US$19.2 million programme in Malawi will help poor rural people become key players in a newly liberalized economy with private sector support

A new IFAD-supported development programme in Malawi will create opportunities for poor rural people to benefit from the country's emerging economic liberalization.

The US$19.2 million Rural Livelihoods and Economic Enhancement Programme will be partly financed by a US$8.4 million loan and a US$8.3 million grant from IFAD. The loan agreement was signed today by Brian G. Bowler, Malawi's Ambassador to the European Union, and Kanayo F. Nwanze, IFAD's Vice-President.

The Royal Tropical Institute of the Netherlands will provide an additional US$100,000 grant. The Government of Malawi will contribute US$390,000.

Through their participation in the progamme, small-scale crop, livestock and fish producers and processors will be linked up with relevant people in the private sector to gain the knowledge and skills they need to participate fully in the market place. The programme will improve farmers' links to value chains by establishing more efficient production, transport, storage, processing and marketing systems for agricultural commodities. About 24,000 households will participate directly in the programme.

"Involving the private sector to drive agricultural commercialization is a new approach in Malawi," said Miriam Okongo, IFAD's country programme manager for the country.

"Malawi is undergoing a period of economic liberalization," she said. "Parastatal marketing institutions are being restructured and market competition is increasing."

"However, the rural population is not yet prepared for the realities of a market-led world. The aim of this programme is to help them make production decisions based on market needs rather than taking the traditional production-oriented approach."

The initial focus will be on groundnuts and Irish potatoes. These commodities are primarily grown by smallholders and provide significant opportunities to add value using technologies accessible to poor households. Participants will improve the yields and quality of their produce, learn better processing and marketing methods, and gain access to the financial and technical support services required to make the transition from subsistence to small-scale commercial farming.

The programme will also provide resources to strengthen national and local institutions in agricultural commercialization. It will begin with a three-year pilot phase. Following a comprehensive review, it will be expanded to work with up to six commodities.

"We believe there will be many opportunities to expand and replicate the initiative, both in Malawi and in surrounding countries, once key value-chain actors gain confidence in the approach," said Okongo.

With this programme, IFAD's total assistance to Malawi is about US$118,500 million for 10 programmes and projects to help the government in its poverty alleviation efforts.

IFAD was created 30 years ago to tackle rural poverty, a key consequence of the droughts and famines of the early 1970s. Since 1978, IFAD has invested almost US$10 billion in low-interest loans and grants that have helped more than 300 million very poor rural women and men increase their incomes and provide for their families.

IFAD is an international financial institution and a specialized United Nations agency. It is a global partnership of OECD, OPEC and other developing countries. Today, IFAD supports more than 200 programmes and projects in 84 developing countries.