Malawi taking innovations to scale and reaching across borders

KEY RESULTS

• The Enhanced Integrated Framework (EIF) has contributed to good export results through the Malawi Export and Trade Centre.
• It has also played a catalytic role in supporting smallholder farmers at the national and beneficiary levels by collaborating with the National Smallholder Farmers' Association of Malawi (NASFAM) and helping the production and export of soya and ground nuts.
• Increasing trade is contributing to poverty reduction among smallholder farmers.

As a landlocked least developed country (LDC), Malawi mainly depends on overland transport of its merchandise imports and exports. This results in high transit costs that limit the country's economic performance and ability to compete successfully in regional and international markets. Improving Malawi's trade architecture holds a huge potential to improve the lives of the 51% of Malawians living in persistent poverty. 

The economy of Malawi, with an estimated population of 19.3 million, depends on agriculture, which contributes to 31% of gross domestic product, employs 76% of the work force and accounts for about 90% of export revenue. However, Malawi's vulnerability to climate hazards, such as droughts caused by El Niño during 2015 and 2016; flooding by Cyclone Idai in 2019 and by Cyclone Freddy in March 2023; along with heatwaves and their devastating impact on agriculture and infrastructure, demands more economic investment and diversification to give impetus to the attainment of the Sustainable Development Goals. 

The EIF support to Malawi began in 2012. The Government of Malawi, through the Ministry of Trade and Industry (MTI), sought to use the EIF partnership to unlock Malawi's latent trade potential through targeted support in three strategic areas: i) strengthening the capacity of the MTI to develop trade policies and strategies and to participate more effectively in the World Trade Organization and regional trade agreements; ii) addressing challenges faced by smallholder farmers to trade; and iii) supporting the Malawi Investment and Trade Centre (MITC) to better promote exports and investments for the agro-industry, including working with the World Bank in establishing the groundwork for an agro-processing special economic zone. 

The programme recognized the significance of agriculture to the national economy and directly responded to four impediments: low productivity, poor product quality, lack of access to regional and international markets and the lack of broader integration with the country's development and poverty reduction strategies. All these continued to hinder trade growth in Malawi.

The Government's EIF programme of support trained officers in the MTI to analyse and formulate trade policies. These officers are now better able to analyse and implement trade and export development and Aid for Trade (AfT) strategies. Some of the key policy documents that were formulated within the space of the EIF programme were the National Trade Policy, the National Trade Facilitation Plan, the National Industrial Policy and the National Export Strategy II. The training also enhanced the capacity of staff in resource mobilization by equipping them with skills to develop successful project proposals for donor funding. Furthermore, with this capacity firmly in place, the symbiotic relationship between the MTI and trade-related sectors and line Ministries, such as transport, agriculture, tourism and mining, has been strengthened. This means that the Government can more effectively address constraints created by Malawi's lack of territorial access to the sea, relative isolation from world markets and high transit costs stemming from being a landlocked LDC.

Trade is now mainstreamed into national air, rail and road transport and agricultural sectoral plans, allowing all these different sectors to work together more effectively. In Malawi, an important factor that supported this was the EIF National Implementing Arrangements that involved strengthening the coordination mechanism for development partners, line Ministries, the private sector and AfT more broadly. This helped to systematically address constraints identified in the Diagnostic Trade Integration Study and to ensure successful implementation. A chapter on trade was also incorporated into Malawi's long-term development plan, the Malawi Growth and Development Strategy III. These policy developments have boosted the country's trade competitiveness and contributed to strengthening the country's regional and international trade linkages. 

Once the principles and basic capacities had been established to better integrate trade into Malawi's national policies, the Government used the EIF programme to identify ways to support Malawi to improve its productivity, address issues of product quality and gain access to markets. The Government prioritized supporting the Anchor Farm Model – a project aimed at linking smallholder farmers to agro-processors. 

The Anchor Farm Model 

The Anchor Farm Model was implemented by the NASFAM in association with Exagris Africa, in the Mchinji district. This ground-breaking initiative brings rural farmers together for an agricultural season into a common land area to be trained in good agricultural practices. Assembled in this way, smallholder farmers receive much-needed support on how to use agricultural inputs, such as seeds and pesticides, and they also gain the ability to implement and experiment with new production techniques.

Working together with NASFAM means that at harvest time, farmers have a ready market for their produce, selling to designated agro-processors at higher prices than they previously fetched. Through farmer–buyer negotiation meetings held prior to each marketing season, farmers were organized into marketing committees to meet with prospective buyers to negotiate on commodity prices and volume. The project promoted an innovative marketing model called the One Market, One Day Centre, where a market centre is opened and operated for just one day. This model has several advantages, such as bringing in large volumes of crops in one day to meet buyer demand; reduced shipping and handling costs; no storage costs incurred by farmers; and the market centre being located close to farmers to reduce transport costs, thereby increasing profits of the farmers.

Through the EIF project, which ran from 2014 to 2017, a total of 6,500 small-scale farmers registered and were supported in best practices in crop production and marketing, which led to an average income increase per grower by 2.4 times for soya beans and 1.6 time for groundnuts. By the end of the project, a total of 95.98 metric tonnes (MT) of oilseed crops were exported and of that, 72.91 MT of soya beans were exported to Botswana and 23.07 MT of groundnuts were exported to Zambia.

Production of both soya and groundnuts also grew by 44% and 61%, respectively. The quality of the products improved, too, and growers saw a rise in their household incomes. Almost 53% of the farmer growers are women, a positive indicator of growing support to a sector of the country's population that is disproportionately affected by poverty and often vulnerable to climatic shocks.

The Anchor Farm Model has been hailed as a big success in Malawi, with scale-up plans to take this initiative further to other regions in the country. As of April 2023, NASFAM continues to be supported by development partners, such as Ireland and Sweden. Smallholder farmers are now growing new crops like soya, up to now grown exclusively by large-scale commercial farmers, thereby improving the livelihoods and food security of thousands of smallholder farmers, while contributing to food security in the region. 

Soya farmers like Bester Glandson in Kawerawera are reaping the benefits of being a part of the Anchor Farm scheme. Like the 6,500 other farmers in the project, she has also benefitted from NASFAM's inputs and crop husbandry services, thereby reducing crop failures and increasing farm productivity. This in turn has improved her standard of living. She built a home for her family and is now able to feed her children and send them to school. 

Moving beyond national borders

EIF support, led by the Government of Malawi, also facilitated the MITC, whose mandate is to harness trade opportunities in the Southern African Development Community (SADC) and other regional markets in Africa; attract foreign and domestic investment; and lobby for conducive policies to promote business growth. The MITC is actively involved in facilitating the access of micro-, small- and medium-sized enterprise (MSME) to information and export markets through ongoing participation in regional trade fairs in SADC. As a result, Malawi's presence in the region has grown, and trade agreements were signed with Mozambique, South Africa, Tanzania, Zambia and Zimbabwe. 

Working through the MITC has opened markets for Malawian companies that were previously closed to companies working alone. Malawian companies have now successfully exported 240 MT of beans to South Africa. Successfully exporting this product to markets such as South Africa, a regional giant, is considered a huge achievement. This success is attributed to skills support offered by the MITC, which has trained MSMEs to improve post-harvest handling, grading and packaging to improve their market competitiveness.

The promotion of exports and investments into Malawi from the SADC region is also beginning to yield results. Agro-processed and value-added Malawian exports, such as beverages, sugar cane and oil seed products, are now traded in multiple countries. More than 500 new jobs were created, and the country recorded USD 1 billion in new export orders, with an estimated USD 10 million in actual exports from Malawi. USD 350 million worth of investment deals came through the Malawi Investment Forum, which was supported in part through the EIF. 

The EIF also supported the establishment of a Malawi Consulate in the Tete region of Mozambique, which now continues through national Government funding. As the only diplomatic office based in Tete Province, the Consulate aims to boost trade between the two countries in tourism, agriculture and services and is already meeting its ambitious objectives. The two countries signed an agreement in 2019 for Malawi to supply a quota of 1,000 tonnes of poultry and poultry products, and by 2022, the quota had already been met.

Malawi signed the African Continental Free Trade Area Agreement to facilitate trade with African countries. Cuthbert Wadonda Chirwa believes that Malawi has a lot to offer other countries in terms of expertise; for example, the Anchor Farm Model can be replicated in other African countries trying to address challenges of low productivity among smallholder farming groups. 

The EIF has a multiplier effect

The Government of Malawi has worked hard to ensure that AfT to their country increased to USD 400 million, since the EIF started its support to the country. The EIF legacy of improved capacity and infrastructure within the MTI has allowed it to mobilize further support from other donors.

More recently, the Government of Malawi used EIF support together with that of an EIF strategic partner, the Commonwealth Secretariat, to set the stage for the way forward by reviewing the National Export Strategy I (2012-2018) and designing the National Export Strategy II (NES II) – which is being implemented in the period from 2021 to 2026. Malawi has recently also received EIF support to the UNCTAD-implemented eTrade Readiness Assessment. In 2023, the Government is developing flagship projects with EIF support, in cotton, fisheries and mining, which support the implementation of the NES II. The Director of Trade and EIF Focal Point, Charity Musonzo, believes that these flagship projects will provide a framework through which resources will be mobilized from the Government as well as from development partners during the implementation of the NES II.

With support from the EIF and donors, the active participation of the private sector and investors, strengthened institutions, increased productivity and efficiency across its different sectors, Malawi's economy is set to grow, thereby contributing to the achievement of the Malawi Vision 2063 of being an inclusively wealthy and self-reliant nation.

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As the second phase of the Enhanced Integrated Framework (EIF) comes to an end in 2024, the objective is to produce a catalogue of impact stories showcasing the efforts of the EIF partnership in the least developed countries (LDCs) and recently graduated LDCs where it has been actively engaged. This impact story makes up one of the stories in the catalogue. Essential input and reviews were received from the country‑based EIF National Implementation Units (NIUs) and the wider EIF team. 

The primary objective of each impact story, as well as the entire catalogue, is to adopt a journalistic approach in recounting the EIF's engagement in the LDCs during both Phase One and Two. The aim is to offer valuable insights and to document outcomes and impacts, as well as some lessons learned from the work of the EIF partnership in the LDCs. These stories do not provide a comprehensive overview of every aspect of EIF partnership engagement such as precise timelines or the exact extent of involvement (i.e., financial contributions). Instead, they serve as one of several means of information about the work of the EIF partnership. Interested readers are encouraged to supplement these impact stories by consulting other sources, including EIF Annual Reports, Trade for Development News articles, EIF social media channels, and, where applicable, the NIUs in the LDCs as well as the EIF Executive Secretariat.

It is essential to acknowledge that the information provided is neither exhaustive (e.g., it is based on the latest available data at the time of writing in 2023) nor evaluative in nature. 

Lastly, while each impact story adheres to a similar structure, the diverse range of countries, contexts, and EIF engagements means that each story is unique.