Mining & Trade News

The Malawi Stock Exchange (MSE) has urged the private sector, including mining companies, to utilize the local stock market in accessing a wide pool of funds through multi-platforms provided by the entity, especially during this period when a lot of companies have been affected by the Covid-19 pandemic.

MSE Operations Manager Kelline Kanyangala said after observing the country’s growing infrastructure developments that are capital intensive, MSE has been motivated to step into play with investment capital for private companies.

Kanyangala said strategic utilization of MSE funding can fast track the recovery process, reduce unemployment and increase individual’s disposable income since, as a platform for business investment capital, it is designed to facilitate growth of the private sector. 

She explained that currently MSE has three platforms that companies can utilize; The Main Board is for well established companies; the Alternative Capital Market Board targets small and medium enterprises while the Debt Board is for entities that would prefer not to use equity financing.

“Raising capital through the Exchange offers various benefits for a company including access to a wider pool of funds, access to cheap capital, increased visibility, enhanced corporate governance among others,” she said stressing that the role of the MSE is more pronounced now during the economic recovery process.

In a bid to secure its insurers, MSE has been offering Covid-19 compliant guidelines to listed stakeholders to facilitate holding of virtual meetings at a time when face-to-face meetings are discouraged due to Covid-19. Plans are underway to engage the listed firms on how best to utilise the Exchange in raising additional capital.

“The Covid 19 pandemic had a significant impact on the traded volumes transacted in 2020,” said Kanyangale. “In as much as the performance was positive, we so believe it could have been better had we not experienced Covid 19,”

She also expressed optimism to register new listings on the market having engaged several firms on the importance of being listed.

“We have had a number of engagements with potential issuers who had expressed interest to raise capital through the equity and bond platforms. It is too early to confirm on anything but we are hopeful that we will register new listings on the market,” she said

Established in 1994, MSE started equity trading in 1996 with National Insurance Company Limited (NICO) as the first listed firm and it has so far listed 16 companies.

The Competition and Fair Trading Commission (CFTC) has warned traders in the country to stop claiming that some of their products cure the novel coronavirus (Covid-19) pandemic.  

CFTC Executive Director James Kaphale says in a statement that it is unfortunate that some traders in the country have been promoting and marketing certain products as cure or treatment for Covid-19 but currently no Covid-19 cure has been identified and approved by World Health Organization (WHO).

Kaphale says: “According to international health authorities, there is no clinically tested and approved product which can cure Covid-19.”

“Any trader found presenting that their product can cure Covid-19 would be violating the Competition and Fair Trading Act and the Consumer Protection Act.”

“Similarly, any trader found pricing excessively would be infringing the law.”

One of the mandates for the Commission is to protect Malawians from unfair trading practices.

Kaphale, therefore, says since the outbreak of the pandemic, CFTC has been actively monitoring the market and inspecting business premises to ensure that opportunistic pharmaceuticals companies and traders were not taking advantage of the pandemic to infringe on the rights of consumers.

He says during the campaign, the Commission observed that some pharmaceuticals companies and traders were taking advantage of the pandemic to exploit consumers through deceptive conduct and excessive pricing of essential personal protective equipment (PPEs) used in the management of Covid-19.

Kaphale says: “To deal with the suspected infringements, the Commission has instituted formal investigations against five pharmaceutical companies and traders.”

“The Commission will impose stiff sanctions against any pharmaceutical company or trader found engaging in deceptive practices or any other trade malpractices such as excessive pricing in the supply of products used in the management of Covid-19.”

Meanwhile, Kaphale has appealed to consumers to observe laid down health rules as a way of mitigating the spread of Covid-19.

The Malawi Government reduced tax on any essential imported products used in the management of Covid-19 pandemic including hand sanitizers, face masks, hand washing soaps, oxygen and oxygen regulators.

Malawi has registered over 30 thousand covid-19 cases, with total deaths at 1021 and total recovery at 17184.

During the second wave of the pandemic, majority of the confirmed cases are from local transmissions which means abiding by preventive measures could be a remedy to tame spread of the virus in the country.

According to section 43 (1)(d) of the CFTC, a person shall not, in relation to a consumer, engage in conduct that is likely to mislead the public as to the nature, price, availability, characteristics, suitability for a given purpose, quantity or quality of any products or services.

Further section 43 (1)(g) of the CFTC explains that a person shall not, in relation to a consumer, engage in unconscionable conduct in trade of goods and services.

The Malawi Revenue Authority (MRA) says it is impressive with its revenue collection figures despite the prevalence of the novel coronavirus (Covid-19) pandemic which has hit the industry.

MRA’s Head of Corporate Affairs Steven Kapoloma told Mining & Trade Review in an interview that the impressive performance is as a result of interventions that the tax collector has put in place to widen the tax net.

Kapoloma explained that to ensure that it continues meeting its targets, the body is persistently working on bringing new members into the tax net, conducting public awareness meetings on the importance of tax remission and protecting its clients from Covid-19.

Despite the pandemic, MRA managed to collect a significant amount of money during the first half of 2020/2021 financial year. From July to December 2020, it collected K530.86-billion against the overall target of 1.1-trillion the development he described as impressive and attributed to the spirit of dedication of MRA officers.

“We believe the performance will improve in the third and last quarter because we have put in place a number of interventions aimed at increasing revenue collection, despite Covid-19 pandemic,” said Kapoloma.

In a bid to reduce Covid-19 transmissions among its clients and employees, MRA ensures that people visiting their offices follow all government set preventative measures.

Kapoloma also said the organization has decongested its offices through the use of automated service delivery kits such as electronic payments.

He said those at the borders have been provided with a pre-clearance facility which allows importers and exporters to submit their declarations and supporting documents for processing before the arrival of their goods.

“We have online transaction platforms that allow importers and exporters to process Customs transactions on line and real time, which use Customs Management Systems called ASYCUDA. The systems also interface with government agencies such as Directorate of Road Traffic and Safety Services (DRTSS), Reserve Bank of Malawi (RBM), Malawi Police Services (MPS) and International Police (INTERPOL),” said Kapoloma.

He, however, bemoaned the increase in cases of tax invasion and smuggling of goods but said the tax collector is tirelessly working on combating the malpractices.

Kapoloma sounded hopeful that the organization will soon win the fight against tax evasion and smuggling, through sensitizing the general public on the importance of tax remission.

He said MRA also encourages the general public to report to their offices anyone evading tax and smuggling goods.

“MRA conducts routine intensive patrols through the Flexible Anti-Smuggling Teams (FAST). We have fixed roadblocks operating in all the three regions of the country, which are in addition to mobile roadblocks we mount from time to time to control smuggling.

MRA is a public agency which was established by Act of parliament 1998 to assess, collect and account for tax revenues

Malawi is advancing with preparations to become part of the Africa Continental Free Trade Area (AfCTA) after President Dr. Lazarus Chakwera signed and ratified the AfCFTA instruments on November 1, 2020, which government is now working on depositing with the AU.

The approval of instruments required to operationalize the AfCTA are expected to be signed off by African governments by January 2021 to show their commitment to the trade arrangement.

The AfCFTA is one of Africa’s reform efforts upon realizing trade imbalances with other continents and the subsequent economic loss suffered since the colonization era.

According to Minister of Trade, Sosten Gwengwe, the AfCFTA reinforces the dreams of the founding fathers of the African Union to see a united and more integrated Africa that would ensure that African wealth remains in Africa to benefit the African population.

Among the instruments required to operationalise the AfCFTA include: Rules of Origin that entails laws, regulations and administrative rulings applied by governments to determine the country of origin of goods, services or investments and whether they qualify for a preferential tariff regime.

Through the arrangement, tariff offers shall be applied to scheduled products and time frames within which a country can liberalise its trade in the free trade arrangement. To date, 41 countries and customs unions, including Malawi have submitted their tariff offers.

Gwengwe disclosed that Malawi submitted its initial offer covering 90% tariff liberalisation in November 2019 and the final offer is now ready after being validated by stakeholders, led by the Malawi Confederation Chambers of Commerce and Industries (MCCCI), on November 21, 2020.

“All strategic products and sectors have been designated either under sensitive or excluded list for purposes of liberalization,” said the Minister explaining that the country is at an advanced stage in preparing the National schedule of specific commitments and is expected to submit it before January 1, 2021.

Gwengwe said that another advantage of the AfCFTA is its role to eliminate Non-Tariff Barriers (NTBs) as a way of enhancing and facilitating intra Africa trade.

“The AfCFTA mechanism will facilitate reporting, monitoring and negotiating of the removal of NTBs across regions and the continent as a whole. This facility will provide real time communication on the existence and types of NTBs among all parties to reduce time and cost of cross border trade,” Gwengwe said.

He added; “Although our product offering is primarily classified under sensitive and/or excluded, we still have access to a wider market than before especially to the North, West and Central parts of the continent.”

The minister further disclosed that Malawi will soon launch the National Export Strategy II that will encourage private sector develop competitiveness in niche areas where Malawi can have comparative advantage.

Gwengwe said his ministry, with the help of the United Nations Economic Commission for Africa (UNECA), have formulated a strategy on National Implementation of the AfCFTA to mitigate against any challenges that may arise out of the operation of the trade agreement.

On November 1, 2020, President Dr Lazarus Chakwera signed and ratified the AfCFTA instruments, which government is now working on depositing with the AU.

A total of 54 out of 55 countries have signed the agreement with exception of Eretria. 34 countries have since ratified the agreement.

The AfCFTA is expected to bring together 55 African countries with a combined population of 1.2 billion people including a growing middle class and combined GDP of more than US$3.4 trillion.

Traders in Personal Protective Equipment (PPEs) have bemoaned low sales following continued drop in the number of coronavirus (Covid-19) cases in Malawi, which has prompted many Malawians to stop using PPEs.

Anthony Chiputula who sells face masks in Lilongwe city complained in an interview that since government started announcing a drop in number of Covid-19 infections in its updates, his business has nosedived.

“The decline in number of local Covid-19 cases has greatly affected my business, as only few individuals are interested to buy and use face masks,” said Chiputula

Esther Botolo who sells hand sanitizers in the same city concurred with Chiputula that the number of customers who visit her shop to buy hand sanitizer has gone down. She attributed the decline to the decline in Covid-19 infections which has made people to relax in the fight against the global pandemic.

“The business of selling hand sanitizers is no longer attractive as was the case at the time Covid-19 cases were high,” he said.

Adam Taulo, a tailor in face masks business also complained that his business has drastically gone down. He explained that he usually had huge orders at the time Covid-19 cases were high, which he said is not the case currently.

“My business is struggling a lot, because people no longer place huge orders for face masks. I know this is happening because most of people have stopped adhering to Covid-19 preventative measures,” lamented Taulo.

Meanwhile ministry of Health has asked all Malawians to continue adhering to all Covid-19 preventative measures, saying there is a possibility that the country may experience a second wave of the pandemic as is the case in other countries.

In an attempt to mitigate challenges being faced by women entrepreneurs in the country, the Malawi Government has embarked on institutionalization of a number of business and industrial reforms.

Speaking during the first Annual COMESA Federation of Women in Business (COMFWB) Trade Fair in Lilongwe, Minister of Trade Sosten Gwengwe said the reforms have been instituted in a bid to change the country’s trade composition and promote industrialization realizing the major role women has in the business sector.

He said: “The Government of Malawi is implementing the National Industrial Policy (NIP) and National Trade Policy (2016 policies).

“The NIP has the objective to maximize domestic value addition and structural transformation which is a theme adopted at the continental level, the Tripartite and regional levels.

“Particularly, in setting a new path for the structure of the economy from dominance by agriculture and towards a larger share of manufacturing in Gross Domestic Product (GDP), the NIP adopted the clusters that were identified in the country’s National Export Strategy and adds clusters that Malawi has capacity in and vital for import substitution.”

He said the Government has instituted National Trade Policy to address constraints on the supply side in order to grow the economy at national level.

Gwengwe added that the policy will also build the country’s business sector to respond to improved market access and build a competitive economy.

The Ministry of Trade is implementing a number projects with assistance from various development partners such as the European Union, World Bank, United Nations Development Programme (UNDP), UK’s Department for International Development (DFID), United States Agency for International Development (USAID), among others.

The projects include the Enhanced Integrated Framework, Export promotions, the Micro, Small and Medium Enterprises Business Incubator, Malawi Enterprise Productivity Enhancement Project, Trade Related Facility, among others.

He stressed that the projects will provide capacity and technical support programmes to businesses including Small and Medium Enterprises so that stakeholders can improve their knowledge and skills in value addition activities as well as build linkages with both domestic and international markets.

Gwengwe urged local entrepreneurs to be participating in the regional trade fairs and exhibitions saying such creates a platform to integrate into regional value chains and overcome some supply side constraints.

In his remarks, Minister of Agriculture Robin Lowe said there is need to resuscitate agribusiness development in the country as it has potential to spur socio-economic development and growth.

“However, this is possible if all players in the agriculture sector, including financial institutions and farming communities get committed towards investing and improving their performance in agribusiness and pulling in the same direction, “ he said, “This requires collaboration and coordination of various interventions including banking services that can benefit agribusiness and agriculture sector growth in Malawi.”

Lowe said the country requires employment of some strategies for it to restore its glory in agribusiness.

The strategies include: promoting agribusiness financing; promoting savings and investment culture by having rural based campaigns and awareness meetings; facilitating innovative financing mechanisms and arrangements for farmers; facilitating provision of risk-reducing initiatives in the agriculture sector including crop insurance, warehouse receipt system and other initiatives and; promoting electronic banking initiatives.

He also said the country needs to institute promotion and financing anchor farm model initiatives which heavily relies on financing.

Lowe said farmers and all players in the agriculture sector lacks support from the banks for them to excel in the industry.

He said the country also needs to invest in developing skills of managing various processes across value chains and value chain development; and promote development of the market infrastructure.

The aagricultural sector employs 85% of the population, contributing 65% of export earnings and 28% of Gross Domestic Product (GDP).

Sugar group Illovo Malawi has forecast a positive business outlook owing to reforms it is undertaking at its Nchalo and Dwangwa sugar factories, and predicted normal weather patterns.

In its audited financial statements for the year ended August 31, 2020 signed by its Chairman Gavin Dalgleish and MD Lekani Katandula, Ilovo says the continuing positive effects of the Nchalo agricultural recovery plans, the ongoing structural changes within the agronomy sections at both estates, together with a return to more normal weather patterns have contributed in creating buoyant prospects for its business.

It says another positive attribute is the continuing improvements in Electricity Generation Company (EGENCO) electricity supply coupled with the ongoing focus on grower sustainability and viability.

Illovo says: “All we want is to continue to impact positively on the overall agricultural performance on both own and smallholder farmer operations.”

“In terms of milling operations, both Dwangwa and Nchalo factories will continue to address plant operational and performance parameters to build on the good work presently underway in terms of milling capacity and reliability.”

On the commercial front, Illovo says it will continue its various initiatives in the local direct consumption market and extend delivery footprint to the wider consumer market supported by an ongoing focus on the route to consumer strategy including affordability, quality and warehousing and logistics.

“Sugar exports, into very challenging regional and deep water markets, compounded by the Covid-19 related logistical challenges, will continue to be an area of focus for the commercial teams who will strive to optimize value in every ton of sugar sold and will develop markets to fully exploit all revenue growth opportunities,” reads the statement.

It, however, says the country’s economic environment including inflation, exchange and interest rate fluctuations together with the internal debt levels of the company, exacerbated by effects of Covid-19 pandemic will continue to have marked effect on the overall business profits.

Barely two weeks after the Indigenous Business Persons Association of Malawi (IBAM) called on the State to support Small and Medium Enterprises (SMEs) affected by Covid-19, Minister of Industries Roy Kachale says government is monitoring the situation and geared to offer different rescue interventions.

In the wake of a steady drop in the number of Covid-19 positive cases, IBAM challenged government to inject stimulus financial packages to resuscitate struggling businesses that have the capacity to meaningfully contribute to the national economy once the pandemic is gone.

 “We cannot specifically point at one area in the industry that has been negatively affected by the pandemic, but for sure SMEs have suffered a lot,” Kachale said.

He pointed out that access to finance and markets are major solutions towards the challenge being faced by the SMEs.

“Government is working hand in hand with development partners to bail out the country from the siege,” he said explaining that developing partners are willing to finance the survival of the country’s SMEs.

 “Since the future looks brighter and that there is interest to support the industry, we need strict measures to ensure that the money is used for its intended purposes,” he said.

One of the Africa’s non-profit organisations working on fostering the agenda of emerging entrepreneurs, Kukaya Foundation, will Saturday host a luncheon for participants gracing the Global Entrepreneurs Week (GEW) commemoration currently underway in Blantyre, Malawi.

Speaking in an interview with Mining and Trade Review, CEO for the Zimbabwe based foundation Ruzivo Chipeta said the luncheon will be held at Dzuka hub in Blantyre.

She explained that the event will create a platform for local entrepreneurs to share ideas and experiences to inspire future innovators and entrepreneurs in Malawi.

“Our mission as an organization is to inspire people to dream, believe, design, create and own their life stories in a way that impacts the world positively,” she said promising that activities during the luncheon will not only inspire future entrepreneurs but will also create networks that can bear powerful collaborations and partnerships.

Chipeta explained that the word ‘Kukaya’ means ‘home’ and in the context of the Foundation, it represents an African proverb that says; “Children are raised by the village where everyone in the society has a role to raise, mentor and empower young people to become responsible adults”.

Kukaya Foundation operates in 12 African countries where it promotes innovation, creativity and leadership among high school youths.

The GEW commemorations are held across the globe for one week every November. Participants are inspired through campaigns to explore their potential as self-starters, innovators and job creators who can bring ideas to life, drive economic growth and expand human welfare.

As part of commemorations, local entrepreneurs will also be given an opportunity to take part in the #IAmAnEntrepreneur  40 seconds video challenge and the winner will receive a free trip to the next Global Entrepreneurship Congress in Riyadh, Saudi Arabia in March 2021.