Mining & Trade News

Agricultural experts have advised government to consider reintroducing wheat production in an effort to mitigate against the economic impact of importing the cereal which has seen a drastic rise in the prices of bread and other confectionaries cross the country.

Lilongwe University of Agriculture and Natural Resources (LUANAR), Professor of Plant Breeding and Genetics, Moses Maliro, says the consumer price index for local bread continues to widen due to forex scarcity and the on-going Ukraine and Russia war, which are major global wheat exporters.

Wheat is a cereal crop consumed by over 2.5 billion people globally. The current demand for wheat in Malawi is estimated to be 200,000 tonnes per year with a projected growth in consumption of 3%–6% annually.

Bread prices in Malawi have doubled in the past few weeks to K1, 000.00 with the 50 kilogram bag of bread flour now selling at K48,000.00 from K36,000.00.

According to Prof. Maliro, the current wheat supply and demand gap is wide with 99% of the wheat being imported due to low domestic production. The imported cereal is spread throughout the value chain from the importers to millers, bakeries, biscuit manufacturers, wholesalers and retailers.

“45% of milled flour is utilised by commercial bakeries, 46% is distributed to rural and urban outlets and biscuit manufacturers utilise 9%,” he says

Maliro notes that lack of stable markets and a national wheat development strategy are some constraints suffocating wheat production in the country.

“Production constraints include the lack of a national wheat development strategy, lack of stable markets, unavailability of improved varieties, low input use and limited knowledge in the management of wheat crop,” he says adding that currency devaluation and limited forex reserves further affect the annual import volumes and prices of wheat flour on the domestic market.

The professor suggests that domestic production and broad value chain opportunities could be increased through policy support, including research for development, expansion of production into non-traditional wheat growing areas, investing in irrigation and developing market systems.

Meanwhile, LUANAR, in partnership with University of Nottingham, UK, are supervising a local PhD student who is magnifying the local wheat production in a quest of developing ideal wheat varieties suitable for local malnutrition population.

Statistics indicates that wheat imports are projected to rise to 63 MT by 2028. Although total production increased from 19.6 MT in 2008 to 29.2 MT in 2019, and the total area under wheat increased from 8.5 to 10.2 million hectares, domestic supply is still much lower than demand.

A 2018 USDA report on global wheat imports shows that the sub-Saharan Africa (SSA) region has been a major driver of rising global wheat trade over the last decade. The year-over-year growth in wheat imports for SSA is greater than any region across the globe. Current annual production in SSA is approximately 7 MT which accounts for only 28% of total annual demand.

Agricultural systems of Malawi are dominated by maize and the wheat value chain is driven almost entirely by imports, which currently represent greater than 99% of demand.

After 7 years of launching and implementing the Buy Malawi Strategy, Government and Malawian business operators will March 18 commemorate the initiative by showcasing a wide spectrum of locally produced products at the Gateway Mall in the capital city, Lilongwe.

The Malawi Government through the Ministry of Trade and Industry introduced the strategy as a way to promote production and consumption of locally produced goods and services.

Led by the Minister of Trade and Industry, Mark Katsonga, government is calling on local residents, visitors and travelers to celebrate the day, which has become an annual event, by buying and consuming locally produced goods products and services.

“The Buy Malawi Day is an important foundation of the Buy Malawi Strategy, which boosts the production and consumption of locally produced goods and services,” says Katsonga.

The minister points out that apart from instilling patriotism, the culture and lifestyle of embracing local products ”will substantially stimulate competitiveness of local firms, industrialization and, job creation.”

Katsonga advises local industries to intently seek produce or service feedback from both their individual and corporate customers in order to get relevant input so that they keep improving and building their competitiveness and satisfying the needs of their local and export markets.

As one way of showcasing local identity and oneness, Katsonga urges all private firms and all institutions to set aside a particular day or days of the commemoration week to wear locally made clothes to foster the Buy Malawi Strategy as well as to empower local designers and tailors, who make up a good proportion of local micro, small and medium entrepreneurs.

He calls on commercial banks to take a vigilant role in the promotion of the strategy by facilitating affordable financial services to innovative enterprises that produce goods and services locally.

He further appeals to land authorities across the country to prioritize allocation of pieces of land to enterprises and investors that intend to promote local products for both the local and international markets.

“Public servants should continue wearing clothes designed and manufactured in Malawi every Friday,” the minister says adding wholesalers, retailers and general distributors must ensure adequate stocks and visibility of local merchandise in visible shops.

According to a draft report of the Malawi FinScope 2019 indicates that Micro, Small and Medium Enterprises in the country continues facing challenges including low information technology penetration and low investment in research, science and technology.

Despite the challenges faced in the sector, the report show that the MSMEs in Malawi contribute a significant share of employment.

The overall Malawi MSME sector is estimated to consist of 1,141,784 business owners registering an increase of about 50 percent from 758,758 in 2012.

About 11 percent of the population own MSMEs and employs approximately 1,825,219 people 1,260,118 in 2012.

Standard Bank has forecast that Malawi’s economic recovery will continue in 2022 with growth forecast to reach 4.1% driven by rebounds in manufacturing, mining and quarrying, construction, transportation and electricity, gas and water supply.

In a statement announcing financial results for the year ended December 31, 2021, the Bank, however, says despite the economic growth prospects, the pressure on the exchange rate will likely continue on the back of weak foreign exchange supply.

“Upward pressures on inflation rate will likely remain in the first half largely driven by supply constraints,” states the Bank.

In the year under review, the group says it continued to operate in a challenging operating environment as the demand for foreign currency continued to outweigh supply.

“This resulted in the depreciation of the Malawi kwacha and the expectation is for the Kwacha to depreciate further as we head 2022. Covid-19 also continued to affect business which in turn impacted credit growth and transactability,” reads the statement

The domestic economy is estimated to have grown by 3.9% in 2021 from 0.9% in 2020 following solid performance in the agriculture, mining, quarrying and construction sectors.

 In response to rising oil prices, global supply chain constraints and seasonal fluctuations in domestic food prices, global supply chain headline inflation picked up in the year and averaged 9.3% compared to 8.6% in 2020.

 The Kwacha depreciated against the United States dollar by close to 6% in 2021compared to about 3% in 2020 owing to weak foreign exchange supply.

Standard Bank’s profit after tax of MK24.8 billion was 4% above the prior year, and total revenue grew by 31% year on year driven by growth on both net interest income and non-interest revenue

Nyika Solar Technologies Limited, a new local player in renewable energy industry is looking for an investment partner to take up 30 percent equity shares from a US$500,000 investment into its proposed affordable solar water heaters manufacturing project.

Nyika Solar Technologies C.E.O Rev David E. Gondwe says the project is geared to promote local industrial production, increase renewable energy production and save investments in electrical power generation while reducing deforestation.

He says the company’s operations will be undertaken through its Lilongwe ofice, with sales and installation centers in Malawi, Zambia, and South Africa.

Gondwe revealed that Nyika Solar Technologies has so far already spent over US$175,000 in the technology sourcing and research for the past three years while US$20,000 has been spent during the past 1.5 years on development costs.

Meanwhile an environmental impact assessment was conducted and a certificate of approval was granted by the Environment department.

According to the CEO, the new capital expenditure of US$500,000 is required to send technicians for training in the Caribbean and pay for technology supply agreement

He added that investors or the banks will have to service a 5–7-year working capital loan of US$1,060,000.

The production of heaters is expected to reduce electricity costs, increases people’s financial savings, a development which will significantly  improve their living standards

Gondwe expects that reduced power demand on the electricity networks will enable countries to supply power to the growing industrial areas of their economies, without having to invest further in new power generation capacity.

“We also eye to reduce the current practice of charcoal and firewood consumption across the Southern African region hence mitigate the negative effects of global warming that is emerging as a result of deforestation,” says Gondwe adding that the project will also be a catalyst of job creation

Gondwe believes that being centred in Lilongwe, Malawi;s capital city will boast its local and international outreach

With Malawi seeking to diversify from its overdependence on tobacco as the major economic crop, cassava has come into the limelight as Salima based National Cassava Processors Association (NCPA) has scaled up production of cassava-based industrial and energy products targeting both the local and international markets.

Through its processing factory, NCPA, which was established in 2011, produces a wide range of products including High Quality Cassava Flour (HQCF), Sauce, fire briquettes, and animal feeds, among others, from the tuber.

NCPA’s Marketing Representative Geoffrey Chikaonda said in an interview that the association is comprised of about 1,500 voluntary membership of local farmers and processors across the country.

Chikaonda said: “NCPA was established with support from Cassava: Adding Value for Africa (CAVA), which is coordinated by the Chemistry Department at Chancellor College and Food and Agriculture Organization (FAO).”

“The Association is owned and controlled by its members, cassava processors, who join on a voluntary basis with the objective of increasing income through the provision of value-adding services, and identifying and facilitating access to domestic and foreign markets for processed cassava products.”

NCPA also promotes structural changes at both a macro and micro level to create opportunities for processors to the wider benefit of Malawi’s cassava farmers.

The Association has managed to institutionalize its operations, establish internal operational structures including the executive, and facilitate the development of a draft strategic plan to guide its operations.

Chikaonda said: “This far, the Association also facilitated capacity building services to members with support from C:AVA, Food and Agriculture Association (FAO) and German Technical Cooperation (GIZ), which helped 17 processors to acquire machinery and 13 to initiate the process of procuring machinery.”

“We also coordinated networking and collaboration initiatives with stakeholders for provision of inputs such as clean cassava planting materials to farmers, and initiated the marketing of HQCF to MALDECO Fisheries.”

Chikaonda said NCPA envisions to be one of the major contributors to the Malawi economy through cassava value addition and processing.

NCPA conducted a market assessment which forecast potential growth in the medium and long term for its HQCF despite the current market for the product being narrow in the country.

The assessment estimated that the market could attain a six-fold increase from 40 MTs to 252 MTs of HQCF sold annually within the next few years.

“It was also found that there is significant unused processing capacity, so scaling up to meet this demand should be achievable. Currently, there are approximately 61 MTs of HQCF being produced annually, against a capacity of 869 MTs (representing a capacity utilization of 7%). This means that some NCPA processors, if properly supported, could increase production to meet the demand,” he said.

Chikaonda, however, lamented inadequate capital to capacitate processors to maintain and purchase the much needed machinery.

He said the association, therefore, intends to coordinate efforts with development partners, research institutions and supply chain stakeholders to ensure that members have access to affordable and up-to-date inputs and machinery.

“It is important for processors to have affordable and functioning inputs and technology in order to meet market demand and compete with international enterprises, therefore NCPA will provide support throughout the input purchasing process including communication, negotiations and potentially funding.

Local firm, the Foundation for Irrigation and Sustainable Development (FISD), says is implementing a new business model dubbed “Irrigation water supply initiative” which will involve selling of water for irrigation to farmers through advanced irrigation infrastructure.

FISD Marketing and Communications Manager Wezzie Benson Chiumia told Mining and Trade Review that FISD rolled up the programme to complement government’s efforts in promoting agriculture industrialization through supply of more efficient technologies to spearhead productivity in the sector.

Chiumia observed that there are many irrigation schemes that are farmer managed in Malawi and some are not in operating state due to both minor and major faults hence FISD intends to resuscitate these schemes by investing in already existing and even new ones with solar powered irrigation facilities.

“The initiative is a pilot project being implemented under Kaombe Irrigation Scheme in Nkhotakota district, and it is a business model whereby our company will be providing irrigation infrastructure to farmers using our own resources and we will take control over the management of these structures,” he said.

Chiumia said: “Tentatively the project seeks to supply farmers with water for their irrigation needs at an affordable fee, thus K12,500 per 0.1 hectare per season.”

“We came up with this price upon a proper gloss margin analysis with types of crops farmers tend to cultivate, and has been structured to carry away burdens by the farmers of having to monitor irrigation operations as we will be conducting those for them.”

The pilot project has received partial financing from United Nations Development Programme (UNDP) and International Fund for Agricultural Development (IFAD) through the Malawi Innovation Challenge Fund (MICF)
In terms of project’s benchmarks, Chiumia disclosed that the company has managed to rehabilitate Kaombe Irrigation Scheme including installation of solar powered irrigation systems.

He said: “Specifically, we have managed to drill high yielding boreholes, installation of pumps and associated structures, and the rehabilitation of canals,”

“We mobilize farmers to work in the developed schemes through close collaboration with Water Users Association (WUA); as at first farmers are required to register with WUA before they are referred to a FISD technician responsible for the distribution of the water to paid-up farmers.”

FISD has also recently introduced floating irrigation pumps comprising of 24v DC floating pump and 275w solar module in its effort of promoting mechanization of agriculture practices by smallholder farmers.

Chiumia explained: “We have pumps for smallholder farmers which are mobile and flexible enough to ease mobility of farmers when commuting to and from their farmland, and they are effective as they have 275W solar module capacitating water flow of up to 11,500 litres per hour.”

“Times have changed with continued climate change so it is high time the country adopted irrigation farming on large scale to triple our agriculture earnings.”

The company has also a financing arm under FISD Finance for Agricultural Development which is registered with Reserve Bank of Malawi as a Micro Credit Agency providing loans for investments in Irrigated Agriculture.

FISD which started its operations in the country in 1985 is a revenue generating entity of the Foundation for Irrigation and Sustainable Development (FISD); a local NGO that was formed with an aim of spearheading Sustainable development and promoting the livelihood of the rural to complement Malawi Government’s efforts for the same.

FISD Ltd specializes in design and implementation of innovative irrigation, water supply engineering works, clean energy agribusiness and financing.

The Malawi Government is scouting for a strategic investor to construct the Beira-Nsanje oil pipeline based on the Build, Own, Operate and Transfer (BOOT) arrangement.

Spokesperson for the Ministry of Energy Upile Kamoto explained that Government is failing to execute the proposed multi-million kwacha project, which has been on the cards for a long time, due to lack of funds.

Once completed the project is envisioned to aid in reducing landing costs of fuel into the country, apart from securing adequate fuel supplies.

Kamoto said; “The project is still on the cards. It seeks to construct a petroleum fuels transportation pipeline either from Beira to Nsanje or from Beira to Blantyre. Due to limited government finances, the preference is to engage a private company on Build Own Operate and Transfer (BOOT) arrangement.”

“The project is envisaged to improve cost, safety and reliability of transportation of petroleum fuels and hence improve on fuel security in Malawi.”

She said currently the project is at a stage where the government is looking for funds to conduct feasibility studies including possibilities of securing an investor who will do all the feasibility studies and develop the project under BOOT arrangement.

Kamoto, however, said there are no tangible timelines for the project due to unavailability of funds
“Since there are no funds yet for feasibility studies and its development, no tangible timelines are there yet for the project and the project cost will only be arrived at when the full feasibility study has been carried out,” she said.

Currently, National Oil Company of Malawi (NOCMA) has the capacity to keep 60 days of fuel for the country in its reserves with plans underway to increase to possibly 180 days.

Malawi hauls fuel imports from the ports of Nacala and Beira in Mozammbique and Dar es Salaam in Tanzania mainly through road transport.

Meanwhile, NOCMA is working on increasing fuel imports through rail, which is a cheaper means of transport compared to road haulage.

One of the local insurance firms in the country, General Alliance Insurance Limited says it is committed to work with different stakeholders in conserving environment through afforestation.

The company’s head of corporate affairs, Pamela Mazengela made the remarks during a tree planting exercise in Michiru Forest.

The campaign sponsored by General Alliance Insurance Limited, with 2,000 tree seedlings is promoted by Sustain Green Campaign.

According to Mazengela the 2,000 seedlings are an initial contribution for this year’s tree planting season. Other contributions are expected to be made to various stakeholders across the country.

She said; “We donated trees to sustain a green Malawi as part of our corporate social responsibility and giving back to the environment having realized the impact of carbon emissions from the vehicles we insurer has on the environment.”

“This is just a preamble as we plan to plant trees in Blantyre, Lilongwe Mzuzu and Zomba.”

In her remarks, Idah Mbalume who is a plantation manager at Michiru forest commended General Alliance for the gesture saying that it has complimented their efforts in restoring vegetative cover of the forest which has encountered several setbacks in previous years.

Mbalume said; “It is imperative that corporate entities like General Alliance are coming our way with these tree planting exercises which is very welcoming, as it helps us to save on labour costs since we have limited capacity to recruit more labourers to work on this forest.”

“As Michiru forest we intend to plant at least 20 thousand tree seedlings during this year’s tree planting season, and I would therefore urge other companies to emulate the good gesture portrayed by this insurance firm in giving back to environment.”

The Sustain Green Campaign which runs under hashtag #Plant4TheFuture initiative,  is comprised of 22 young people who found synergy on creating solutions for reforestation and their goal is to plant 1million trees across Malawi in areas highly affected with deforestation as well as creating awareness in primary schools by involving students to plant trees at the campus and in their homes.

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.