OPEC Fund provides US$20 million loan to boost agricultural transformation in Malawi

December 19, 2024: The OPEC Fund for International Development (the OPEC Fund) has signed a US$20 million loan agreement with the Republic of Malawi to finance Phase II of the Shire Valley Transformation Program (SVTP II), an initiative aimed at boosting agricultural productivity and resilience through sustainable irrigation and natural resource management.

The program is designed to enhance food security, reduce poverty and improve livelihoods for approximately 130,000 people in the Shire Valley, a key agricultural region in southern Malawi. The total project cost is US$285 million and other lenders include the World Bank, African Development Bank, private sector institutions and the Government of Malawi.

OPEC Fund President Abdulhamid Alkhalifa said: 

“This program demonstrates the OPEC Fund’s commitment to fostering sustainable development in cooperation with our partner countries and international development partners. By investing in resilient infrastructure and agricultural transformation, we are helping to secure food supplies and empower communities in one of Malawi’s most vulnerable regions.”

The loan will specifically support the construction of 50 kilometers of one main irrigation canal and 126 kilometers of secondary canals. Upon completion, the infrastructure will provide reliable irrigation for 17,500 hectares of agricultural land, significantly reducing farmers’ dependence on rainfall and creating the conditions for higher crop yields for sugarcane, rice, sorghum, mangoes and beans.

The first phase of the program established key foundational infrastructure and strengthened smallholder farmer organizations. Phase II will expand irrigation services, support the transition of smallholder farmers to commercial agriculture and promote climate-resilient farming practices.

Agriculture is a cornerstone of Malawi’s economy, contributing nearly 25 percent to the country’s GDP and employing more than 60 percent of the workforce, the majority of whom are women. However, the sector faces significant challenges, including climate variability, low productivity and limited market access.

The OPEC Fund is a longstanding partner of Malawi, to date providing around US$250 million in sovereign financing, supporting initiatives across agriculture, water, transport, health and education.

About the OPEC Fund 

The OPEC Fund for International Development (the OPEC Fund) is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively. The organization works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world. The OPEC Fund was established in 1976 with a distinct purpose: to drive development, strengthen communities and empower people. Our work is people-centered, focusing on financing projects that meet essential needs, such as food, energy, infrastructure, employment (particularly relating to MSMEs), clean water and sanitation, healthcare and education. To date, the OPEC Fund has committed more than US$27 billion to development projects in over 125 countries with an estimated total project cost of more than US$200 billion. The OPEC Fund is rated AA+/Outlook Stable by Fitch and AA+, Outlook Stable by S&P. Our vision is a world where sustainable development is a reality for all.