Project Case Study
Boosting Malawi's Economy: Unlocking Export Potential
Transforming Poverty into Prosperity through Strategic Value Chain Development
Malawi is one of the poorest and most climate vulnerable countries in the world, with poverty reduction rates lagging its peers. By 2040, it is projected to have the fourth-highest concentration of people living in poverty globally. Addressing the critical barriers to growth, tackling the impending demographic crisis, and curbing rapid environmental degradation are central to the UK’s development agenda. Kick-starting sustained growth is fundamental not only to poverty reduction but also for achieving broader development objectives, such as enhancing Malawi’s resilience to climate shocks and expanding its tax base to fund quality public services that can meet the demands of a rapidly growing population.
Malawi’s deteriorating macroeconomic environment poses a significant obstacle to sustainable growth and poverty reduction. The macroeconomic environment remains volatile, with a pegged currency causing an overvaluation of the Kwacha. This overvaluation adversely affects the country’s export competitiveness and has led to a severe trade balance deficit.
Malawi Value Chains (MVC) is one of three components of the five-year Malawi Trade and Investment Programme (MTIP), which aims to break Malawi’s cycle of low growth. MVC focuses on the expansion of existing commercial/off-taker models in high value export sectors to bring high potential industries to scale and increase Malawi’s overall volume of exports. The other complimentary MTIP components focus on increasing access to patient capital and reducing the time and costs of trade and logistics. MVC is actively engaged in three export value chains: macadamia, mango, and mining.
The project aims to facilitate the export of over £4.14 million in macadamia and mango products leading to a cumulative increase in exports by 2,942 metric tons. By focusing on macadamia, mango, and mining, the project is not only boosting export volumes but also enhancing access to capital and reducing trade barriers,
To achieve this impact, MVC is undertaking the following initiatives:
- Support to estates to enhance productivity and quality: We are supporting four (4) estates to start with – Tropha, East Africa Plantations, Moyo Goods, and Lujeri – with productivity and quality enhancing interventions in pest control, orchard management, and optimal varieties. The activities are covering 1700ha and are showing promising signs in terms of increased production and export in the current harvest season. The initiative will be extended to four (4) more estates in the next FY.
- Investment facilitation: We have supported two (2) companies with development of documentation for expansion projects in macadamia and mango for engagement with financiers. We are also facilitating linkages between these companies and financiers for potential fundraising of GBP3.9 million. A third company is expected to be provided similar support in the next quarter, with the prospect of raising another GBP3.5 million in financing. We are supporting a feasibility study for establishment of a cracking factory by Malawi Macadamia Association, which will provide enhanced capacity in the industry for access to the kernel global export market.
- Agronomic and financial training to mid-sized farmers: We have so far trained thirty two (32) mid-sized farmers in the seasonal agronomy of macadamia and mango, farm planning, financial modelling, and pitching to financiers. We are also facilitating connections to financiers for ten (10) out of the cohorts trained.
- Direct investment in infrastructure for mid-sized farmers and smallholder farmers: We are in the process of setting up a Matching Grant Facility, that is expected to finance irrigation and post-harvest infrastructure for mid-sized and smallholder farmers. The Fund will be worth GBP1 million for the coming financial year, with potential to be extended to the following two years of the project.
- Increased supply from mid-sized farmers for export: The project has facilitated industry discussions and buyer-supplier contracts for the first time ever between the one commercial farm Malawi Mangoes and mid-sized farmer suppliers. This is expected to provide an additional 100 tons of supply from mid-sized farmers into the export chain.
- Workforce development: We are supporting placement of students from the Lilongwe University of Agriculture and Natural Resources on macadamia farms to enhance practical knowledge of students. An estimated 35 students are expected to participate in this programme by the end of the FY. We are also supporting the hosting of industry talks at the University and student visits to farms.
