Component Objective
Whereas Component 1 helps to organize POs, develop PAs, and advance access to markets (especially for mature PAs), Component 2 supports improvements in the investment and trade environment that will both deepen and sustain market linkages and improve financing for PAs and POs. By promoting dialogue between the government and private sector, this component supports interaction on subjects leading to the formation of PAs (contracts and enforcement) and improved access to markets (trade facilitation, regulatory inefficiencies, improved agribusiness product standards, and certification for PAs). Component 2 pilots some of the new land laws, which contain provisions for more secure land tenure, with PAs and POs.
Sub Component 2.1: Access to Agricultural Financing USD7.3m
Warehouse receipt financing has been growing in Malawi, but commercial banks still have limited capacity to deal with agricultural commodities and manage warehouse receipts. Participating banks generally limit the risk of handling and storing agricultural commodities by charging higher interest rates, which deter farmers from taking advantage of warehouse receipt financing. Smallholders also generally lack capacity to participate in the system. To strengthen the credibility of the warehouse receipt system, Subcomponent 2.1 supports assessments in the critical challenges of the current system, examine international experience, and identify concrete engagement models to encourage farmers as well as small and medium enterprises (SMEs) to use warehouses to improve incomes and financing.
Sub Component 2.2 Access to Land for Commercial Agriculture USD7.3m
Supports the policy and regulatory environment for increasing access to land and tenure security for commercially oriented smallholder and commercial farmers, and other actors in agricultural value chains. Under this subcomponent, the project is piloting aspects of the new land laws—including Customary Land (2016), Registered Land (2017), and Acquisition of Land (2017) - and other international land principles. This activity sets the pace for the project’s production and investment activities, because farmers receiving matching grants must have secure land tenure to access finance.
Sub Component 2.3 Support Business Enabling Services USD8.3m
Supports improvements in the regulatory environment to facilitate agribusiness and the commercialization of agriculture, focusing on public‐private dialogue (PPD), attracting Agro-Investment, standards & certification, and Competition and fair-trading. The Trade and Industry Sector Wide Approach (TIP‐SWAp) and ASWAp technical working groups (TWGs) is supported to improve dialogue on challenges related to the commercialization of agriculture, promoting inter‐ministerial coordination on key agribusiness issues, and support the implementation of business or agricultural reforms. MBS is supported to assist POs and PAs in obtaining various types of certifications for their products and processes—for example, Sanitary and Phytosanitary (SPS) certification, Global Gap, Rainforest Alliance, Halal certification, Fair Trade certification, and HACCP.
The component also supports capacity building within MITC and MoITT to identify agri‐spatial solutions for removing barriers to the development of PAs, Undertake market demand assessments,and assess the feasibility of commercial sites. The Project is also supporting MITC on initiatives to promote and facilitate trade and investments in Malawi.