The African Development Bank (AfDB) has agreed a US$20mn soft commodity finance facility with Meridian to fund its value chain operations in Malawi, Mozambique and Zimbabwe.

Meridian is a manufacturer and distributor of fertiliser, seeds and other farm inputs, and trader of agricultural commodities in Southern Africa.

The 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, aimed at helping local farmers and soft commodity suppliers to grow their revenues and produce quality crops for export.

Specifically, the funding will be used to purchase farm inputs, mainly fertiliser, to farmers to ensure consistency and quality of the commodities supplied to Meridian, purchase soft commodities from more than 10,000 farmers and provide working capital to Meridian to enable the company to engage in basic processing of the purchased soft commodities prior to export.

The facility will allow AfDB 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”, the bank says in a statement.

Meridian was established in 1970 to assist small-scale farmers. The company currently employs over 4,200 people and distributes over 250,000 metric tonnes of goods a year, with its key African markets being Malawi, Mozambique, Zambia and Zimbabwe. Among its shareholders is African Agriculture Fund (AAF), in which AfDB owns a 20% stake.