MIL-OSI Europe: Boosting women agri-businesses in Malawi

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Source: European Investment Bank

Closing the gender gap

Agriculture provides 70% of the jobs and 30% of the Gross Domestic Product of Malawi. Most of these jobs are mainly part of the informal economy and many are occupied by women.

By reinvesting up to 90% of their earnings back into their households – on nutrition, food, healthcare, school – and into their businesses, women help to reduce poverty and contribute to food security.

However, most women in agri-businesses face unequal access to land, jobs, knowledge, fertilizer, and the best seeds. With few assets, it is harder for them to increase productivity and get loans.

Markus Schulte, Investment Officer at the European Investment Bank, met with financial institutions and the Delegation of the European Union in Malawi to explore ways to help smallholders in the agriculture sector get loans and training.

“The banks we talked to explained that they were facing a lack of long-term financing limiting their capacity to offer loans for long-term investments. These banks were also reluctant to finance women agri-businesses because of their lack of collaterals and the high financial risk faced by the sector, notably due to the climate and weather uncertainty. That’s how we started developing a risk-sharing facility to encourage local banks to provide loans to clients, and in particular women, in this sector,” Schulte says.

When Moa Westman, Gender Specialist at the European Investment Bank, heard that the Bank was considering setting up the Kulima Access to Finance Project, she did not hesitate.

“When I saw this project for the first time, I was convinced that this would be a good opportunity for the EIB to make a difference, because I know what the gender gap in the agriculture sector is in Malawi,” says Westman.

Before joining the EIB, she contributed to a study that quantified the cost of the gender gap in agricultural productivity in Malawi, Tanzania, and Uganda

The study reveals that closing the gender gap in Malawi’s agriculture sector would boost crop production by 7.3%, add USD 100 million to the economy each year and lift 240 000 people out of poverty.

“We designed the technical assistance to both increase the ability of the banks to lend to women in agriculture and to accompany these women to grow their businesses. It’s a real combination of loans and technical assistance in the form of training, coaching to pitch businesses and networking,” explains Westman. Under Kulima, the EIB provided €25 million in credit lines equally split between First Capital Bank Malawi and Ecobank Malawi, guaranteed by a grant from the European Union. These credit lines were qualified by the 2X Challenge, which provides a global standard for gender finance.

“Before partnership with the EIB, we were not focusing on businesses run by women. Our cooperation opened our eyes. Lending to women is more profitable because chances are high that they will be able to service the loan without issue and boost the diversity of their business. Also, when we lend to women, we are assured that we are also helping the larger communities, as women making money take care of their households,” said Steve Harawa from First Capital Bank Malawi.

George Phuza adds: Collaborating with the EIB has proven highly beneficial for Ecobank Malawi. It notably supported us in delivering impactful initiatives such as Ellevate, our dedicated financial programme aimed at empowering and supporting women-focused businesses.”

Advice for future women entrepreneurs in agriculture

What is positive about the agriculture sector, according to Banda, is that you can decide to grow your business at any time, start with production and later on choose to add value and move to agro-processing.

“A woman who wants to start her agri-business needs to take entrepreneurship seriously, connect with the right people, get entrepreneurial training and manage formally her business,” says Banda, who also received The most gender focused entrepreneur award 2023 from Leading Women of Africa, a non-profit company that runs programmes, workshops, masterclasses and events for women in Africa.

She insists on the necessity to put the system and structure in place and make sure to separate personal earnings and business resources.

“Women entrepreneurs should not delay the start of their agri-business because the market is there,” advises Ellen Gunda. “People are eating every day, so this is a profitable and sustainable business. An agri-business requires a lot of study about the value chain and technical knowledge for the food production and transformation.”

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