Smallholder farmers and micro agri-food businesses in Malawi are set to gain improved access to longer-term financing following a €7.5 million agreement between EIB Global and Centenary Bank Malawi.

The financing, provided under the European Union’s Global Gateway initiative, is designed to increase lending to rural communities and businesses operating across Malawi’s agricultural value chain.

Half of the facility will be directed towards sustainable and climate-resilient agriculture, while the remaining half will support the economic empowerment of women.

The initiative comes as access to finance remains a major challenge for Malawi’s agricultural sector. Agriculture accounts for more than 70% of employment in the country, making the availability of affordable and suitable financing important for farmers and rural businesses seeking to invest and expand.

Limited access to longer-term capital can make it difficult for smallholders to purchase inputs, improve production systems, invest in equipment or adopt technologies that can strengthen resilience to changing weather conditions.

For micro and small agri-food businesses, financing can also determine whether they are able to move beyond primary production into activities such as processing, storage, transport and marketing.

EIB Vice-President Marko Primorac said the partnership would direct longer-term funding towards rural communities and small agricultural businesses that often have difficulty accessing finance.

“When a micro-business can borrow, it can invest and grow,” Primorac said, highlighting the potential for increased financing to support jobs and household incomes.

The financing will be accompanied by a technical assistance programme aimed at strengthening Centenary Bank’s ability to provide agricultural lending and reach customers who remain underserved by the formal financial system.

Technical support will also encourage farmers and agri-food businesses to adopt climate-resilient production practices. This is intended to combine access to capital with the knowledge and expertise required to use financing for more sustainable agricultural investment.

For farmers, this could be important because simply making credit available does not necessarily guarantee better agricultural outcomes. Businesses also need appropriate technical knowledge to determine where investment can generate productive and sustainable returns.

The agreement also places a strong emphasis on women.

Half of the facility is intended to support women’s economic empowerment, addressing financing barriers that continue to affect women entrepreneurs operating across agricultural value chains.

The operation is backed by an EU-financed guarantee and forms part of the European Union’s Global Gateway investment commitments in Malawi.

It brings together European financing and technical expertise with Centenary Bank’s local banking network, potentially allowing funding to reach agricultural businesses that may have limited access to international development finance.

Centenary Bank Acting Managing Director Beatrix Mosiwa described the agreement as an important step towards the bank’s objective of providing inclusive and sustainable financial solutions.

Malawi’s agricultural sector also has an important connection to international trade. Agri-food products account for the majority of Malawi’s exports to the European Union, meaning investment in sustainable production could have implications beyond individual farms.

Improved access to finance could help agricultural businesses strengthen production, invest in value addition and improve their ability to meet changing market requirements.

For smallholders, however, the biggest opportunity may be the availability of financing over longer periods. Agricultural investments often require time before they generate returns, particularly when farmers are investing in irrigation, equipment, soil improvement, storage or climate-resilient production systems.

Short-term or expensive credit can therefore limit the types of investments a farmer can realistically make.

The new facility builds on EIB Global’s long-standing involvement in Malawi. Since 1977, the institution has invested more than €630 million across 47 projects in the country, supporting small businesses and public and private investment in areas including energy, water and transport.

The latest agreement shifts additional attention towards locally based agricultural businesses and rural entrepreneurs.

For Malawi, the broader objective is to connect finance with agricultural productivity, climate resilience, women’s economic participation and job creation.

The success of the programme will ultimately depend on how effectively the financing reaches farmers and small agri-food businesses, the terms attached to lending and whether technical support enables borrowers to make productive investments.

If those elements come together, the €7.5 million facility could provide more than additional credit. It could help strengthen the businesses and farming communities that form the foundation of Malawi’s food system and rural economy.