Sustainable Macadamia Production – Malawi 

Key Facts

• Client: Gala Macademia
• Term: 10 year loan
• Guarantee instrument: Pari Passu 
• Guarantee exposure: Malawi Kwacha 9.75bln (50%) 
• Effective date: October 2023

Deal Summary

AGRI3 is supporting the mobilisation of MWK 19.5bln (USD 12m) from Old Mutual Malawi to Gala Macadamia 

The loan will be used to support the company’s operations and expansion, supporting sustainable agricultural production, improved livelihoods and forest conservation on the farm. 

Malawi, located in the Southern African region, is heavily dependent on agriculture and is particularly vulnerable to climate related shocks. The agricultural sector employs 60% of the population and accounts for 30% of the GDP. The predominance of agriculture means the country is particularly vulnerable to commodity prices and agri-market volatility. Recent decline in tobacco sales and low cotton prices have seen a reduction in foreign exchange leading to shortages of other good such as oil and gas and imported foodstuffs. The country is also prone to droughts and other natural disasters (such as cyclones), which can affect crops and harvests.

The macadamia industry is relatively young in Malawi and developing at a rapid pace on the back of a growing global market, as well as being the preferred crop in migrating from tobacco production. It is primarily an export crop, which has growing global demand due to a number of lifestyle trends. The agriculture sector in Malawi is characterised by subsistence farming and therefore low productivity and limited cases of commercial scale and sustainable agriculture. Supporting sustainable agricultural production at a large commercial scale, with an export focus, will impact the economy through much needed foreign currency generation, the agriculture sector in advancing commercialised farming and the community with a web of activities that benefit surrounding communities, uplifting livelihoods. The impact demonstrates how the proposed investment amplifies activities at Gala beyond regular farming practices in Malawi. 

GalaMacs is on course to become one of the leading farming operations in the region with 2,050ha of planted macadamia trees, offering significant economic and environmental benefits for the population. The loan from Old Mutual Investment Group (Malawi), supported by AGRI3, will be utilised to continue to support the expansion and ongoing operations of the existing farm.

Impact Rationale

The loan from Old Mutual will be strategically allocated to sustain the expansion and continuous operations of the existing farm. This includes restoring degraded land, which was previously used for tobacco, and supporting the scale up of sustainable production operations on the 2,050 ha of farm area using precision irrigation (1,400ha) and application of liquid fertilizers. The company is also trialling a range of innovative Integrated pest management and yield enhancement practices. The company will meet Global Gap certification for export and will also explore different sustainable certification schemes. The company further aims to restore and maintain a significant area, up to 3,000ha, of the land under native vegetation, with the potential to generate significant biodiversity and carbon mitigation benefits. 

Critically for the country, the farm is expected to generate significant positive impact on rural livelihoods by providing employment and training support to workers on the farm, while the company has also developed a beekeeper and honey program. In addition, GalaMacs is in the process of developing a smallholder scheme, to provide farming opportunities for local communities, adding additional benefits for livelihoods and incomes.

Impact Targets