Following on its work with the Agricultural Commodity Exchange in Malawi to set up a successful Warehouse Receipt System (WRS), with finance by a commercial bank, the USAID Southern Africa Trade Hub commissioned an investigation on the feasibility of and interest in setting up an Agricultural Storage Investment Fund (ASIF) for Malawi.
A WRS enables farmers and medium-sized traders to store their grains securely, use the stored grain as collateral to leverage credit, and sell their crops later in the season when prices are generally higher.
The USAID Trade Hub has identified investment opportunities into agricultural storage for grain and oil-seeds of 720,000 MT to the value of US$120 million in Malawi and Zambia and have already identified three Development Finance Institutions and several private enterprises who are keen to invest.
The Agricultural Storage Investment Facility will offer commercial long-term finance at competitive US dollar rates to storage operators to finance the development of decentralized storage in the region. ASIF addresses the bottleneck in warehouse financing with earmarked credit lines provided to Malawian banks for on-lending to agribusiness and SMEs so they can build new warehouses, particularly in rural areas.