Govt struggles to recover K55.8bn Mega Farms loans

Malawi Government is chasing K55.8 billion in unpaid loans from farmers under the Mega Farms programme. The outstanding debt emerged when Mega Farms director Henry Msatilomo appeared before Parliament’s Government Assurances and Public Reforms Committee last week alongside senior Ministry of Agriculture officials led by Principal Secretary Erica Maganga. Msatilomo said farmers had repaid only K15 billion, representing about 21.2 percent of the loans advanced under the programme. The programme received K57 billion in financing, while accumulated interest added another K13 billion, bringing the total obligation to K70 billion. Msatilomo said the loans originated from the 2023/24 farming season, when 212 contracted farmers cultivated 8,092 hectares and produced about 23,000 metric tonnes of maize. In the 2024/25 season, the number of contracted farmers increased to 855, while the cultivated area rose to 43,122 hectares and maize production reached about 88,000 metric tonnes. Government later changed the production model, engaging five institutions to cultivate farmland under the programme. The institutions were Lilongwe University of Agriculture and Natural Resources, Malawi Defence Force, Malawi Prison Service, Greenbelt Authority and Shire Valley Transformation Programme. They cultivated 2,087 hectares and produced 6,811 metric tonnes of maize. But government is also facing pressure from suppliers, who are owed K27.9 billion out of K48 billion worth of inputs supplied to the programme. Msatilomo attributed the slow recovery of the loans partly to legal challenges and inadequate collateral. He said injunctions obtained by some farmers had delayed recovery efforts. Government has since hired seven debt-collection companies to pursue the outstanding money. Mega Farmers Union chairperson Vasco Madhlopa acknowledged that farmers owe government money, saying the union would meet in October to discuss the way forward after an earlier injunction was vacated. The debt has also raised questions over how beneficiaries were selected and whether government put adequate safeguards in place before releasing public funds. Agriculture expert Leonard Chimwaza said weaknesses in due diligence contributed to the problems facing the programme. He called for a more business-oriented approach to agricultural financing to prevent public funds from being exposed to weak repayment mechanisms. Mwapata Institute executive director William Chadza also called for reforms in beneficiary selection and loan security, including insurance and arrangements that allow lenders to recover money directly from agricultural sales. Governance expert Willy Kambwandira said the programme requires stronger accountability, viable markets and credible repayment arrangements to protect public resources. The debt comes as Malawi continues to grapple with food insecurity, with about four million people facing hunger during the 2025/26 period while government moved to import 200,000 metric tonnes of maize from Zambia.