An Analysis of the Impacts of Pre-Feasibility Evaluation on Financial Risk Exposure in Smallholder Farming Projects: A Study of NEEF Beneficiaries in Salima District

Author

Witman Vizenge’zenge Saka, Dr. Aaron Faro Mvula

Abstract

 Pre-feasibility evaluation is an important project appraisal mechanism through which financing institutions assess the viability, financial requirements, risks, and sustainability of proposed projects before committing financial resources. In Malawi, the National Economic Empowerment Fund (NEEF) provides agricultural loans to smallholder farmers with the aim of improving agricultural production, household incomes, entrepreneurship, and rural livelihoods. However, beneficiaries continue to experience loan repayment difficulties, unstable agricultural incomes, and challenges in maintaining farming projects over time. This study analysed the impacts of pre-feasibility evaluation on financial risk exposure among smallholder farming projects funded by NEEF in Salima District. Specifically, the study examined the influence of pre-feasibility evaluation on beneficiaries’ understanding of loan repayment obligations, loan repayment performance and household income stability, and project sustainability and continuity. A mixed-methods approach was employed, combining quantitative and qualitative evidence. Data were collected from 382 NEEF beneficiary smallholder farmers through structured questionnaires and from 10 NEEF officers through semi-structured interviews. Approximately 20 institutional documents were also reviewed. Quantitative data were analysed using descriptive and inferential statistics, while qualitative evidence was analysed thematically. The findings indicate that pre-feasibility evaluation improves beneficiaries’ understanding of loan conditions, repayment schedules, financial responsibilities, budgeting, income forecasting and resource management. It also strengthens repayment preparedness and financial planning. However, many beneficiaries continued to experience repayment difficulties and unstable household incomes because of climate variability, poor harvests, pest infestations, fluctuating market prices and rising production costs. Pre-feasibility evaluation contributed positively to project sustainability through improved planning, risk identification and resource allocation, although long-term sustainability assessment and the utilization of assessment recommendations were not consistently practiced. The study concludes that pre-feasibility evaluation is necessary for reducing financial risk exposure, but its effectiveness depends on continuous technical support, market access, climate-risk management, financial literacy and post-disbursement monitoring.

Keywords

Pre-feasibility Evaluation, Financial Risk Exposure, Smallholder Farmers, NEEF, Loan Repayment, Household Income, Project Sustainability, Agricultural Financing, Salima District.

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