Driving Innovation in Malawi: NBS Bank and Rabo Partnerships Unite
In a strategic collaboration within Africa, Rabo Partnerships engaged with NBS Bank, a financial institution in Malawi serving around 350,000 customers with a broad range of banking services including saving accounts, loans, and other financial products for individuals, businesses, and communities in several African countries. NBS Bank is the 3rd largest in Malawi by customer deposit market share and 4th/5th in loan market share. It has a vast network of PAFUPI-agents, and the ambition to sizeably grow its customer base and business volume by growing into the rural areas. The collaboration began with advisory services and expanded into active implementation, with the aim to contribute to financial inclusion and food security in Malawi.
After an extensive review of the bank in 2016, Rabo Partnerships and NBS Bank developed a new strategy and business plan. Initially, the focus was on improving NBS bank’s loan portfolio and operational structure, leveraging the expertise of Rabobank employees through short-term assignments on topic such as Credit Risk Management, as well as the expertise of Resident Advisor Edward Molenaars. Edward’s expertise on IT infrastructure has helped NBS to shape and develop its IT processes and systems, while the change in the executive leadership of the Bank also enabled great progress in digital transformation. This shift from lending and liquidity challenges to a solid bank with a growth strategy, stronger capital position and refocus on the market set the groundwork for subsequent developments over the past years.
As the project evolved, the focus shifted to Food and Agri (F&A). Rabo Partnerships helped NBS refine its Food & Agribusiness banking strategy and supported its implementation, drawing on expertise from Rabo Partnerships’ Advisory and Blended Finance teams, making use of consultants from throughout Rabobank and our wider network and understanding of impact investors in the market. Understanding the full supply chain of each agri sector is crucial for NBS to manage client relations, risks and financial product offering. Rabo Partnerships helped NBS deepen its understanding of 5 sweet spot sectors being tea, macadamia, seeds, soy, and groundnuts, and is adding banana and rice in 2024. This way, NBS Bank will develop into being a Thought Leader in the Food & Agri sector.
Recognizing the success of NBS Bank’s focus on Agriculture, SME and Agency banking, in December 2023 NBS Bank was the first non-sovereign party to receive funding from IFAD, the International Fund for Agricultural Development, a specialized agency of the United Nations. The loan of 5 million US dollars is to be utilised to support value chain development by on-lending to tea and macadamia players and its smallholder farmer associations in Malawi. Following this, OikoCredit and AgriFi also committed to providing USD loans to NBS, with more impact funds in the pipeline.
Generally, attracting long-term (5-10y) USD funding is challenging for Malawian banks, but crucial to finance the Food & Agri sector that has a significant cost base (e.g. fertilizer) as well as sales (in case of export products) in USD and is sometimes better served with a loan in USD than in MalawianKwacha. The long tenor enables long term investments in the tea or macadamia estates, supporting the transition to a sustainable value chain.
The resident advisor, together with Rabobank consultants and the Blended Finance team played a key role in the process to arrange the funding. Henry Smit, Rabobank’s Head of International Desk Africa and one of the main RP consultants in this workstream says: “I had the privilege to support NBS Bank in developing and implementing their F&A strategy and I am especially proud of the USD funding project. By unlocking structural long-term funding for NBS Bank, we were able to bring a real game changer to increase investments in agri value chains in Malawi.”
The commitments from IFAD, OikoCredit, and AgriFi demonstrate the long-term value of the collaboration between Rabo Partnership and NBS. This partnership drives operational improvements and positively impacts clients, contributing to food security. NBS aims to become the leading Food & Agribusiness Bank by 2025, with a strong branch and agency network and advanced digital solutions. The focus on digitization and F&A aligns with Rabo Partnerships’ commitment to financial inclusion and food security in Africa and we are proud to be a strategic partner to NBS.