Policy Direction Brief: Enabling Malawi’s Root And Tuber Crop Producers Achieve Financial Literacy And Access Available Financing Instruments For The Development Of The Sector In Malawi

Executive Summary

• The Root and Tuber Crops Development Trust (RTCDT) has been co implementing a five-year project called Root and Tuber Crops for Agricultural Transformation in Malawi with support from the Irish Aid. 
• This is coming on the backdrop of robust extension systems to upgrade RTC production and market performance.
• Governments and the project decision stems from the realisation that most farmers, especially RTC smallholders, were not getting the corresponding high value from their produce while middlemen who operate at the agriculture produce markets are the ones reaping huge profits yet they would not have invested anything in the process of production.
• As a matter of fact, RTC smallholder farmers have not been accessing agri financing and high end markets amid revelations that in most developing countries, 80 to 90 percent of agricultural produce is sold informally through transactions at the farm gate, roadside sales, village and rural assembly markets, and urban wholesale and retail markets.
• The projects’ overarching objective blends well with the mission of the Trust which is to spearhead the development of a vibrant root and tuber crops industry through facilitating, coordinating linkages within the entire value chains and enhancing innovations to generate quality products for food security, national and international markets. 
• RTCDT role is portrayed in the stakeholder engagement at all levels through advocacy, including RTC financing and high-end markets for rural communities.
• RTCDT organized Root and Tuber Crops (RTC) Stakeholders and Statutory Regulators and Financial Inclusion symposia focusing on negotiating regulatory framework and financing for RTC sector in Malawi.

Key Performance Objective

Through RTC Action, RTCDT intends to establish transformative linkages and advocate for sustainable enabling policy environment for development and trading of RTCs commodities production, financing and investment in infrastructure, strengthen business services and improve farmers’ livelihoods.

What is the problem?

The Root and Tuber Crops (RTC) value chain in Malawi is underdeveloped partly because;

1. RTC has limited access to financial inclusion resources from both the commercial lending sector and donor supported funding instruments for potentially developing the sector for value addition and mechanisation and tapping its obvious potential to propel economic growth and socio-economic development of the country. The RTCDT wants to lift members to access financing for value addition for the sector through potential financiers from commercial banks, micro finance institutions, development partners and state affiliated organs that finance agriculture development programs in Malawi.
2. The majority Root and Tuber Crops Development Trust (RTCDC) members through RTC-ACTION project remain producers and are unable to graduate to value addition players processors due to limited financing. The RTCDT wants to lift member to access and trade at formal high-end markets through the Trust’s portal as well as on their own.

What do we want to achieve?

The symposia wanted to achieve the following;

1. To develop strong, coordinated, reliable and consistent quality and profitable financing and business RTC value chains.
2. To develop and nurture a recognized strong, coordinated, reliable and consistent financing and business -mainly industrial processing and value addition, market access interface platform through the RTCDT and Ministry of Trade.
3. To identify and address financing and business policy gaps and opportunities for RTC sector and market development from stakeholders, state and non-state actors authorities, development partners and other enabling partners including the private sector.

Where are we working in Malawi?

We are working with RTC value chain players across the three regions and reached to 381 RTCDT individual, corporate, statutory or group members. We reach out to over 380,000 farming families with 57,000 within youth category and 44 private establishments through working partnerships recognized and facilitated with Malawi Government. The bulk of our cooperatives have a 60:40 ratio with the former composing of women and youth.

How are we making it happen?

Potential RTC sector financiers, donors and development partners, private Bank/Lending Institutions, development NGOs, Micro Financiers and donor/government Agri-financing, RTC processors, farmers and associations, existing registered cooperatives, private commercial farmers are engaged 

Whom have we worked with?

The Trust has worked with Malawi government through AGCOM, the ministry of trade and industry, the Program for Rural Irrigation Development (PRIDE) project with funding from the government of Malawi (GoM) and the International Fund for Agricultural Development (IFAD) together with Irish Aid through the International Potato Centre (CIP)’s RTC-ACTION PROJECT. Others are commercial banks, micro finance institutions, Malawi Bureau of Standard (MBS).

What have we achieved so far?

Through a national Resource Mobilization and Financial Inclusion symposium for the RTC sector was held. The idea was to create, facilitate and maintain a forum for potential RTC Financiers to meet and understand the potential and the available RTC market. 

The Trust is also involved in supporting its members develop proposal for donor/government Agri-financing instruments in order to achieve RTC value addition ambitions. So far one member has accessed the Agriculture Commercialisation (AGCOM) Grant to construct a Cassava processing plant in Machinga. Another 2 groups are in the final stages of achieving the same.

Next Steps

• To support RTC corporative become formal RTC Businesses and access financing tools and instruments in commercial and non-commercial sector.
• Enhance RTC supply chains through community adoption of sustainable adoption of technologies like irrigation and processing to cover seasonal unmet need.
• To support RTCDT members, especially women and youth, to move from producers to value addition players in the sector.
• Advocate for and grow more sustainable access to high-end RTC local and international markets for RTCDT members especially women and youth.