Rome: A new financial agreement signed Wednesday between International Fund for Agricultural Development (IFAD) and Government of Republic of Malawi will help more than 437,000 rural households improve their access to financial services nationwide.
The agreement for the Financial Access for Rural Markets, Smallholders and Enterprise Programme (FARMSE) was signed in Rome by Gilbert Houngbo, President of IFAD, and Ambassador of Malawi to Italy, Tedson Kalebe was made available to Malawi News Agency (Mana) in Lilongwe.
The total cost of the project is US$57.7 million, including a $21 million loan and $21 million debt sustainability framework grant from IFAD.
The project will be co-financed by the Government of Malawi ($9.6 million) and by the beneficiaries themselves ($6.2 million).
Malawi faces major challenges including drought, food insecurity and the HIV/AIDS epidemic.
The poverty rate stands at 50.7 per cent of the population, with 30 per cent of the people living in extreme poverty.
The agriculture sector which supports the direct and indirect livelihoods of over 80 per cent of Malawi’s population provides the bulk of the raw materials required by the manufacturing industry and contributes 40 per cent of total export earnings.
Agriculture is the main foreign exchange earner, primarily from tobacco, sugar, tea, coffee and cotton.
In Malawi, as in other developing countries, micro-, small- and medium-sized enterprises (MSMEs) are critical to economic growth and development, in particularly by creating jobs, increasing food production, providing income and fostering a diversified, resilient economy.
To address sector challenges and exploit its potential, the government of Malawi is partnering with IFAD to implement FARMSE.
With a particular focus on women and youth, FARMSE aims to sustainably reduce poverty by working with the poorest households.
The programme will improve livelihoods and enhance the resilience of rural households in the programme areas.
It will increase rural household and MSME access to a range of financial services.
The programme will support government efforts to reduce poverty in rural areas and strengthen community-based financial organizations, financial cooperatives, microfinance institutions and commercial banks.
Since 1981, IFAD has financed 13 rural development programmes and projects in Malawi for a total cost of $499.1 million, with an IFAD investment of $266.9 million directly benefiting 1,885,750 rural households.
Source: Malawi News Agency MANA