Mining & Trade News

Illovo Sugar Malawi has registered a 61.2% Net profit decline for the year ended August 31, 2019 with the company recording K10.08-billion profit against K16.45-billion profit recorded in previous 2018 financial year.

This was revealed during the company’s annual general meeting held on Thursday, February 27, 2020 at Ryalls hotel in Blantyre.

MD Mark Bainbridge told Mining and Trade Review that challenging market conditions, such as pre- and post-election unrest and continued illegal sugar importation has exacerbated the decline in cash flow.

Bainbridge said: “Fundamentally we have faced a stiff market environment in domestic sales in the year ended, as there has been increased competition on the market base due to influx of low priced sugar illegally imported from bordering countries.”

“Despite intensive support from the Malawi Revenue Authority (MRA) which had run several search and confiscation operations coupled with sensitisation programmes aimed at halting illegal practices, export quality and pricing constraints have also impacted the company’s operations throughout the season”.

However, he said that in a quest to counter some of the registered and projected business shocks, the firm’s commercial and logistics teams adapted a revised strategy to enhance sugar direct deliveries to customers and have also embarked on consumer promotional and activation initiatives and optimised portfolio.

On prospects, Bainbridge said the company is expecting normal weather patterns and improvements in power generation to have a positive impact on the agricultural output and factory throughput, as the company is also set to enact strategies to turnaround financial and operational stability to the smallholder sugarcane farmers.

“The business will continue its various initiatives in the local direct consumption market and extend the delivery footprint to the wider consumer market,” he said.

During the AGM, the company also announced that it has opted not to pay dividends to its shareholders for the year ended because management has prioritised debt reduction and other initiatives such as revenue and volume enhancement strategies to secure business development and sustainability through reduction in the overall cost of sugar production.

But a representative of Minority Shareholders Association in the firm Frank Harawa argued that the company has registered a decline in profit because the selling price of the commodity is high on the local market as compared to on the export market.

“To us, it is not reason enough for locals to be paying more for the same commodity which is being sold at a cheaper price on foreign markets, I therefore suggest management lowers prices on the local market allowing many to afford of which in turn it will cushion up business returns and recover costs incurred during exportation process, ” he said.

According to the company’s 2019 report, exchange rates, inflation and interest rate movements and the debt levels of the company continues to have a marked effect on the overall business profitability.

Malawi’s Minister of Education, Science and Technology, William Susuwele, says the Malawi Government has started the construction of 250 Day Secondary Schools in the country under the US funded Secondary Education Expansion for Development (SEED) project.

Susuwele told journalists in Lilongwe that government has also embarked on expansion of 100 Community day secondary schools under the World Bank-funded Equity with Quality Learning at Secondary (EQUALS) project.

The Minister said the aim of the two projects is to address the problem of low transition rate of students from primary school to secondary school due to lack of secondary school infrastructure.

“I am aware that transition rate from primary to secondary schools remains low. This has been so due to inadequate secondary school infrastructure,” he said

The Minister said with such infrastructure in place, access to education will increase by more than double in four years’ time.

The Minister also announced that government has abolished the quota system of selecting students into public universities. According to Susuwele, the system which has been operational since 1987 has been abolished because of the changes in the education sector, compared to the situation in 1987.

” Since quota was introduced in 1987, the context has changed as we now have reasonable spaces in public universities,” he said

Meanwhile, the ministry has also reintroduced the Junior Certificate Examinations (JCE) on grounds that many students were relaxing after the examinations were abolished which resulted in their failure in the Malawi School Certificate of Education (MSCE). The first JCE examinations will be administered in 2021.

There is need for the Malawi Government to enter into partnerships with private sector players in order to develop decent public infrastructure which will facilitate economic growth.

Governor of the Reserve Bank of Malawi Dalitso Kabambe made this observation when he launched a high level public private partnerships conference at Bingu International Conference Centre in Lilongwe.

“Government needs a hand from the private sector to build infrastructure for the country’s economic development. For example, the public can build a school with limited hostels and a private company can intervene by building more hostels and start generating business from the same school by renting out the hostels to students,” said Kabambe.

He said good infrastructure is required in different sectors of the economy including education, health, transport, agriculture, tourism, energy and mining in order to attract international investors.

The public private partnership conference, which was held from February 24 to 26, was organized by the Public Private Partnership Commission (PPPC) under the theme ‘’Malawi`s Next Big Thing.”

Kabambe, who launched the conference on behalf of State President Arthur Peter Mutharika, said PPPs are crucial in eradicating poverty through developing the country’s education sector by providing necessary infrastructure to increase the number of people attaining tertiary education.

 ‘’It is sad that only 2.3% of Malawians have university degrees while 70% from the age of 15 have a Primary School Leaving Certificate of Education [PSLCE], 11% have the Junior Certificate of Education [JCE] and 6% have the Malawi School Certificate of Education [MSCE] as highest qualifications,” he said.

On the health sector, Kambambe explained that there is a need for private investors to partner government in procuring equipment for specialized treatment of a number of diseases which prompt patients to seek treatment in hospitals in foreign countries.

“We have many patients travelling to countries like India and South Africa for medical attention. Government needs the support of the private sector to provide equipment to treat such medical cases,” he said.

On the energy sector, the Governor cited development of the Mpatamanga Hydropower Plant as a role model of how PPPs can work to develop the energy industry.

Power utility Electricity Generation Company (EGENC0) is currently scouting for a strategic equity partner to develop the Mpatamanga Plant on the Shire River through a PPP arrangement.

In the tourism sector, Kabambe said the private sector players need to partner government to construct more hotels in the country’s places of tourism attraction to attract international tourists who bring foreign exchange into the country.

The conference attracted foreign delegates from Africa, Europe, Asia and USA, and officials from World Bank and United Nations Economic Commission for Europe (UNECE). 

In her speech, a Ugandan national Beatrice Ikilai who represented UNECE said Malawi stands to adequately benefit from PPPs if it embraces an appropriate model, and her organization is ready to assist Malawi on the course.

Director General for the Nation Planning Commission[NPC] Dr Thom Munthali commented that Malawi can move out of the poverty trap if it commercializes its activities.

Munthali said: ‘’For instance, we have initiated a programme called Agricultural Transformation Initiative, and under this initiative we are educating the farmers to modernise farming practices and commercialise the trade.”

‘’We are almost ready to start the project in Machinga District, the Liwonde area, the area which has been selected because of its suitable soil status.’’

Greg Toulmin from World Bank also commented that the Malawi Government needs to implement new strategies that takes on board private sector financing when developing public infrastructure.

‘’There is need for the private sector to support government by playing a major role in improving the lives of people of Malawi in different angles of life including energy and trade,’’ said Toulmin.

The Ministry of Industry, Trade and Tourism has released the official results of the national hotel star grading exercise which the Tourism and Hotels Board conducted in the 2019/2020 financial year.

The Tourism and Hotels Board had its 125th meeting that was held on December, 13 2019 where it approved the star rating of hotels and lodges in accordance with its assessment.

Chairperson of the Tourism and Hotels Board Connie Msiska says in a Press Statement that in the hotels category, the Board awarded 5-Star status to Amaryllis Hotel in Blantyre and 3-Star to Sunbird Lilongwe Hotel.

On lodges, Msiska says the Board awarded 3-Star status to Sunbird Nkopola, Game Haven, Kayak Africa and Leslie lodges. Mikoma lodges and conferences was awarded 1-Star status.

“The hotel star grading exercise indicates to consumers the property’s commitment to quality service and standards as indicated by the stars. The hotel grading system leads to an overall improvement in services levels and physical facilities of a property,” says Msiska.

The Board started conducting the hotel grading system in 2010.

Lack of top class hotels and other tourism facilities is one of the problems which the local tourism industry is facing.

Malawi is famously dubbed the Warm Heart of Africa, and has considerable potential for tourism as it boosts of several tourist attraction sites including its most exquisite freshwater Lake Malawi, several national parks, game reserves, and the scenic Mulanje Mountain.

The tourism industry in Malawi has significantly grown since the mid-1970s, and government is attempting to expand it further by implementing a number of projects designed to attract more international tourists.

Currently, the sector’s contribution to gross domestic product stands at around 7.7%, and government believes the sector can register significant growth with more investments in tourism support infrastructure, improved quality of tourism products and services as well as improved conservation and management of cultural heritage resources.

The Malawi Government recognises tourism as a priority sector that can be used as a vehicle for economic growth and poverty alleviation as outlined in the Malawi Growth and Development Strategy (MGDS) III.

The Ministry of Finance, Economic Planning and Development says it will in April this year start implementing the Enhanced Public Works Pilot Programme (EPWP) under Phase IV of Malawi Social Action Fund (MASAF) project.

The Ministry will implement the eight months’ programme through the National Local Government Finance Committee.

Executive Director of the National Local Government Finance Committee Alufeyo Banda explains in a Press Statement that Malawi Government will implement the public works programme with funding from the World Bank and the German Government through the German Technical Cooperation(GIZ).

Banda states that the objective of EPWP is to enhance the effectiveness of the regular public works programme which was implemented in 35 Local Authorities in the country by addressing key challenges faced during the implementation works.

He says some of the challenges include; lack of capacity for frontline staff which affected their ability to deliver quality supervision, non-adherence to sector norms and standards which led to poor quality community assets, lack of community ownership for public works programme assets and inadequate supervision and monitoring of resources by council officials.

The public works programme will be piloted in 10 districts of Blantyre, Balaka, Chiradzulo, Chitipa, Dowa, Karonga, Kasungu, Lilongwe, Nkhotakota and Phalombe.

In selecting the districts, the pilot considered several factors including poverty levels and food security, degree of land degradation and availability of the Unified Beneficiary Registry (UBR) data.

“The targeted number of the EPWP is 10,000 participants in a phase in all the 10 districts with 1,000 participants per district. The 1,000 will be selected from 5 micro-catchments in each of the 10 districts with every micro catchment not exceeding 230 acres,” Banda says.

The EPWP will focus on land resources conservation as its aim is to contribute towards conserving natural resources.

Participants will work for 12-days a month and receive a safety net wage paid bi-monthly.

In addition, 4000 beneficiaries will be linked to sustainable livelihoods interventions to enhance their capabilities.

“Sustainable livelihoods interventions will be implemented through a strategic linkage to the Community Savings and Investment Promotion Programme (COMSIP) and the District Community Development Office in the pilot districts,” says Banda.

There is need for transparency in the procurement process for Malawi government projects to ensure that selected groups such as the women and youths have the opportunity to successfully bid for the contracts.

Assistant Director of Public Procurement and Disposal of Assets Authority (PPDA), Timothy Kalembo said this at a training for women on open contracting which Civil Society Agriculture Network Malawi (CISANET) in partnership with Hivos held in Mzuzu.

Kalembo said: “The training was very important because women cooperatives and the youth are part of Micro, Small and Medium Enterprises (MSMEs).”

“The role of PPDA is to promote targeted procurement, where procurement and disposal of entities is focused on certain selected groups of people be it women or the youth with an aim of developing the group.”

The women were drawn from from the media, Purple Innovation and Mzuzu women entrepreneur cooperatives.

The training dwelled on open contracting, and the Public Procurement and Disposal Act and its provisions.

Executive Director of Purple Innovation Patricia Ntengela described the training as significant in terms capacity building as imparted skills and knowledge on the participants.  

“The training has helped in empowering women to ensure that they have the competencies and capabilities to take part in competitive bidding processes which are dominated by their male counterparts.” she said

CISANET and Hivos Malawi conducted the trained as part of the Empowerment of Women in Agriculture in Malawi Project.

The project will also provide women cooperatives with startup capital for agricultural related businesses.

The first round of Agricultural Production Survey conducted by the Ministry of Agriculture has projected an increase in cereal, legumes, roots and tubers, livestock and fisheries production in 2019/2020 growing season.

The survey has forecast that maize production will increase by 8.8% from 3.4-million metric tonnes in 2018/2019 growing season to 3.7-million in the 2019/2020 growing season due to favorable weather conditions and increased access to inputs by farmers.

According to the statement released by the Ministry, rice production will also increase by 9.8%, millet 8.9% and sorghum at 3% due to availability of seed, increased wetlands as well as support programmes by government and other stakeholders.

“Most of all cotton production has also increased tremendously from 25-thousand metric tonnes in 2018/2019 to 52-thousand metric tonnes in 2019/2020 growing season representing a 106.8% increase due to intensive promotion campaigns, favorable weather, seed availability and good market arrangements,” says the Ministry.

On livestock, the survey says production will increase as follows; cattle at 4%, pigs 7.7%, Sheep 3.2%, Goats 7.5%, Rabbits 5.5% and Quails at 192.5% due to improved livestock management practices such as good housing, feeding, breeding and disease control.

However, fish production is to register a decrease by 19.1% from 202-thousand metric tonnes to 169-thousand due to low catches, migration of fish and severe water stress.

During the 2019/2020 Mid-year Budget Review statement, Minister of Finance Joseph Mwanamveka said government has earmarked a total of K9.2 billion for maize purchase from smallholder farmers.

Mwanamveka said government will promote structured markets through commodity exchanges, warehousing systems and establishment of cooperatives as well as putting in place mechanisms to curb pilferage and illegal exportation of the country’s farm produce.

Government says there is need for a majority of Malawi’s young population to play a role in agricultural development if the country is to address food insecurity and expand its export base.

Minister of Agriculture, Irrigation and Water Development Kondwani Nankhumwa said this on his return from a 3-day long Global Forum on Food and Agriculture (GFFA) Conference held in Berlin, Germany.

“We agreed at the conference that there is no way food security for a nation like Malawi can be achieved if the youth, who form the majority of the population, are not taking an active role in agriculture,” he said.

The conference which was held under the theme “Food for All! Trade for secure, Diverse and Sustainable Nutrition” brought together Agriculture Ministers from 71 countries to discuss long lasting solutions to food insecurity.

Currently more than 820 million people suffer from hunger, and 2.5 billion suffer from some form of micronutrient deficiency, while the world’s population is growing fast and projected to reach nearly 20 billion people by the year 2050.

Nankhumwa told Mining & Trade Review that the conference was vital for Malawi’s Agricultural transformation drive as it has set another benchmark on how the country is fairing in ensuring risks of food insecurity are mitigated.

“We have discussed how trade in food and agricultural commodities and trade in services for Agriculture can contribute towards achieving food security for the world’s increasing population, as well as improving farmer’s livelihoods and income,” he said.

At the conference, it was also observed that most of the strategies governing agricultural sectors in many countries are outdated making it difficult for present farmers to sail through the current waves in the sector brought by numerous natural and technological changes.

Nankhumwa said: “A policy is a living document which must be regularly monitored and changed over time as the world is dynamic.”

“Malawi must follow suite to ensure we are at par with our trade partners and competitors.”

He noted that over the past few years, Malawi has not been able to maximize agricultural production to satisfy the local and international demands which calls for the need for adoption of new policies to advance mechanisation and commercialisation systems.

At the conference, the Ministers had sessions with Agriculture youth representatives from various countries, who presented their petitions lobbying governments to create conducive environment for youth participation in agricultural activities.

Nankhumwa pledged to implement more youth-centred projects to supplement Youth in Agriculture project which his ministry is currently running in some districts.

Government is advancing with preparations to start rehabilitation of part of M1 Road from Kamuzu International Airport road junction to Mzimba Turn-Off, and the Kacheche-Chiweta section.

Minister of Finance, Economic Planning and Development Joseph Mwnamveka announced in his presentation of the mid-year National Budget Review that Government has finalized financing agreements for the road project totaling K140 billion with the European Investment Bank and the European Union (EU).

“Works on this road are expected to commence anytime soon as procurement of the contractor is at an advanced stage,” said Mwanamveka. 

He also said government has signed a 27.2 Million units of accounts loan agreement with the African Development Bank (AfDB) for the Liwonde-Nsipe road project, which is part of the Nacala Road Corridor Project, and procurement of a contractor for the road project is underway.

He said government allocated $47.9 billion to Roads Fund Administration for the completion of various road projects.

“I wish to emphasise that the focus of Government is to provide resources to finish existing projects rather than embarking on new ones,” he said.

The Minister reported significant progress on the Njakwa-Livingstonia road where completion of the second phase is expected to end by June this year.

Other road projects in progress include Ntcheu-Tsangano- Neno- Mwanza road which is expected to be completed by October this year and Nkhotakota- Dwangwa road rehabilitation expected to be completed by September this year.

Government is also in discussions with a number of donors for the financing of the Salima -Nkhotakota road, Jenda – Edingeni road, Mangochi – Makanjira road, the Lirangwe -Chingale – Machinga -Liwonde road, the Nambazo – Nasiyaya – Mswang’oma road, the Nkando – Mulomba – Phalombe road, and the Balaka – Chilipa – Mangochi road, among others.

Among other infrastructure developments, Mwanamveka said government has signed

loan agreement of US$90.0 million with the World Bank for the Equity with Quality and Learning at Secondary Schools Project.

“The project has already commenced,” he said.