—in what is known as Last Mile Infrastructure.
“These interventions are aimed at transforming agriculture by increasing productivity and efficiency in scarce land and labour use,” said Dr. Nankhumwa adding that AGCOM also invests in capacity development and organizing producer organisations into cooperatives to operate at economies of scale.
The project only supports producer organization that have formal arrangements with off-takers to ensure they are producing for the market and therefore promoting business culture among small and medium scale farmers that do the bulk of the country’s production.
Dr Nankhumwa highlighted that the project has, meanwhile, made significant progress in putting the system and establishing all strategic documents to guide implementation such as: AGCOM matching grants manual, Risk management manual, Partial credit guarantee (PCG) manual, M&E Manual, Communication manual, Institutional and organisational development guidelines.
“To promote independence and transparency, the project established independent committees such as Independent Evaluation Committee (IEC) and Investment Committee to independently evaluate proposals submitted to AGCOM for matching grants and Patrial Credit Guarantee. These committees comprise members mainly from the private sector and a few from the public sector,” he said.
The project has also a Contingent Emergency Response Component, which can be triggered by Government to respond to natural disasters. During the 2019 Cylone Idai flood disaster, the project provided US$20 million (US$7-million for maize purchase; US$7.5 million for rehabilitation of public irrigation schemes) among others, after government requested AGCOM for assistance.
Meanwhile, AGCOM has so far managed to approve 45 PAs, out of which, 25 have already paid the required 30 percent contribution and are already accessing funds from AGCOM for implementation of the sub-projects. Over 400 hectares of land for local and foreign investments have been identified to secure an enabling business environment for PAs
Nakhumwa, however, pointed that the project has also encountered numerous constraints such as optimal commitment for PAs to make the 30% contribution and aftermaths of Covid-19 pandemic that has delayed in delivering some strategic capacity building trainings.
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