Agriculture is the backbone of Malawi’s economy. It accounts for 30 per cent of GDP and 80 per cent of foreign earnings, and it employs more than three quarters of the active population.

However, half of all farmers cultivate less than one hectare, making it hard for them to produce a surplus for market. This is compounded by the impacts of climate change, which contribute to the slow rate of poverty reduction.

To address these challenges, a financing agreement for the Transforming Agriculture through Diversification and Entrepreneurship Programme (TRADE) was signed today by Gilbert F. Houngbo, President of the International Fund for Agricultural Development (IFAD), and Joseph M. Mwanamvekha, Minister of Finance, Economic Planning and Development of the Republic of Malawi.

Funding includes a $51.1 million loan and $18.9 million grant from IFAD and $20 million in co-financing from the OPEC Fund for International Development. In addition, $15.3 million is provided by the Government of Malawi, $11.7 million from the private sector and $8.3 million from beneficiaries themselves.

TRADE will help Malawi achieve the Sustainable Development Goals and contribute to improving the livelihoods of rural people. It will help develop value chains for seven commodities – groundnuts, soybean, sunflower, Irish potato, diary, beef and honey.

“This new programme for Malawi will consolidate and scale up the success and good practices of the completed Rural Livelihoods and Economic Enhancement Programme,” said Ambrosio N. Barros, Country Director for Malawi. “It will focus on the commercialization of smallholder agriculture through strengthened access to markets and financial services, while also focusing on adaptation to climate change, which is key for poverty reduction.”

The programme will strengthen the capacity of smallholder farmers, organize them into producers’ organizations and promote partnerships with small and medium enterprises. It will also develop roads and other rural infrastructure.

At least 55 per cent of vulnerable women and 50 per cent of young people in the 11 districts covered by TRADE will benefit from programme activities.

Since 1981, IFAD has invested more than $336 million in 14 rural development programmes and projects in Malawi worth a total of almost $638 million. These interventions have directly benefited more than 2 million rural families.