Programme profile

KULIMA-MIERA: More Income and Employment in Rural Areas of Malawi

Malawi Agriculture

Programme Index Listing

Location
Malawi
Main implementer
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Other implementers
GFA Consulting Group
Donor
European Union / BMZ German Federal Ministry for Econ. Cooperation and Dev.
Duration
Phase 1 2015-19 / Ext. 2019-22
Total budget
USD $26 million
Annual budget
USD $3.7 million
Contact
Florian Bernhardt, MIERA Team Leader: florian.bernhardt@giz.de
Resources
Technical reports / analysis
KULIMA-MIERA fact sheet

Project description / objective

KULIMA-MIERA aims to enhance employment and income, particularly for poorer people in rural areas of Malawi.  MIERA supports smallholder farmers, micro-enterprises and SMEs to build their business capacity and relationships, add value to their products, access improved services and productive resources and engage in structured markets.

The programme focuses on selected agricultural value chains including Cassava, Groundnut, Soybean, Sunflower, Paprika/Chilli, Macadamia and Rice.

Market systems focus

Context
Malawi’s economy is highly dependent on agriculture. The vast majority of rural people are smallholder farmers or are engaged in mostly informal micro, small or medium sized enterprises (MSMEs). Given the very small landholdings, poor access to inputs, services and markets, rural households tend to focus on subsistence farming. The low degree of market integration reduces opportunities to engage in value addition, be it through increasing productivity, processing of raw products or reaching better markets. As such, household and farm incomes remain low and chances for employment are limited

1. Soybean

There are many smallholder farmers involved with a strong business mindset but unorganised on the apex level. Trade and aggregation is informal and fragmented partially due to volatile and unpredictable prices. Other challenges include limited access to inputs, low productivity, lack of capacity at the aggregation level, missing links between smallholder farmers, MSMEs and processors. On the other side, there is increasing domestic and regional demand and an increased number of buyers represent an opportunity in this open market system.

2. Groundnut

Groundnut productivity and quality is constrained by poor uptake of improved seed, inoculants and the low utilisation of other inputs. Challenges include low productivity, low product quality, aflatoxin contamination, lack of storage and drying facilities, fragmented and informal trade and aggregation and low MSME and smallholder capacity. There is potential to upgrade this value chain by improving productivity and crop quality. The yields obtained, at about one metric ton per hectare, could potentially be doubled.

3. Cassava

The Cassava market system is characterised by a large number of smallholders and a few micro and small enterprises – larger commercial enterprises are not active in this market system. Low productivity, lack of access to disease-free planting material and lack of value addition, quick perishability, lack of awareness of markets as well as erratic supply of raw cassava roots to suppliers represent the major challenges faced by cassava producers. There is large relative market demand for different cassava products ranging from fresh cassava roots to processed high quality cassava flour which can be used as an alternative to wheat flour in baking.

4. Sunflower

The Malawi sunflower value chain has high value addition opportunities at the processing level where there are quite a few local processors/buyers connecting with a few organised farmers. Cheap imports of raw material and substitutes undermine the viability of the value chain. Marketing agreements with transparent pricing models represent an opportunity for the sector.

5. Paprika / Chilli

Market system interventions in the Paprika/Chilli value chain can have a high impact on income and employment by focusing on aggregation and volume substitutability for tobacco in smallholder farming. These crops are potentially attractive and it is relatively easy to transfer skills and inputs. Access to quality and certified seed, lack of processing facilities in Malawi and market volatility represent major challenges for this market system. Strong brand name for Malawi’s Bird Eye Chilli offers potential for future growth.

6. Rice

This is an established crop in Malawi that is easy to grow and already has strong examples of engaging smallholders. Challenges remain around access to certified seed and extension services, steady supply of good quality paddy as well as quality processing plants and marketing. Malawi has, however, high potential to grow in this market system as the local variety Kilombero has a strong local, as well as regional, demand. Kilombero is already being exported to the UK and potential also exists to expand this niche market further.

7. Macadamia

This is a good industry capacity to build on in Malawi with a possible quality advantage. It has strong potential alongside other crops, including cash crops within either cooperative or estate models.

Programme interventions

Promotion of inclusive business models and facilitating stakeholder dialogue

KULIMA MIERA supports committed agribusiness companies to set up mutually beneficial, economically viable and inclusive business relationships such as contract farming that provide agricultural inputs, extension packages and act as end-market for smallholders by off-taking the produced commodities at fair and market competitive prices. On the demand side, we adopt very specific interventions for each value-chain and for every partner. On the supply side, we tend to implement common interventions, as most of the challenges at the farmers’ level are similar across all the value chains.

Technical & strategic advisory support
Supporting private sector partners in the development, piloting and up-scaling of their individual inclusive business models through technical and strategic advisory support

Expert consultancy
Supporting private sector partners for the operationalisation of inclusive business models and institutional capacity development through GIZ seconded experts and/or in given cases through external consultant support. Closely working with staff from private sector partners and institutions (business development service providers and/or consultancy firms) ensures that knowledge transfer takes place and the expertise to offer this support is available in future in the local market.

Support for networking / umbrella organisations
Supporting networks and umbrella organisations to discuss and make appropriate recommendations to tackle sector- and/or value chain challenges (e.g. RTCDT: Roots and Tuber Crops Development Trust)

Improving value chain services

KULIMA MIERA works hand in hand with strategic service providers (e.g. Agricultural Commodity Exchange for Africa) to improve provision and adoption of demand-driven and needs-based services e.g. market information, warehousing / storage and extension services.

KULIMA MIERA also works with partners on strengthening their embedded services (provision of inputs, technical extension, organisational support) as well as the development and promotion of new types of services such as alternative input provision and financing mechanisms as part of their inclusive business and new marketing models.

Technical and financial support to service providers
Support to service providers which improve their service delivery and increase smallholder adoption of their marketing services such as market information, storage and collateral finance as well as a transparent structured trading platform.

Improving delivery of embedded services
Supporting partners to improve the design and delivery of their embedded services to farmers and farmer organisations integrating them fully in their inclusive business model operations.

Capacity building for farmer organisations
Working with farmers in farmer organisations to better understand their needs and demand for different services and offer targeted capacity development to improve up-take of offered services.

Supporting the business capacity of farmer organisations and MSMEs

KULIMA MIERA works with business service providers to enhance the business capacity of farmer organisations and MSMEs through a balanced mix of training and coaching. A training-of-trainer (ToT) concept for the implementation of training and coaching, together with the commitment of BDS and private sector partners ensures long-term access to and utilisation of training tools and coaching methodologies. Training is delivered through private sector and BDS providers with private sector partners who are committed to incorporating the tools into their training and outreach plans.

Farmer Business School (training)
FBS is a comprehensive adult learning approach that targets changing the mindset of smallholder farmers by sensitising them to market opportunities and possibilities to improve productivity, family income and nutrition. The core of its modules is income-oriented decision-making based on cost-benefit analysis of different technologies for a lead crop and two other food crops, combined with strategy development to diversify income. New modules on Contract Farming, Marketing of Farm Produce and Benefits from Membership in Farmer Organisations were developed and implemented during the scaling-up of the project in 2018.

Farmer Organisation Cycle approach
GIZ developed the FO Cycle approach in Malawi drawing on different existing GIZ methodologies in combination with Malawian expertise and resources. The approach was put in place in 2018 making use of a systematic combination and alteration of assessment, training, peer-to-peer learning and coaching of leaders and selected members to promote business capacity development, service provision, financial viability and profit generation.

MSME Business Training and Coaching Loop
The aim of the MSME Loop is to enhance entrepreneurial competencies of business owners of existing micro, small and medium enterprises (MSME) to increase employment and income opportunities for poor people in rural and peri-urban areas. The MSME Loop also aims at facilitating business linkages as well as access to services including finance.

The MSME Loop involves elements of various proven training and coaching approaches and focuses on the three adult learning levels of mindset / attitude, skills and knowledge development. Coaching and mentoring aim to support participants in applying and implementing new skills to their own businesses, take ownership and link up with business partners and relevant service providers.

Notable results (systemic change, poverty impact)

Promotion of inclusive business models and facilitating stakeholder dialogue

  • 416 marketing and contract farming agreements have been signed between lead companies and farmer organisations, linking farmers directly to better output markets and increasing their access to improved inputs and extension.
  • A national dialogue forum for cooperatives, their apex organisations and other key stakeholders identified institutional challenges to the emergence of business-driven cooperatives and farmer associations. Concerted actions to address these challenges by the Ministry of Industry, Trade and Tourism (MoITT), together with apex organisations for cooperatives and farmer organisations as well as development partners, have resulted in the formulation and implementation of a new Cooperative Policy.

Improving value chain services

  • The Agricultural Commodity Exchange developed a coherent rural and organisational strategy for the next five years that aims at better reaching smallholder farmers and MSMEs through more meaningful support and marketing services such as the Warehouse Receipt System adapted to their needs.
  • Since 2017 more than 4,000 farmers have participated in the newly developed Agricultural Commodity Exchange for Africa (ACE) Marketing School, a tool identified in the ACE 2020 Rural Strategy, both supported by GIZ. As a result, many smallholder farmers are starting to adopt structured trade services offered by the partner ACE and are organising collective marketing.

Supporting the business capacity of farmer organisations and MSMEs

  • 23,000 smallholder farmers have been trained in farm economics, agribusiness and marketing skills using the Farmer Business School approach. Many participants have already started introducing new farm business management practices such as record keeping or gross margin analysis. Surveys show that 64 per cent of participants have adopted these improved business/financial planning practices; 27 per cent the Business investment planning and 13 per cent the processing to make value added products.
  • The combination of farmer training and market system interventions have resulted in an income increase of at least 15 per cent for 5,858 households as of January 2019.
  • More than 150 MSMEs and 60 FOs have been trained on better processing and business and marketing opportunities for different products and are now starting to tap into new retail markets for their value-added products.

[uploaded August 2019]

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