MALAWI – European Investment Bank (EIB) and First Capital Bank (FCB) have signed a 7-year €12.5 million (US$12.3m) loan facility to support sustainable agriculture for socioeconomic development and poverty alleviation in Malawi.
The financing is part of the long-term EUR 25 million (US$24.7m) scheme aimed to accelerate agricultural investment in the country.
The facility, which has been provided through the Kulima Programme, aims to enable the Malawi Government and the private sector to better tackle challenges triggered by Covid-19 and the global energy shocks, among others.
Kulima Programme supports transformation of the agriculture sector from production to processing and commercialization, including enhancing access to medium and long-term financing by small and medium producer organizations and agribusinesses.
The financing scheme will be managed by First Capital Bank and is backed by the European Union and European Investment Bank, as part of the broader Team Europe support for sustainable commercialisation of smallholder farmers across Malawi and southern Africa.
Speaking after the signing ceremony, EIB Vice President, Thomas Ostros, said, “The first ever Team Europe cooperation between the European Investment Bank, European Union and First Capital Bank, will unlock a better future and create employment opportunities throughout the sector and be supported by sharing best-practice agricultural, gender and financial expertise.”
The new financing will provide longer-term loans than normally available in both local and foreign currency to enable companies to better reflect the economic life of new investment.
A risk-sharing facility backed by the European Union will further enhance access to finance by small holders and agricultural companies.
Under the initiative, First Capital Bank will provide financing in Malawian Kwacha, USD and EUR to eligible clients that will unlock investment that strengthens the overall competitiveness of Malawian agriculture.
The impact of the agricultural financing provided through First Capital Bank will be enhanced through best-practice shared under a dedicated technical assistance and training programme.
The Frankfurt School of Finance & Management will support First Capital Bank in further strengthening their agricultural lending capabilities and enabling agricultural companies led by women and female smallholders to better access the new financing.
The technical assistance program will also support share inclusive and sustainable business practices to ensure that investment by smallholders contributes to poverty reduction, improved food security and more competitive and inclusive agricultural value chains.
“First Capital Bank is committed to building on our track-record of supporting agriculture across Malawi by improving access to finance, sharing best practice and innovation to unlock investment across the sector.
“This new partnership will unlock agricultural investment, create employment and unlock economic growth in Malawi in the years ahead,” said Spyridon Georgopoulos, Chief Executive Officer of First Capital Bank.
The new Malawi initiative follows the successful launch of Team Europe recent support for agricultural investment in Malawi, Zambia, Zimbabwe and Kenya.