The Context

Over the last decade, the southern African nation of Malawi has made important economic and structural reforms and sustained its economic growth rates. Nevertheless, poverty is still widespread and the economy remains undiversified and vulnerable to external shocks. The country has an estimated population of 16.8 million (2014).

GDP grew by 5.7 per cent in 2014 but slowed to 2.8 per cent in 2015 as the country suffered from the dual challenges of bad weather and macroeconomic instability. Flooding in the south followed by a countrywide drought led to a contraction in agricultural production. The production of maize, the key crop in terms of food security, fell by 30.2 per cent year-on-year. As a result, an estimated 2.8 million people (17 per cent of the population) were unable to meet their 2015/2016 food requirements.

More than a third of rural households earn their livelihood only from farming or fishing. An additional 25 per cent combine work on their farm with other jobs, largely in agriculture. Poorly paid agricultural labour is the main additional source of income. Lack of economic opportunities and the seasonality of rainfed agriculture leads to labour shortages during the critical periods of the cropping season, with underemployment for the rest of the year.

The Strategy

In Malawi, IFAD loans focus on promoting sustainable agricultural practices and integrating the private sector and smallholder farmers in value development.

Activities support long-term growth paths for two groups:

• poor smallholder farmers located in areas with medium to high potential who have the potential to achieve economic independence; and
• marginal farmers and vulnerable households, including households headed by women, youth and orphans.

Key activities include:

• strengthening agriculture as farmers’ main livelihood by intensifying production, enhancing natural resource management and improving access to profitable markets;
• securing and diversifying the livelihoods of marginal farmers and vulnerable households by supporting effective use of their limited resources and promoting non-farm employment opportunities;
• strengthening local institutions and resources at community and household levels.

Participating in policy dialogue with other donors and the Government ranks high on IFAD’s agenda in Malawi. Priority areas for advocacy include market-led agricultural growth to reduce poverty, incentive frameworks for agriculture and the need for consistency in policy implementation, especially at the grass-roots level, to foster the emergence of private-sector operators and farmers’ organizations.