Mining & Trade News

The US$5 million Chintheche 5-Sstar hotel project by Countrywide Hotels & Resorts Limited, a subsidiary of Countrywide Group of Companies (CWG) seeks an investor to enter into a 70:30 rate joint venture partnership arrangement.

According to Mike Mlombwa, the CWG Group chairperson, the market feasibility study of the 400 square metres ecofriendly water and resort themed beachfront establishment situated along the northern shores of Lake Malawi shows a 30 percent Internal Rate of Return.

He said having already completed both the technical feasibility documents and technical designs, CWG is now waiting for an environmental impact assessment to be conducted.

 “We expect that activities at the hotel will yield spill over benefits to surrounding communities by providing a readily available market for their fishing and farming activities as well as promoting different value chains to do business and generate sustainable revenues from the hotel.

“The project aims at complimenting government efforts to ensure that tourism brings meaningful economic benefits to the people of the country,” he said.

Once completed, the hotel, which is expected to create over 200 jobs for Malawians, will have accommodation, conference facilities and various water sport activities such as kayaking, snorkeling, cruise boat rides among others.

Mlombwa said CWG is also constructing 3 other hotels in Blantyre with a 40-roomed 3-Star portfolio placed along Chirimba road near Chileka roundabout 5km away from Chileka airport.

CWG is an indigenous Malawian conglomerate which has been operating businesses in the country for over 20 years incepted with the group’s flagship Car hire business.

Sycamore Credit Limited, one of Malawi’s fastest growing microfinance institutions, has earmarked the country’s Micro, Small Medium Enterprises (MSME’s) as a priority sector for its wide ranging credit facilities.

The company’s Managing Director, Audrey Mwala, said the business growth experienced in the past year has necessitated expansion of services to accommodate a diverse range of clients seeking reliable and affordable services.

“In 2021, we introduced a new package targeting micro enterprises that are involved in selling of day to day consumables including vegetables,” she stated explaining that the initiative was one of the company’s biggest strides in ensuring financial inclusion.

Despite being affected by client failure to timely settle loan repayment targets, Mwala, stressed that Sycamore Credit Limited will continue to counter some of the Covid-19 knock-on effects on MSME’s by being more innovative.

“The unstable business environment experienced by our clients due to the pandemic has negatively reflected back to us,” she said pointing out that her company intends to expand its group lending facility to ensure that SME’s needing credits are adequately assisted.

She said Sycamore Credit Limited has since secured a special credit facility through the private sector led Malawi Industrial and Agriculture Corporation (MAIIC), which will facilitate access to financial services for deserving SME’s who have formalized their enterprises.

Mwala appealed to SMEs to formalize their businesses to win support from different microfinance institutions because they lack proper identification.

Sycamore Credit Limited opened its doors for operations in 2018 when it started to provide credit solutions to salaried employees, MSME’s as well as informal businesses.

The Malawi Confederation of Chambers of Commerce and Industries (MCCCI) has advised government to review some of the existing taxes in the forthcoming 2022/2023 national budget in order to stimulate private sector growth.

The recommendations were issued by MCCCI president, James Chimwaza, during a pre-budget consultation meeting called by the Ministry of Finance

MCCCI proposes the removal of some general and specific domestic tax measures such as excise tax, value added tax (VAT) and withholding tax.

He said government should also consider providing incentives that will promote usage of alternative sources of energy amidst the current power deficit due to lack of sustainable sources of energy.

Chimwaza further suggested the review of excise duty on alcoholic beverages to curb beer smugglings saying the current system is counterproductive. He also recommended the abolition on withholding tax on farm produces to bring consistency and fairness on the market.

“When ADMARC is purchasing produce from local farmers they do not deduct withholding tax while when private businesses do so they pay. This puts private business at a disadvantage,” he said

The MCCCI president further proposed the downward review of the 20 percent withholding tax on gross sales to 10 percent for small and medium enterprises (SMEs). He also observed that the export allowance calculated at 25 percent of profits from exports was not attractive enough for exporters

“To make export allowances attractive for exporters, we propose a review of the current provision which is based on taxable profits according to Taxation Act to change to export proceeds,” he noted

In his comment, Minister of Finance Felix Mlusu acknowledged the issues raised saying that government will rectify some of the concerns.

Mlusu reminded participants that his ministry recently launched the Domestic Revenue Mobilisation Strategy, as a tool to ensure transparency around the administration of tax and non-tax policies.

The minister stressed government’s desire to continue fostering inclusiveness of the private sector in national development through the creation of a conducive business environment.

He pointed out that for the country to address its foreign exchange challenges, government has launched the Second National Export Strategy which encourages the private sector to industrialise as well as to generate foreign exchange earnings through exports.

Malawi offers a wide range of tax incentives with the aim of encouraging development, enhancing output, earning and saving foreign exchange and expanding employment opportunities.

These tax incentives are aimed at enabling businesses to grow and expand their operations thereby contributing to the overall social-economic development of the country.

As Malawi joins the rest of the world in commemorating the World Competition Day, the Competition and Fair Trading Commission (CFTC) says a policy addressing concentration and abuse of market power is an indispensable tool..

Addressing a gathering when celebrating the day, CFTC acting executive director Apoche Itimu, said the advent of COVID-19 has seen a sharp rise in the misuse of market power by large business enterprises that frustrate smaller ones from participating and competing fairly in the country’s trade activities.

Itimu noted that as the socio-economic impact of the pandemic continues to erode the gains posted as a result of globalization, existing economic inequalities within and between countries are also increasing the gap between the rich and the poor.

“It has been observed that big enterprises have become bigger while small ones have suffered the most and in some cases have even collapsed,” she said and suggested the need to address abuse of buyer’s power under the fair competition law and policy regarding aspects of labour, farmer welfare and supply chain contracts.

She also expressed dismay over unfair trading practices that impede the achievement of an inclusive digital economy. “The boom in e-commerce is essential for economic recovery and inclusivity,” she said also observing the need to protect the digital space

Itimu further warned traders not to engage on any anticompetitive trade practices, especially during festive season when many traders take advantage of unsuspecting consumers to sell or buy goods at manipulated prices

The celebrations were held under the theme “Competition Policy for an inclusive and Resilient Economy”,

Commemoration of the Competition is a tradition that dates back to December 5, 1980 when the United Nations adopted the international standard for competition laws attributed as “the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices” popularly known as the United Nations Set of Principles and Rules on Competition.

With about 40 percent of Malawi’s export potential laying in neighbouring countries in the Southern Africa Development Community (SADC), Malawi has the potential to ignite a trade-led growth by manufacturing and adding value to products along various agricultural and mineral resource value chains.

To achieve this, the Buy Malawi Strategy (BMS), an initiative that encourages local business competition through the production and sale of local products, can take advantage and capitalize on existing trade networks across the continent.

According to the strategy, the agriculture value chain is the main component that is targeted for exploitation because of its significance to the country’s economy as a major driving force behind employment and exports. Other significant growth sectors with competitive advantage include mining, forestry, ICT, retail and wholesale, transport and warehousing.

The strategy, which dovetails into the African Continental Free Trade Area (AfCFTA) concept of creating a market of a combined GDP of US$3 trillion for African raw materials and finished goods to serve more than 1.2 billion people, has the potential to boost Malawi’s industralisation drive and consequently, the country’s economy.

Statistics indicate that for years, Malawi’s import bill has been growing while the trade deficient widened and foreign reserves declined due to the importation of various items such as fuel, drugs and raw materials for manufacturing.

Local experts believe that both the BMS and the AfCFTA facilities have the capacity to accelerate employment, empower and create wealth in Malawi through increased productivity and trade.

“If successfully implemented, the strategy will translate into job creation, increase in household incomes, higher national revenues and GDP growth and increased government spending on public services,” says Amos Tizora, Executive Director at the Circle for Integrated Community Development (CICOD). “The BMS and the AfCFTA) will contribute to reduction of poverty and transformation of people’s lives across Africa,” he adds.

Recently, President Lazarous Chakwera, who is also SADC chairperson, told the second Intra-African Trade Fair in Durban of the importance of advancing sustainable ways of manufacturing goods designed to have a positive impact on ordinary people’s lives.

Concurring, South Africa’s president, Cyril Ramaphosa said Africa should not provide employment and add value to other economies when its people are in poverty and conditions of under-development.

President Chakwera urged nations to create policies that would support Africa’s economic integration and strengthen industrialisation to make Africa the factory of the world.

The Intra-African Trade Fair is a key pillar of the AfCFTA. It gathered Africa’s political leaders who faced buyers and sellers from across the world to share trade, investment and market information as well as plans to support intra-African trade.

According to the Economic Commission for Africa, the AfCFTA agreement, signed by 54 of the AU’s 55 member states with Eritrea yet to join, has potential to increase intra-African trade by over 50 percent, while the World Bank projects that AfCFTA could add US$76 billion to the rest of the world in yearly income.

It is expected that the AfCFTA will boost intra-African export figures through the creation of a continental customs union; elimination of tariffs on 90 percent of intra-Africa goods; easing movement of capital and people between countries; facilitating external investment; and reducing non-tariff barriers.

Two of Malawi’s government ministries, Trade and Industry, architects of the BMS hope that the initiative “will substantially enhance competitiveness of local firms through stimulation of local production and growth.”

President Chakwera has said that a vibrant private sector is crucial in stimulating the country’s economic growth and creating employment.

Speaking during launch of the Presidential Initiative on Job Creation, drawn to address youth unemployment and private sector productivity, Chakwera explained that the rise in the cost of living being experienced in the country is a result of a shift in economic prospects due to global dynamics and the effects of the Covid-19 pandemic.

In 2020, the COVID–19 out-break, which mainly affected activities in tourism, the accommodation and food subsectors, transportation and agriculture, saw Malawi’s economic growth drop from 5.7 percent in 2019 to 1.7percent.  

Real GDP growth, expected to be driven by recoveries in the tourism and agriculture sectors, exports, FDI, and public investments in infrastructure (airport, roads, energy), is projected to grow at 3.3 percent in 2021 and 6.2 percent in 2022 despite threats of disruption from a potential COVID–19 third wave, bad weather, and fiscal overruns due to revenue underperformance.

To kick-start the initiative, Chakwera announced the partnership between the National Economic Empowerment Fund (NEEF) and mobile phone service provider TNM. The partnership intends to drive mobile phone penetration, financial inclusion, job creation and community development under the Presidential Initiative on Job Creation.

The president further said government has put in place measures that will generate an enabling environment for agro-business; stronger partnership with the private sector; solutions to tackling the barriers to small and medium enterprises; capacity to build the infrastructure needed to support jobs and supporting the youth to participate in the economy.

“Removing those obstacles is government’s responsibility and it begins here with my declaration that my administration will engage the private sector as partners,” he said while admitting that his government had failed to create one million jobs in the first year of his administration, as promised during the presidential election campaign.

He attributed the failure to the Covid-19 pandemic, which he claimed had reversed the gains made by his government and had cost the country 600 000 jobs from the time the first COVID-9 cases were reported in April 2020.

In a Hardtalk interview with British Broadcasting Corporation (BBC), Chakwera claimed his administration had covered up the loss with labour engagements in the Affordable (farm) Inputs Programme (AIP) and in NEEF, which he said had facilitated the creation of thousands of new businesses through the disbursement of business loans.

Malawi vice president, Dr. Saulosi Chilima, has called on world business magnates and leisure seekers to come to Malawi and experience the country’s rich and diverse culture, trade and tourism investment opportunities

Speaking during the Malawi National Day at the Dubai Expo 2020, Chilima explained that Malawi is a land full of untapped opportunities in agriculture, tourism, mining and manufacturing.

“I wish to invite investors here in Dubai to explore investment opportunities in areas like eco-tourism, hotel, camps and lodges, water and lake sports, wilderness safari, energy generation, minerals beneficiation and agro processing,” he stressed.

Chilima, who is also Malawi’s minister of economic planning and development and public sector reforms assured prospective investors that apart the numerous investment and trade opportunities, Malawi has a hard-working and trainable workforce, a peaceful and welcoming environment and a strong judicial system.

In a speech tailored to reiterate the world trade fair’s theme ““Connecting Minds, Creating the Future”, as well as its sub-themes of sustainability, mobility and opportunity, Chilima called on participants to come and explore Malawi’s mineral resource opportunities which include agro-minerals for fertilizer production, energy and industrial minerals such as bauxite, iron, gypsum, coal, and uranium.

The vice president, however, pointed out that so far Malawi has only been able to export tobacco, dried peas, soya beans, sesame seeds, tea and coffee to the UAE.

But he challenged that apart from exporting the mentioned products, Malawi can also supply the UAE with frozen goat meat, fresh fruits and vegetables as well as value added products such as sugar and edible oils, whose raw materials are abundant in Malawi.

Transport access for goods to UAE from landlocked Malawi is through Indian Ocean sea ports in Tanzania and Mozambique but for perishables and other sensitive goods, an Emirates Airlines freighter plane with necessary facilities makes routine landings in Malawi.

Malawi is signatory to a number of multilateral and bilateral trade agreements such as the COMESA, SADC, AfCFTA, EU and UK GSP and AGOA, which provide preferential access to world markets.

The 2020 fair has been held this year because of the Covid-19 pandemic. It is expected to run till March 2022.

Meanwhile, the gathering is regulated by strict precautions, including mask and vaccination requirements, and limitations to the number of people in the fair and in exhibition pavilions.

The United Nations is also part of the fair highlighting the sustainable-development goals (SDGs).

The Malawi Investment Trade Centre (MITC) has challenged local Small and Medium Enterprises (SMEs) to produce quality products that can compete favourably on both local and international markets.

Speaking during the official opening of a three-day mini trade fair in Lilongwe, MITC Board Member, Fumbani Nyasulu, who also represented the Principal Secretary in the Ministry of Trade, said local production of good and high quality products can easily turn the country from a gross importing nation into an exporting one.

“The government agenda is to export more and import less, hence, our call on SMEs not to only focus on the local market but to produce with the international markets in mind.

“We should be competitive enough to replace the imported products in the shops with quality and affordable local products,” said Nyasulu explaining that government has put in place measures that will assist local producers build their capacities in different value chains.

The mini trade fair has been organized to give the local SMEs an opportunity to come together and share experiences with their fellow sector players, said Nyasulu adding that the activity is also one of MITC’s functions of promoting trade and investment.

The fair has been organized in collaboration with African Development Fund (ADF), Small and Medium Enterprises Development Institute (SMEDI) and National Association of Small and Medium Enterprise (NASME). The theme of the fair is “SMEs Driver of Industrialization and Economic Growth.”

In his remarks, SMEDI Chief Executive Officer Rodrick Chataika pledged to continue building the capacities of local SMEs. 

“SMEDI will continue playing its important role of capacitating these SMEs through training programs, educating them in business entrepreneurship, management skills, financial literacy on how they can prepare their financial statements and accounting records and also financial proposals if they want to access funding from partners and also from different banks,” said Chataika, whose organization has entered several agreements intended to link SMEs to local banks for business financial support.

He further explained that SMEDI also links SMEs to potential markets, apart from providing incubation centers where entrepreneurs are trained to add value to raw materials and convert them into marketable products.

Chataika said the incubation centers also target local Artisanal Small Scale Miners (ASMs) to turn their raw gemstones into valuable products by professionally cutting and polishing them into internationally marketable products.

Endrina Maxwell, owner of Dwalle Supplies and General Dealers lamented limited capital as the main challenge obstructing her business to compete with bigger companies.

She however sees the formation of cooperatives as an alternative but said she would in the meantime want to run independently. “I want to grow as an individual,” she said

The announcement by the Bankers Association of Malawi (BAM) to introduce a 16.5 percent Value Added Tax (VAT) on various banking services that its members offer to their customers, attracted an immediate public reaction after it was made on Thursday.

The statement signed by BAM’s Acting Chief Executive Officer, Lyness Nkungula, says the association made the decision following a recent parliamentary amendment to VAT Act.

“Bankers Association of Malawi on behalf of its members…. would like to inform the general public that from 1st November, 2021 some of its banking services will attract Value Added Tax (VAT) at 16.5 percent,” reads the statement in part.

The development sparked a national debate with people protesting the pronouncement saying charging customers on every banking transaction only serves to stifle the economic well-being of Malawians, most of whom earn their livelihoods through precarious informal jobs.

Prevailing comments on the social media indicate that people expect the banks to start charging 16.5 percent VAT on bank transactions such as deposits and withdrawals.

“This means that the government introduced MK100,000.00 free tax band is now useless as it will be eaten away by the banks,” notes one commentator.

Economist, Prof. Ben Kalua explains that the introduction of the tax on banking services will not directly affect low income people because they rarely, if at all, use banking services.

“It is a welcome move since poor people are already financially excluded from using banking services,” says Kalua.

However, the Malawi Revenue Authority (MRA) has cleared the mist saying the BAM statement has misled the public because the tax measure does not in any way affect normal banking transactions such as deposits and withdrawal of money.

Briefing the press, MRA Deputy Commissioner, Henry Ngutwa, explained that parliamentary amendment is intended to ensure that banks must meet their obligation of settling 16.5 percent of what they charge their customers on non-related banking services such as printing bank services, ATM charges and fees for processing credits.

The revenue generating body has also said, following the clarification, it does not expect banks to increase their charges.

But commenting on the merits of the Act to clarify banking services and widen the tax base, Prof. Betchani Tchereni says the tax initiative is part of Malawi’s drive towards creating internal sources of revenue as the country drifts away from external sources of income.

“We really need to broaden our tax base,” he says observing that the country experiences pressure to implement its developmental programmes because its development financing is heavily and hugely dependent on external sources as less than 50 percent of its population pay taxes. “We really need to have our own sources of income so that we can do more infrastructure developments and provide social services of higher quality,” Tchereni says but was also quick to note that the proposed tax was likely to affect the customer base of various banking institutions as low income generating people will probably decide to seek for other money saving means in a bid to run away from the 16.5 percent banking VAT.