Mining & Trade News

President Chakwera has said that a vibrant private sector is crucial in stimulating the country’s economic growth and creating employment.

Speaking during launch of the Presidential Initiative on Job Creation, drawn to address youth unemployment and private sector productivity, Chakwera explained that the rise in the cost of living being experienced in the country is a result of a shift in economic prospects due to global dynamics and the effects of the Covid-19 pandemic.

In 2020, the COVID–19 out-break, which mainly affected activities in tourism, the accommodation and food subsectors, transportation and agriculture, saw Malawi’s economic growth drop from 5.7 percent in 2019 to 1.7percent.  

Real GDP growth, expected to be driven by recoveries in the tourism and agriculture sectors, exports, FDI, and public investments in infrastructure (airport, roads, energy), is projected to grow at 3.3 percent in 2021 and 6.2 percent in 2022 despite threats of disruption from a potential COVID–19 third wave, bad weather, and fiscal overruns due to revenue underperformance.

To kick-start the initiative, Chakwera announced the partnership between the National Economic Empowerment Fund (NEEF) and mobile phone service provider TNM. The partnership intends to drive mobile phone penetration, financial inclusion, job creation and community development under the Presidential Initiative on Job Creation.

The president further said government has put in place measures that will generate an enabling environment for agro-business; stronger partnership with the private sector; solutions to tackling the barriers to small and medium enterprises; capacity to build the infrastructure needed to support jobs and supporting the youth to participate in the economy.

“Removing those obstacles is government’s responsibility and it begins here with my declaration that my administration will engage the private sector as partners,” he said while admitting that his government had failed to create one million jobs in the first year of his administration, as promised during the presidential election campaign.

He attributed the failure to the Covid-19 pandemic, which he claimed had reversed the gains made by his government and had cost the country 600 000 jobs from the time the first COVID-9 cases were reported in April 2020.

In a Hardtalk interview with British Broadcasting Corporation (BBC), Chakwera claimed his administration had covered up the loss with labour engagements in the Affordable (farm) Inputs Programme (AIP) and in NEEF, which he said had facilitated the creation of thousands of new businesses through the disbursement of business loans.

In an effort to enhance visibility of Malawi’s mountains on the global tourism network, government says it is set to commemorate this year’s International Mountain Day (IMD) on December 11, 2021 on Zomba plateau, one of the country’s source of inspiration.

Zomba plateau is a unique wilderness standing one foot in the city of Zomba (Malawi’s former capital city) and the other in the remote part of Zomba district. It attracts varying levels of visitors because of its fresh, clean air, diverse landscape and rich biodiversity.

Macpherson Nthara, the Chief Land Resource and Conservation Officer in the Ministry of Forestry and Natural Resources, says the commemoration to be cerebrated under the theme: “Sustainable Mountain Tourism – A Call for Action Towards the 2030 Agenda for Mountains” is aimed at promoting and supporting long-lasting initiatives for sustainable mountain conservation and development in Malawi.

The event, which is being coordinated by the World Mountain Partnership, will be led by a taskforce of local stakeholders drawn from the ministries of Agriculture, Forestry and Natural Resources, Tourism, Culture and Wildlife.

“Mountains are an integral part of the tourism sector in Malawi considering that a number of tourist attraction sites in Malawi are located on mountains,” says Nthara who explained the country’s intention to promote the economic sustainability of mountains and the tourism industry as a whole.

“Mountains host a wide range of ecosystems such as forests, grasslands, rivers and wetlands. These contain a wide range of biodiversity which is a vital source of food, medicine and for tourism,” he observes but is also quick to note that despite their importance, mountains have received little attention in national discussions focusing on the environmental and developmental issues.

The Zomba massif is touted for its cedar, pine and cypress plantations as well as the wild vegetation, fresh water streams, tumbling waterfalls and still lake-like dams.

Visitors enjoy scenic viewpoints, hiking, trekking and walking where they may have the chance to encounter or catch a sight of wildlife including leopards, giant butterflies, baboons as well as have specular time enjoying the unique birdlife and trout fishing

Nthara stresses the need for the country to recognize the ecosystems services provided by mountains and intensify efforts aimed at conserving them whilst implementing a localized agenda of the UN Sustainable Development Goals to which Malawi is part of.

As part of increasing awareness on the importance of mountains for the health of the planet and well-being of billions of people, activities lined up for the day include hiking trips, tree planting exercises, press briefings and a panel discussion on “Sustainable Mountain Tourism’’ where experts in tourism and environmental sectors will talk on the need to safeguard mountain ecosystems and will highlight the tourism potential in mountains.

Historically commercial agriculture has been a male dominated sector. In recent years the advancements in mechanisation and agricultural technologies have levelled the “playing field” and opened the doorway to gender equality within the sector. Farming and Engineering Services Limited Malawi (FES) who have been operating in this space since 1967 and are one of the most progressive and transformative players in the agricultural contracting and ag tech sector have demonstrated this through their adoption of female operators to man their equipment.

Some of the highly specialised contracting operations conducted by the dedicate women of FES include drone aerial survey, land forming and drone chemical crop protection. More than half of the pilots employed by FES to operate their fleet of DJI Agras T16/20/30 drones, which were developed at a cost of over R400-million, are young local females. Clayton Prowse, the Operations Manager at the FES Nchalo operation in Chikwawa, stated that “the female pilots operate in a less reckless manner and are less inclined to take unnecessary risks. This results in reduced downtime and improves mechanical availability of the equipment”. These female drone pilots are also responsible for drone based RTK topographical surveys using a fleet of DJI Phantom 4 RTKs and Matrice drones. The surveys are used as an input to the OptiSurface and MultiPlane software packages used to redesign fields for optimal surface water management. These designs are then uploaded to RTK guidance systems within the Challenger 865C/E tractors. These tractors pull 18 cubic meter dual land-forming scrapers to reshape the field surface for effective water management. This operation is coincidentally also predominantly performed by one of their most trusted and female operators, Mary Thalo. Mary has been with FES since 2012 and is a multiskilled operator, who aside from the land-forming, is also responsible for operating a tile-plough to install sub-surface drainage pipes and doubles as an operator on some of the larger yellow-plant equipment.

Commercial agricultural operations are about more than just operating equipment, there are also many supporting functions within the sector. AgriLab, a part of the FES group, is an ISO 17025 certified soil, water and leaf analysis laboratory. AgriLab endeavours to uplift local and international farmers by helping them increase the productivity of their soils through soil and leaf analysis followed up by fertilizer recommendations. Within the lab several of the lead scientists are also female. Other positions such as managers, mechanics, auto electrician and back-office staff, which have traditionally been filled by male employees, are now increasingly being filled by female employees. Justin Domleo, FES Group Head of Contracting, attributes this to “the increased number of female graduates passing through academic institutions and training academies operating in the sector, such as the African Drone and Data Academy in Malawi”. 

This is great news for employers in the sector as there is now a greater number of suitably qualified candidates from which to recruit and gender is not considered to be a selection criterion. In a sector where female participation has in the past been skewed toward the unskilled positions such as manual weeding, the new norm is a more naturally balanced and fair environment. 

Operating in a country where the UN gender inequality index ranks 173 of 189, FES is proud to support women in agriculture and promote the United Nations Sustainable Development Goals.

There is a need for farmers in the country to adopt the rearing of hybrid breeds of livestock which are highly productive in order to substantially benefit from their activities, this is the view of Nyasha Mbenje, Director for Ntheu-based Well-done Livestock Suppliers (WLS).

Mbenje, whose organization breeds and sells highly productive Boer goats to farmers told Agri Business Review, that rearing of hybrid livestock can hugely benefit farmers through increased income from meat and milk sales as well as assist in boosting the national forex reserve through export of animal products.

She, therefore, advised Veterinary and Livestock Development Department (VLDD) in the Ministry of Agriculture to make sure that hybrid breeds of livestock are made available and accessible to farmers across the country.

Mbenje, however, applauded government for showing interest in encouraging farmers to venture into serious animal production through providing them with Boer goats which, she said, would help them realise their economic dreams besides helping the country meet the population’s demand for animal protein.

“I must appreciate government’s gesture of ensuring that farmers start keeping hybrid breeds of goats. Currently, government is providing rural farmers with Boer goats, the activity that would help them realise their economic dreams. In this program, some farmers are given male and female goats for breeding and their offsprings are passed on to other farmers,” she said.

Mbenje, however, said that there is more that government should do to improve local livestock development sector. She suggested training and deployment of more veterinary experts to the rural areas where they should be responsible for providing veterinary services to farmers.

Meanwhile, some local livestock development experts have complained over the decline of the livestock subsector in the country, which they have attributed to government’s failure to encourage farmers to take livestock production seriously.

Malawi Milk Producers Association (MMPA) Director Herbert Chagona said there is an urgent need for the country to address numerous challenges affecting animal production sector such as low productivity due to the rearing of local breeds. He said farmers should be encouraged to keep hybrid livestock which are fast growing and highly productive.

He disclosed that as one way of ensuring that MMPA members benefit from their works, the organization imports and distributes hybrid cattle and goats that produce more milk, a scheme which only benefits their member associations.

“As milk producers association we encourage our members to keep hybrid types of livestock because they produce more yields. To ensure that our dream is realized, we import hybrid goats and cattle which are distributed to our members,” said Chagona.

Lilongwe Agricultural Development Division (ADD) programs officer Dr James Nkhoma admitted that the local livestock subsector has declined over the past years.

But while admitting that privatization of some vetenary services has affected the sector, Nkhoma quickly explained that there are a number of activities being done to promote livestock development which include ensuring availability and accessibility of hybrid livestock breeds to farmers.

“As Lilongwe ADD, we admit that there is retrogression in the livestock subsector of Agriculture. Privatisation of some veterinary services is among factors contributing to the decline. However, there are some remarkable initiatives happening that include the importation and distribution of hybrid livestock to farmers, ” he explained.

While Sparks Soza, an official at Kasungu ADD said the decline of the livestock subsector is not as a result of government’s laxity to promote the subsector but farmers’ lack of interest to embrace livestock farming as a result of unavailability of grazing land, among other reasons.

“Its indeed true that the local livestock production industry is collapsing. But there are a number of factors contributing to that including lack of grazing land,” he said.

Erica Maganga, Ministry of Agriculture Principal Secretary recently said government is determined to ensure that the local livestock production sector reclaims its lost glory.

“The farmers have been told that, through rearing high yielding hybrid breeds of livestock they can hugely benefit from their works,” she said.

Government through the ministry of Agriculture has repeatedly advised farmers to adopt the keeping of hybrid livestock which are quick maturing and highly productive.

The livestock subsector in Malawi is relatively small and undeveloped. It contributes only about seven percent to agricultural GDP and just 12 percent to the total value of agricultural production.

Over 50 percent of the over 2-million smallholder families are involved in livestock production.
According to the Food and Agriculture Organisation, only 10 percent of total household expenditure in Malawi is on livestock products which account for about 1.3 percent of total dietary protein intake.

Current production and consumption levels are woefully insufficient by international standards, and even below sub–Saharan levels.

Animal populations are considerably low and those for cattle have been decreasing since 1987. In view of the anticipated increase in population to about 18 million from 12 million in 2010, Malawi will face massive deficits in the supply of animal protein if food production, including livestock, does not grow faster.

Unless production increases, the country will have to continue to import substantial amounts of livestock products, which could be a drain on foreign reserves.

A local cooperative union, the Community Savings and Investment Promotion (COMSIP), says it has promoted about 320 legume farmers in the country through its Legume Enterprise and Structure Production (LESP) program, which it kick-started in 2015.

COMSIP says through LESP they have promoted the farmers through offering of loans and matching grants, marketing their produce and teaching them on how they can save their investments.

Cooperate Development and Investment Officer for COMSIP Paul Kamwendo said in the past five years the union has been promoting production of legumes including sugar beans, soya, pigeon peas, groundnuts, rice and others.

Kamwendo said as a capacity building organization promoting savings and investment among groups that do not have accounts with commercial banks, they launched the programme with the understanding that many of union members are farmers and they rely on agribusiness.

He said: “In 2013, we saw that so many groups are looking for market for agricultural products and after doing some research we saw that we could invest and save money in groups but first we were looking at what was coming out of our investment and farming activities.”

“Issues that were hindering us were about market linkages and the financial support, and for that point we introduced the programme called Legume Enterprise and Structured Production (LESP).”

“On financial support, in the first year it was 70% loan and 30% matching grant and the subsequent year it was 50% loan and 50% matching grant while third year it was 30% and 70%.”

“The fourth year, it is 100% grant because they had to graduate in the process than having the same group all the years getting the same percentage of loan and at the same time our basis is to reach many groups other than dwelling on the same group.”

In 2019, COMSIP in collaboration with Harvest Plus, an organization which is fostering and advocating for seed multiplication by fortified seeds, adopted the orange maize Vitamin-A.

Kamwendo said the adoption of Vitamin-A was ideal with the coming of government’s school feeding program which identified the crop as so nutritious and the demand increased, giving an opportunity for farmers to make more profits.

He also said the promotion of the orange maize vitamin-A in collaboration with Harvest Plus is a surplus to what the union has already been doing on legume production.

Kamwendo said through the collaboration, they managed to produce about 300 metric tons in the first year of production while this year they have produced about 400 metric tons of orange maize vitamin A.

However, he lamented lack of financial support as a bottleneck to farmers in the country to fully excel in agribusiness.
He said some farmers fail to access loans from commercial banks in fear of issues to do with collateral and other bank demands including insurance.

Kamwendo said: “Every bank is looking for a farmer that has a ready buyer with ample financial resources. So many of these farmers are subsistence farmers and they do not have such kind of a market.”

“In the legume market, some of the buyers are not coming up with such kind of platform where they offer agricultural contracts.”
“Malawi will become a food basket only if the farmers are assisted financially. You know Malawians are hard workers and in Malawi what many know that brings food or money in their basket is farming.”

“If all farmers in all groups will access agribusiness loans, we will be assured that the Malawian economy will grow because they will have the muscle to compete on the market,” he said.

He also called for mindset change for farmers to start considering farming as a business so that they remain resilient in times of changes of prices of commodities.

He said: “This time our farmers are crying that fertilizer prices have gone up but I will change that to say farming cost has gone up.”

“It means that as a business, this should result in hiking price for that commodity to make profits, prices of legumes should also go up.”

“The market should prepare that the prices have gone up not just be crying. Now you should be thinking that these materials have gone up.”

Nationwide, COMSIP has 895 groups with a membership of 55,781 of which over the years has been facilitating growth of the groups into well managed, member-driven savings and investment institutions which have fully integrated enterprise development at their core.

Generally, COMSIP collaborates with various partners including policy direction and support from Government of Malawi (GOM) and other agencies such as National Local Government Finance (NLGFC), and development partners mainly the World Bank and German Technical Cooperation (GIZ).

The collaboration with various stakeholders helps in enhancing capacity building, general project management and coordination, savings mobilization, nutrition and health, business management and financial literacy among the rural and urban poor households.

There is need for more Malawians to invest in mechanized commercial agriculture if the country is to meet its aspirations contained in the Malawi 2063 vision.

State President Lazarus Chakwera said this at the launch of the 10 year implementation plan for Malawi 2063 that was held at Bingu International Convention Centre in Lilongwe.

He said a person’s educational qualifications or economic status should not be a deterrent factor from participating in farming activities.

Chakwera said: “There are some in our midst who still need to be convinced to start farming because they think they are too educated or too cool to farm.”

“I notice that the Implementation Plan says that we need to digitize farming in order to make it more attractive to young people.”

“I believe that this is not the right way to say it. The right way to say it is that we need to digitize farming in order to make farming more efficient and more productive, and at the same time, we need to reeducate our youth to understand that farming is one of the surest paths to the wealth and prosperity they desire.”

He said there is need for more young people in Malawi’s colleges and universities to be aspiring either to use their education to make farming smarter or to use farming as a foundation for building wealth they can invest in building other industries they are trained in.

“There is no reason a person trained as a doctor cannot build wealth from smart farming and use that wealth to build a hospital. There is no reason a person trained as a teacher cannot use wealth from smart farming and use that wealth to build a school,” he said.

The Malawi 2063 blueprint, which seeks to transform Malawi into a middle income country by the year 2063, has prioritized agricultural commercialization, diversification and mechanization.

The government aims at transforming the agricultural industry from subsistence to commercial farming by encouraging farmers to not only be growing crops like maize only for their households, but engage in large scale farming that will see them using large scale machines in the farms.

Agriculture remains the mainstay of the economy, contributing close to a quarter of the country’s GDP and employing about 64 percent of the labour force.

Close to 80 percent of Malawians rely on rain-fed smallholder agriculture for food.

Though the sector is enjoying huge financial support from both the Government and development partners, production and productivity has remained below its potential and is insufficient to match the increasing demand from domestic and export markets because of low levels of improved farm input use, limited private investment, and low mechanization levels, among others.

Government’s agricultural commercialization drive is eyeing incorporating the use of heavy machinery that will ease workforce that farmers encounter.

The National Planning Commission (NPC), the driver of the MW2063, has prioritized youths as main players in the vision saying they are a fundamental human resource capital.

NPC’s Chairperson Prof. Richard Mkandawire said: “On this journey, our main assets remain the youth, including the girl child. And rightly so, the MIP-1 emphasizes engendered interventions that will promote youth engagement both in action and benefits through-out its Pillars and Enablers.”

“Along with this will be ensuring that our education system and institutions of higher learning are capacitated by both state and non-state actors as purveyors of relevant and employable skills. Skills that should be aligned to the MIP-1 priorities and Malawi 2063 vision generally.”

As banana production is dwindling in the country leading to massive importation of the fruit from neighbouring countries such as Tanzania, a local horticulture firm Synthesis Agriculture has embarked on interventions to scale up cultivation of the crop.

Production of bananas in Malawi has declined due to the outbreak of the Banana Bunchy Top Disease.
Director of Programmes and Marketing for Synthesis Agriculture Mphatso Chiyembekeza said, among other interventions, Synthesis Agriculture is conducting training programmes for farmers on banana cultivation.

He also said the company has conducted research to come up with resistant varieties of the crop and the current banana suckers their researchers are producing easily adapt to the weather patterns of the all banana growing areas in Malawi.

“Malawi used to produce lots of bananas in districts like Thyolo and Mulanje but the outbreak of the disease has drastically affected production. As Synthesis Agriculture, we intervened through research and later introduced the banana suckers that we give to farmers for free,” he said.

Chiyembekeza said it is worrisome that currently some parts of the country are relying on imported bananas, the development that is draining foreign exchange for Malawi and robbing the farmers of income they could have generated from the sale of the fruit.

“Most of the bananas that are being consumed in Malawi are being imported from other countries more especially Tanzania yet we used to have lots and lots of bananas some years ago.”

Chiyembekeza, however, bemoaned resistance by some farmers especially in Thyolo District to uproot the old banana varieties and plant the new disease resistant varieties.

He, therefore, appealed to stakeholders to assist the company in sensitizing the farmers on the advantages of growing the newly developed varieties.

Synthesis Agriculture has, meanwhile, called upon more Malawians to venture into banana farming to meet local market demand for the fruit.

The Banana Bunchy Top Diseases emerged in late 2009 with Thyolo and Mulanje being heavily affected districts before it spread to other banana growing areas putting banana cultivation at the risk of extinction in Malawi.

As of 2016, it was reported that the disease had wiped off the crop affecting 185,000 banana farming households.
Malawi imports about 20,000 tonnes of bananas per week mainly from Tanzania and Mozambique.

The Farmers Union of Malawi (FUM) says there is huge information gap between the supply and demand sides of agriculture financing in the country saying there is a need for more interventions and coordination to narrow the gap.
FUM made the remarks during the inaugural annual agri-financing conference that was organized jointly with the Bankers Association of Malawi (BAM) under the theme; Improving Agricultural productivity and commercialization through access to affordable agriculture finance.

FUM Chief Executive Officer (CEO) Jacob Nyirongo said the conference is one way FUM and BAM are utilizing in narrowing the information gap as it gives various stakeholders a platform to discuss and deliberate on how to improve the agri-financial part of the sector.

Nyirongo also said the conference augers well with the aspirations of the country reflected in the Malawi 2063 development agenda which ranks the agricultural sector as the main pillar towards achieving the vision.

He said: “The objectives of this conference are not exhaustive. Our ultimate objective is that through this conference farmers, financing institutions, private sector players and other players along the agriculture value chain should be able to venture into sustainable strategic business partnerships that will fast-track the agriculture transformation agenda.”

“As Union, we strongly believe that challenges that have stagnated our agricultural sector are very diverse hence demanding concerted efforts when attempting to deal with them.”

“It is for this reason that we collaborated with the BAM to initiate the process of creating this platform whereby key players in agriculture sector will be able to have an in-depth discussion on how we can enhance availability, accessibility and affordability of agricultural financing instruments in the country.”

Nyirongo lamented that the country continues grappling with low access and uptake of agricultural financing instruments despite numerous deliberate interventions and programs being implemented by the Government, non-governmental organisations and financing institutions to improve the uptake of agri-financing instruments in the country.

He said the sector will remain rudimentary unless efforts are made by key stakeholders in the agriculture sector to achieve significant increase in productivity, mechanization and commercialization.

In his remarks, Controller of Agricultural Services in the Ministry of Agriculture, Alexander Bulirani, said the Malawi Government believes that boosting agricultural production requires investments in irrigation, mechanization, fertilizer and improved seeds.

Bulirani said Malawi’s agricultural sector cannot grow in the categories of agricultural diversification, value-addition and agro-processing if the country continues to experience low access to finance for capital investment.

He said his Ministry has embarked on various interventional programs to ensure that farmers that are lagging behind due to lack of access to finance are assisted.

Bulirani said: “The government is currently implementing the Agricultural Commercialization Project (AGCOM) across the country, a flagship project that is providing the much needed capital to farmers for them to commercialize their production.”

“The government also instituted the Malawi Industrial and Agricultural Investment Corporation (MAIIC) in 2018 mandated to drive private sector-led economic development through mobilization of finance, skills and technology for sustainable wealth creation.”

“My Ministry also launched the Farmer Organization Strategy late last year and through this strategy, the Ministry is collaborating with other stakeholders to build strong farmer organizations that will be able to manage agricultural loans thereby reducing the risk of lending money to smallholder farmers.”

He also announced that the Ministry of Agriculture will soon be collaborating with other Ministries to embark on developing the Agricultural Financing Policy that will significantly contribute towards creating enabling environment for the agricultural commercialization agenda.

BAM Second Vice President Zandile Shaba urged banks in the country to come up with deliberate policies to finance agriculture saying the development can increase the added value of raw materials; strengthen local rural economies, food security and nutrition; and improve the quality of life in many homes at risk of exclusion and vulnerability.

Shaba stressed that policies, incentives and regulatory frameworks that safeguard and promote agro-industries have proven to be highly effective in lifting rural populations out of poverty in many countries.

She said from now onwards the country must take a full value chain approach from the farm to the table by greatly investing in the private sector across the agricultural value chains including modern seed and fertilizer companies, agricultural mechanization, irrigation and water management, warehousing, commodity exchanges, food manufacturing and processing, logistics, cold storage and transport.

Shaba said: “Malawi should not be a consumption center; it must be an agro-industrial center. Malawi must export processed tobacco, not leafy tobacco.”

“It must export specialized coffee with distinctively ‘aroma of Malawi’ instead of coffee beans, and export finished textile products and not cotton lint.”

“With access to finance in mind, we should not forget that modernization of the agricultural sector requires that we improve the functioning of agricultural markets.”

“Rapid progress has to be made on the development of commodity exchanges to improve farmers’ access to markets.”
“Commodity exchanges allow for better price discovery and can be effectively linked to warehouse receipt systems that allow farmers to use their grains as collateral for accessing credit from financial institutions.”

Shaba explained that structured markets are important for balancing capacities and prices of agricultural commodities and broadening of foreign exchange earnings.

She said if the structured markets are supported by export mandates, they could limit informal cross-border trade and increase agricultural exports.

The conference was premised on the following objectives: To provide a platform for open debate on policy and regulatory instruments that can enable effective performance of the agricultural financing sector; to provide a platform to financial service providers to present portfolios of their financing instrument that are tailor-made for agriculture; to provide a platform to farmers and agriculture practitioners to provide feedback on the way agricultural financing instruments are designed and; to provide an opportunity to financing institutions to market their products to farmers and other stakeholders.

The World Bank has faulted the Malawi Government on the implementation of the Affordable Input Subsidy Programme (AIP) saying its huge budget is weighing heavily on allocations to development of potential agricultural commercialization and diversification areas such as production of legumes for export.

In the Country Private Sector Diagnostic Report dubbed Creating Markets in Malawi, the World Bank urges Government to increase resource allocation for productive investments in the agriculture sector, including by reviewing and adjusting the AIP to improve efficiency in terms of distribution, targeted farmers most likely to benefit from the subsidy, and fiscal sustainability.

It says though the roll out of AIP and beneficial weather conditions have resulted in bumper harvest, the longer term effects and implications of the AIP need to be closely monitored.

President Lazarus Chakwera led government, launched the AIP in October 2020, as a successor programme to the Farm Input Subsidy Programme (FISP) which was being implemented by the previous administration.

“The budget allocation for the AIP is four times that of the FISP in its final year, absorbing nearly half of the overall agricultural budget. This crowds out productive investments in the sector that could promote commercialization and more sustainable farming practices,” reads the report.

It says by widening incentives for maize production, the AIP also departs from years of effort to promote intercropping and diversification into other, more lucrative commercial crops, such as legumes.

“Reliance on a single crop weakens resilience to production and price shocks—unfortunately all-to-common occurrences for Malawi’s farmers,” states the Bretton Wood institution in the report.

The AIP has scaled up government subsidy support making it available to over 3.7 million smallholder farmers from 900 thousand supported by FISP in its final year.

The program aims to boost maize production to ensure national and household food –sufficiency while also creating a market surplus keeping in line with FISP.

The AIP has a budget of more than US$212-million (MK160-billion) representing 45% of the total agriculture sector budget and 7% of the FY2020/21 national budget proposed in September 2020, this is a tremendous increase from the FISP budget which had been brought down to roughly US$ 46.3 million (MK35 billion) in FY2019/20.

In the report, the Bretton ood institution also challenges the Malawi government to reduce leakages and increase transparency in the implementation of AIP to ensure that the programme does not become another mechanism that only generates rents for political and business elites as it was happening in the implementation of FISP by the past leadership.

The report reviews that in the past those with close relations to the political leadership benefited quite a lot from the programme.

Reads the report: “The AIP requires the participation of a broader set of private sector players simply due to the programme’s holding both suppliers and the Government accountable for true delivery of the quality inputs and timely fulfillment of payouts,”

“Success will depend on transparent contracting and enforcement, holding both suppliers and the government accountable for timely delivery of high-quality inputs and timely fulfillment of payments.”

The Bank observes that unlike FISP, the AIP does not provide coupons for legumes. Though sorghum and rice are included in the programme, experience has shown that they are not redeemed by farmers, who prefer maize as part of the cereal coupon.

It says such focus on increasing maize production detracts from efforts to diversify agricultural production.
“Malawi already suffers from an overdependence on maize, which drives soil degradation and increase vulnerability to climate shocks and pests, like the fall army worm,” the report reads.

The Bank also points out that continued focus on maize input subsidies reduces fiscal space to invest in other important sector priorities, such as irrigation and extension services.

It explains that with crop yields highly dependent on precipitation, input subsidies have experienced diminishing returns.

The report reads: “Yields have largely stagnated over the last decade, despite the FISP. The program accounted for over 40 percent of government spending on social protection between 2011 and 2019, yet more than half of Malawians continued to face severe food insecurity.”

“Analysis has shown that shifting some of the input subsidy expenditures into other social protection programs would be more effective in improving food security, while allocating a larger share of resources to investment in irrigation infrastructure and extension services to improve climate-smart agricultural practices would help to boost resilience to shocks.”

Smallholder farmers account for over 80 percent of Malawi’s agricultural production, but very few are market oriented.
More than 90 percent of farmers grow maize but just 10 percent sell it in markets, and fewer than one in five belong to a functional farmer organization.

The farmers farm on mostly small and fragmented plots, with limited and often unclear rights to the land. Tenure for most land is determined through customary systems and community ownership, which reduces the incentive to invest in the land, keeping productivity and yields low.

According to the report, Malawi’s top 10 exports in 2019 were agricultural products, and all but one have become increasingly important to the country’s export basket over the past 10 years. Small but significant steps have been taken to increase total value addition across the sector since the mid-2000s.

Raw tobacco exports, for example, have fallen since 2010, as exporters have increased primary processing to reduce bulk and weight prior to transport out of the country.

Exports of roasted coffee are another good example, becoming a million-dollar export industry in just a few years.
Other rapidly growing exports include pigeon peas, dried legumes, sesame, nuts, groundnuts, and soybean seed.

“At the same time, global demand for some important exports—notably, tobacco, raw cane sugar, and common peas—has been falling since 2015, emphasizing the need for continued diversification to respond to the market,” reads the report.