AfDB signs $20m facility for Meridian’s soft commodity value-chain operations in Mozambique, Malawi, Zimbabwe

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AfDB signs $20m facility for Meridian’s soft commodity value-chain operations in Mozambique, Malawi, Zimbabwe

5:11 CAT | 06 Dec 2018

In file CoM

The African Development Bank (through its Trade Finance operations) has signed a US$20 million facility to finance Meridian’s operations in Malawi, Mozambique and Zimbabwe.

This Soft Commodity Finance Facility is designed to provide pre- and post-shipment finance along various stages of Meridian’s soft commodity value-chain operations in the three countries concerned, to help local farmers and soft commodity suppliers grow their revenues and produce quality crops for export.

Specifically, the facility will provide funding to purchase farm inputs (mainly fertiliser) to be supplied to farmers to ensure consistency and quality of the commodities being supplied to Meridian. In addition, the facility will provide funding to purchase soft commodities from over 10,000 farmers in Malawi, Zimbabwe and Mozambique and provide Meridian with working capital to engage in basic processing of the soft commodities prior to export.

It will enable the Bank to reach small-scale farmers indirectly through a regional aggregator (Meridian) that understands the market in which it has accumulated a 40-year track record; understands the operational risks and is able to mitigate and manage them.

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Established in 1970 to assist small scale farmers, Meridian focuses on production and supply of various agricultural inputs/outputs through a chain of vertically integrated subsidiaries in Malawi, Mozambique, South Africa, Zambia and Zimbabwe.

The company currently employs over 4,200 workers and remains one of Southern African Development Community (SADC)’s largest commodity aggregators, distributing over 250,000 metric tons of goods per annum throughout the region. Meridian is also a major buyer of soft commodities from small-scale farmers using its retail network of over 120 shops spread across rural areas. Among its shareholders is the African Agriculture Fund (AAF), in which the Bank holds a 20% stake.

Thus, as one of the largest commodity aggregators in Southern Africa, the Meridian group plays a significant role in the promotion of agribusiness in five countries where its operations are in line with four of the Bank’s High 5 development priorities (Feed Africa, Industrialise Africa, Integrate Africa, and Improve the quality of life for the people of Africa).

Meridian’s key markets are Malawi, Mozambique, Zambia and Zimbabwe. Agriculture in these four countries accounts for approximately 32% of GDP and provides a livelihood to 81% of the population in the form of smallholder subsistence farming (56 million people). The group uses its retail outlets to distribute farming inputs such as fertiliser, seeds and hardware products to small-scale farmers.

The project aligns with the Bank’s core operational priority of private sector development as articulated in the Ten-Year Strategy (2013-2022), and “Feed Africa” High5 priority which aims to make Africa a net food exporter, self-sufficient in key commodities and operate commercially viable agribusinesses.

The operation is consistent with the Bank’s Trade Finance Program, which aims to promote exports through support to agriculture and SMEs. Through its Financial Sector Development Policy and Strategy (2014–2019) the Bank seeks to broaden and deepen Africa’s financial systems. Strengthening agricultural value chains and supporting small producers to compete in regional markets through its public and private sector windows is a key priority for the Bank in Mozambique. This operation adds to ongoing US$120 million of projects in the agricultural sector that the Bank is currently implementing in Mozambique.

Meridan: About Us

The Mauritius-based Meridian Group operates across Malawi, Mozambique, Zambia and Zimbabwe. The original companies making up the group trace their origins back more than 25 years, and today the group employs over 3,000 people across the region.

Our companies locally manufacture, distribute and trade in agricultural commodities that allow us to partner with local farmers and provide them with best value, tailor-made solutions.

Our core focus is on the importation, blending and distribution of high quality fertiliser. Meridian’s flagship brand, Superfert Fertiliser, is available throughout the region and enjoys a strong following with an array of farmers and farming enterprises.

We import our raw materials from global producers into the ports of Nacala and Beira in Mozambique, where we have large-scale warehousing facilities.

With Nacala being the closest deep–sea port to Malawi, we established a reliable corridor early on that sees rail transport going from the Nacala port direct to our factory in Malawi. Beira is the ideal port for servicing the region, where we land mixed cargos that are then split up for delivery to Mozambique, Zimbabwe, Zambia and Malawi. The Beira Port is also directly linked to our Zimbabwean factory by rail.

By coupling our global reach in sourcing with our on-the-ground logistics network, we are able to take product directly from source to farmer and vice versa (without the middleman) to connect local farmers output to international markets.

In-country, all of our logistics operations are owned and managed by ourselves.

Apart from the fertiliser unit, our business extends into three key areas; Retail, Seed and Commodities.

In Malawi, the Meridian group has three retail chains: Agora, Farmers World and FW Savemart. Originally established to distribute fertiliser to smallholder farmers across the country, today our network of 110 depots have developed into one-stop-shops providing farmers with all their day-to-day needs, in addition to a complete range of fertilisers. These shops also facilitate a two-way trade with smallholder farmers, enabling us to buy their produce for distribution to commercial buyers in Malawi, as well as for export purposes.

Our seed division comprises of the Demeter brand, the second highest selling seed in Malawi. The Demeter farm covers 8,000ha of land on the banks of the Shire river in Malawi. Demeter Seed is a fully certified integrated seed company producing selected bean seed as well as hybrid and OPV maize seed grown both on Demeter Farm and by selected out-growers. Seed is processed, treated and packed at our facility in Lilongwe before being distributed across Malawi.

Under the Meridian commodities arm we have two bulk commodities trading companies, a salt farm and iodizing plant, and a milling and silo storage complex.

Grain Securities Limited (GSL) and Ferts, Seed & Grain (FSG) are traders of bulk commodities. GSL also offers warehousing for harvested crops in its silos where produce is cleaned, fumigated and stored either to be returned to the farmer or purchased by GSL at the ruling price of the day. GSL also has a milling arm producing maize meal, roller meal and grits. The Mozambique-based Transalt salt farm produces both coarse and fine iodised salt – both of which are distributed across the region.

Source: Modern Ghana / www.meridian.africa/about-us