Malawian Government to start Farmers’ Cooperative Bank
The bank will ease difficulties of accessing agricultural loansIn order to enhance access to agricultural loans by farmers, the Malawian government has unveiled plans to commence a bank dedicated to offering loan services to farmers across Malawi. The bank which will be opened through proceeds from the sale of Malawi Savings Bank (MSB) sold last year, is designed to eliminate barriers hindering farmers from accessing loans in commercial banks. The Minister of Finance Goodall Gondwe in an interview said the bank will be named Farmers' Cooperative Bank. He stated that after on-going consultations among economic experts, the government will launch the bank in order to position agriculture as an important tool for economic growth. The Malawian economy is largely based on agriculture (91%), particularly cash crops grown by smallholder farmers mostly at the subsistence level due to lack of access to agricultural finance. However, access to agricultural finance has been difficult due to high interest rates from commercial banks and asymmetry of information on access to alternative agricultural financing. Interests rates on commercial loans in Malawi are estimated to range between 20-40 per cent; the Farmers' Corporative Bank is expected to address these difficulties.