Farm Infrastructure and Implements Loan

What is it?

The Bank shall finance all eligible farmers in Malawi be it in the small- scale or Estate sub-sectors for the sole purpose of acquiring agricultural equipment and other farm implements which include the following: -

  • Irrigation equipment
  • Boreholes equipment
  • Windmills
  • Dams
  • Water pumps
  • Combine harvesters
  • Generators
  • Land Preparation equipment which include Tractors, Ridgers, Rippers, Harrows e.t.c
  • Fencing
  • Hammer mills
  • Solar equipment for irrigation
  • Silos
  • Threshers
  • Processing and oil extraction equipment
  • Beef and Dairy equipment (value addition component to be cross sold to NBM Development Bank)
  • Any other equipment related to agriculture and related activities.

Prospective customers

All eligible farmers of Malawian origin or foreign farmers residing in Malawi including the following: -

  • Smallholder farmers with not less than 2 years’ experience in farming.
  • Malawians in rural areas who farm on their own land or leased land subject to the new Land Act.
  • Commercial farmers

Benefits

  • The Term Loans will ease pressure on cashflows by spreading the cost over a period.
  • The Term Loans are for a specified fixed period with a grace period (moratorium).
  • The loans will have a flexible repayment schedule (in annual, bi-annual, quarterly, and monthly instalments) over agreed period.

Pricing

The proposed fee structure is as follows: -

Description

Fee/Rate

Comments

Arrangement fee

1% of the facility amount

Once off

Appraisal fee

K200,000

Flat fee payable once off

Interest rate

6.1% to 8.1% above reference rate depending on risk profile of customer.

Priced in line with BAM/RBM reference rate

     

 

Security

Security for the loans will be a combination of any of the following -

  • Registration of the equipment financed under Personal Property Securities Registry (PPSR) to the full value of the equipment.
  • Legal charge over landed property for 100% of the value of the equipment financed (if available)
  • Shareholder and individual guarantees
  • Insurance covering the equipment being financed, crops or livestock with Bank’s Interest Noted OR Keyman insurance (for sole proprietors and limited companies manned by one person) OR Credit Life Insurance to cover death in case of individual and smallholder farmers.

Terms and conditions

The loan shall be subject to the following terms and conditions:

Facility limit (Commercial farmers).

These will be loans of fixed amounts ranging between K5 million and K200million.

Facility Limit (Smallholder farmers, clubs, societies and salaried farmers)

These will be loans of fixed amounts ranging between K2 million and K100million.

Tenure.

The loans shall be repaid over a maximum period of 6 years.

Principal and Interest moratorium.

The loans may have a moratorium of up to 18 months depending on project’s needs. Moratorium shall be aligned with project implementation.

Repayment frequency

Annual, Bi-annual, Quarterly and Monthly.

Facility requirements

For Operative Estates/Farms

  • Bank statements for 2 years
  • Financial statements for 3 years
  • Cashflows projections (through completion of Bank form)
  • Off-taker agreement where possible
  • Quotations from registered dealers/suppliers must be provided.
  • Applicants must have a clean credit record
  • Detailed Business plan

For Start Up Ventures/Salaried Employees

  • Proof of employment or copy of latest pay slip for part-time farmers.
  • Bank statement for 6 months.
  • Letter of undertaking to send salary.
  • A detailed business plan
  • Cashflow projections (through completion of Bank form).
  • Evidence of ownership of farmland.
  • Clean record from CRB
  • Quotation from suppliers

 

mission-vision

 Vision

To be the most successful financial institution in Malawi with international visible presence.

Mission Statement

To provide the best financial services in Malawi and internationally, distinguished by outstanding service, product innovation and sustained earning.