Agribusiness SMEs in Malawi: Assessment of Small and Medium Enterprises in the Agricultural Sector and Improved Access to Finance in Malawi

This report provides an assessment of agri-business small and medium enterprises (ASMEs) in Malawi. The analysis is particularly focused on ASME access to finance (A2F), use of business development services, use of information and communication technology, collaborating and clustering, and the enabling environment. The paper identifies the challenges faced in each of these focus sections and provides recommendations to overcome the same. Key highlights related to A2F among ASMEs in Malawi include:

• Transaction services, primarily bank accounts, are the most commonly used financial service and insurance the least;
• Savings accounts are often used more as transaction accounts for payments in and cashing out;
• Accounts are valued for safe keeping of funds, rather than saving as an investment;
• Small enterprises were as likely to save in the home as at the bank;
• ASMEs commonly face losses through crime, fire and other hazards and they focus on taking measures to prevent loss than using insurance to mitigate it;
• Approximately 40% of small enterprises were borrowing or had borrowed in 2013 for day to day needs and for growth;
• Banks treated SME services as an extension of personal banking, but with little or no substantive differentiation of products tailored to SME or agri-business needs.