Citibank has refused to guarantee a fertiliser deal worth US$17 million for the Malawi government owned Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) because a Belgium-based firm chosen to supply the commodity does not deal in fertiliser.

The refusal raises fears for the success of Malawi's multi-million US dollar farming input subsidy programme, which has already been delayed by parliament's failure to pass the 2008/09 national budget on time.

No deal

Documents show that SFFRFM, one of the country's major fertiliser distributor and which directly falls under the Ministry of Agriculture and Food Security, asked National Bank of Malawi to facilitate a letter of credit (L/C) worth US$17 million with Citibank in favour of a Belgium-based firm called Anabelco.

National Bank of Malawi approached Citibank to participate in the deal, but the US bank refused to proceed with the transaction because Anabelco does not deal in fertiliser, it deals in vegetables and fruits.

Trust in Citibank

General manager for SFFRM, Bester Ndisale, confirmed to local media that Citibank had declined to establish an L/C for that reason, and he seems quite happy with the bank's decision.

"We trust our partners, we will go by the advice from Citibank. Currently, we are looking for an alternative supplier," he said.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.