Mining & Trade News

It could be solar or coal. But water as a source of power must not be ignored. At least that is what might take for the African region to achieve energy efficiency, according to experts at a recent African Hydro Symposium which took place in Blantyre, the 29th of its kind in the region.

Scores of delegates from well over 14 countries gathered in the Warm Heart of Africa to share the future of power generation in the region.

The timing and the hosting nation could not be more convenient. Malawi has one of the lowest electrification rates in the region. Statistics indicate that only about 11% of the people in the country with a population of over 17-million are connected to the country’s main grid.

And the effects of the current climatic conditions on the generation of power in the region should not be ignored, according to the experts who took part in the three-day conference.

“In Southern Africa where rainfall patterns have changed, we need to call for innovation from partners on sustainable ways of generating power. We need turbines that use less water,” said William Liabunya, CEO for Electricity Generation Company of Malawi (Egenco).

Liabunya cited Malawi and Zimbabwe which are facing electricity challenges mostly due to decreased water levels in Lakes and rivers as the major victims of the effects of climate change on power generation.

But climate change is only one of the challenges affecting power generation in the region. Lack of adequate investment by private companies is another contributor to inadequate power generation.

Why companies?

EGENCO, the first parastatal to play the role of a power generator in the country has been in operation for just only two years. One of its maiden projects has been to increase the energy capacity of Nkula A. So far, the rehabilitation of the power plant has seen a boast of 10 megawatts. Other projects are in the offing.

During the conference, Secretary for Ministry of Natural Resources, Energy and Mining, Patrick Matanda highlighted EGENCO’s 15-year strategic plan aimed at improving power access in the country.

Matanda said there is need to increase power supply in the country as this will ultimately increase economic opportunities.

“Clinics will open, students will study well in the villages, businesses will be kept open and this will ultimately attract investors,” he said.

Liabunya said private companies need to join the bandwagon through investment in power generation as Independent Power Producers (IPPs) to supply the national grid, and supplement power generated by EGENCO in order for Malawi to overcome the energy deficit.

The conference attracted four European countries including United Kingdom, Croatia, German and Austria.

African countries represented included Namibia, Kenya, Democratic Republic of Congo, Mozambique, Cameroon and Kenya.

“When you look at our young history, it gives us pride to host this symposium,” said Liabunya, “Maybe out of the 14 countries in the region [present] we have the lowest reach and it is our responsibility to make the changes.”

Shayona Cement Corporation says it is committed to increase cement production to ensure that it employs more Malawians and provide more business opportunities to companies operating in Malawi in order to play a major role in Malawi’s economic growth.

Shayona MD Jitendara Patel said this at Tata Zambia Malawi Branch offices in Lilongwe when his Company received 24 Tata Trucks which it has procured for distribution of cement across the country.

“Shayona is a Malawian company. I, the founder, was born in Mulanje, and my vision is to see the Company growing to make Malawi self-reliant on cement production since importation of cement is a drain on the country’s foreign exchange,” he said.

Patel hailed the long time relationship between his Company and Tata, which he said, will continue to bear more fruits.

He said Shayona expects to procure more trucks from Tata as it continues with its expansion drive, which will see the company building infrastructure for a logistics department at Kanengo Industrial area in Lilongwe.

Head of Aftersales and Administration at Tata Zambia – Malawi Branch Karthik Rajagopolan thanked Shayona for maintaining the business relationship with his Company saying the advantage of buying from Tata, unlike other overseas dealers, is that its local presence makes it easier for a customer to access back up services.

A study by economic researchers has recommended to the Malawi Government to tread carefully when offering tax exemptions in line with regional trade pacts in order to check the bludgeoning trade deficit.

The Economic Researchers have also advised the government to address smuggling of foreign products into the country to address revenue losses and scale up Malawi’s benefits from trade liberalization in order to grow the economy.

The researchers from a Zimbabwean firm, Trade and Development Studies Centers, made these recommendations at Ryalls Hotel in Blantyre as part of the results of the study on the impacts of Malawi’s Bilateral and Regional Trade Agreements which was financed by the European Union (EU) under a Technical Assistance initiative aimed at supporting Malawi to benefit from Bilateral, Regional and Multilateral Trade Agreements.

A report on one out of five studies carried out by the firm titled “Impact assessment of full trade liberalisation for South Africa, Africa continental free trade area and the COMESA/EAC/SADC/Tripartite free trade area on revenue, industry and Malawi’s economy,” indicated that between 2009 and 2018, the country’s total trade revenue increased by 11% from US$3,209 million to US$3,587 million.

However, the report further stated that “total exports fell by 26% to US$ 880 million in 2018 while imports increased by 34% to US$ 2, 707 million over same period. “

“The trade deficit more than doubled from US$835 million in 2009 to US$1,827 million in 2018 thus putting pressure on Balance of Payment (BOP) position,” reads the report.

Director of Trade and Development Studies Centers Dr. Moses Tekere said there is need for Malawi to place high revenue sensitive products under the exclusion list of African Continental Free Trade Agreement (AfCFTA) which includes South Africa if Malawi is to register optimum results out of full trade liberalisation.

“The South Africa effect is critical in Malawi’s regional trade arrangements including the AfCFTA. Malawi should therefore harmonize its exclusion list under AfCFTA with the list of products currently attracting positive tariffs from South Africa to remain in the exclusion list,” he said.

He said there is also a need for legal and institutional capacity building of institutions implementing trade remedies to deal with instances of unfair competition from imports that threaten local industry.

Tekere also recommended that Malawi scales up support to Small and Medium Enterprises (SMEs) and business institutions on export market readiness.

Principal Secretary in the Ministry of Industry, Trade and Tourism Dr. Ken Ndala commented that Malawi’s trade policy aims at creating an open economy with relatively low tariffs and free from non-tariff barriers therefore participation in the trade agreements reflect Malawi’s commitment in promoting more open and liberal trade as a key component of its development agenda.

Ndala said:  ” Malawi’s market ultimately relies on accessing other countries’ markets and attracting investments from other countries. Therefore, as a country, we strongly support initiatives towards trade and investment development and promotion as a vehicle to create incomes, jobs and prosperity.”

However, Ndala said the ministry has noted that there is low capacity and uptake for private sector to market access opportunities arising from trade agreements and great reluctance to support trade liberalization and regional trade negotiations for fear of losing domestic markets.

He said: “The way forward is for firms to embrace the reality and we hold hands in focusing and repositioning towards expanding to other markets. This is more the reason we undertake trade negotiations to facilitate exports while also safeguarding our nascent and strategic industries.”

“We continue to implore upon the private sector to be supportive of these negotiation processes.”

Malawi is among the five countries that are yet to initialize interim Economic Partnership Agreements (EPA) negotiations in the Eastern and Southern Africa (ESA) region and is also one of the countries that have signed but not ratified the Tripartite Free Trade Area and the Africa Continental Free Trade Area.

Malawi is planning to scale up investment in aquaculture so that the country is able to meet fish demand for the local market and start exporting processed fish.

Speaking during the launch of the Aquaculture Round Table in Lilongwe, Director of Small and Medium Enterprises (SMEs) and Coordinator of Cooperatives in the Ministry of Industry, Trade and Tourism Wiskes Mkombezi explained that the government will work with different stakeholders to commercialize fish farming.

Mkombezi said it is shameful that the nation is importing fresh and canned fish regardless of the famous fish species that Lake Malawi has.

He said: “We do not have to be importing fish, but instead through aquaculture, we should be producing enough for local consumption and export.”

“It is sad to see foreign fish species like Kalapao from Mozambique flooding our markets despite us having enormous potential to develop our fish farming industry.”

He said it is high time Malawi developed its fish processing and export industry, which will create more employment opportunities and contribute to growth of the national economy.

Mkombezi urged fish farmers to take aquaculture seriously to increase local production and help in import substitution.

He said growth in aquaculture will also help in attracting tourists, as most visitors are always eager to taste the famous chambo delicacy.

Director of Fisheries in the Ministry of Agriculture, Irrigation and Water Development Friday Njaya commented that it is possible for Malawi to produce enough fish for the local and export market as the country has huge potential to develop aquaculture.

“As a nation, we have plenty of unexploited markets in countries like South Africa, Tanzania and Zimbabwe,” he said.

German Technical Cooperation (GIZ) Standing in Country Director Kornelius Schiffer hailed the launch of the round table saying it will assist in eradicating malnutrition cases as fish remains one of the major sources of animal protein.

Schiffer promised continued support to sustainably achieve the vision and the mission of the round table.

He pleaded with the Government to put in efforts to develop aquaculture“on the ground and not only on paper.”

The aquaculture round table is a collaboration of the Ministry of Industry, Trade and Tourism, Ministry of Agriculture, Irrigation and Water Development and GIZ.

Malawi fisheries sector contributes an estimated four percent to Gross Domestic Product(GDP)catering for livelihoods of some 1.6 million people including those living exclusively on the catch, processing and trade of wild fish stocks mainly from Lake Malawi.

In Malawi, fish plays an important role in food security as it caters for over 40% of the total national protein requirement.

The annual fish production increased from about 144-thousand tons in 2015 to 157-thousand tons in 2016, representing 8.98% increase of which aquaculture production was over 7-thousand tons.

The European Union (EU) says Malawi needs to invest more in the transport sector if the country is to realise advancements in economic transformation.

Head of EU Delegation to Malawi, Sandra Passen, said poor road conditions pose a serious threat to international trade, local business development and Malawi’s overall economic growth.

The Ambassador was speaking at a signing ceremony of a K34 billion Loan Agreement between the European Investment Bank (EIB) and Malawi Government for the M1 Road Rehabilitation Project.

The road project, starting from Kamuzu International Airport junction in Lilongwe to Mzimba Turn Off targets rehabilitation of 301km of priority sections of the road identified as having the highest impact in facilitating trade, eliminating bottlenecks, and reducing road fatalities.

It will serve to enhance Malawi’s connectivity, boost regional trade and ease the movement of goods and people along the North-South Corridor.

Passen said ” EU is contributing K 34 billion from our African Investment Platform (AIP), which will be managed by the European Investment Bank (EIB) through a so called blending operation whereby EU grant funds are blended with loans from financial institutions. The project is also complemented by the rehabilitation work under the World Bank loan.”

She, however, said there is need for Malawi to embrace “a robust financial and operational policy to build long-term sustainability with efficiently managed revenues and timely preventative maintenance in the quest to achieve transport linkages.”

“Private sector investment in the sector is important and we need to broaden economic participation in transport services and improve competition,” she said.

The M1 road is an important transport link for the agriculture sector and its rehabilitation will support the market for agricultural produce.

The M1 Road Rehabilitation Project is one of three projects under the European Union’s flagship initiative for Africa, the External Investment Plan (EIP), as other projects are the Mozambique-Malawi 400 kV Interconnector being implemented by German Development Bank (KfW) and the planned rehabilitation of the Nsipe-Liwonde Road, which is part of the East-West Corridor, to be implemented by the African Development Bank (AfDB).

Currently, Malawi will have the first ever interchange- that will replace the area 18 roundabout in Lilongwe as government is constructing a dual carriage way stretching from Parliament roundabout to Bingu National Stadium round about.

Statistics indicates that Malawi has a road network of about 15,451 km, according to the Malawi Roads Authority 2016 coverage, of which only 30 percent are paved and the rest are unpaved and mostly in earth standard.

The Malawi Government is preparing to construct irrigation canals in the Lower Shire Valley Districts of Chikwawa and Nsanje.
The Ministry of Agriculture, Irrigation and Water Development says in a statement that the canals will be constructed as part of the Shire Valley Transformation Programme (SVTP) which it is implementing with financial support from the World Bank, African Development Bank and Global Environment Facility (GEf).
The Ministry says the Programme will develop 43, 370 hectares of the land for large scale irrigation in the two districts.
“As part of the SVTP, irrigation canals will be constructed to enable the conveyance of irrigation water from Kapichira Dam on the Shire River to targeted farming areas within the two districts,” says the Ministry.
As the construction of the irrigation canals will affect people’s land and property, the government is currently sorting out compensation issues to pave way for the civil works.
Though an agro-based economy, Malawi’s agricultural sector is dominated by smallholder farmers who mainly grow crops at a subsistence level.
Overreliance on rain-fed agriculture has resulted in perennial food shortages in the country due to climate change related causes such as drought and floods.
The government is, therefore, implementing SVTP to promote irrigated commercial farming and ensure food security for the nation, whose population stands at 17-million.

Construction works for the long awaited Mozambique – Malawi power interconnector are now ready to commence following the signing of the Implementation Agreement for a EUR 20-million grant that the European Union (EU) will provide for the project through German Development Bank (KfW).

Electricity Supply Corporation of Malawi (ESCOM) CEO Allexon Chiwaya penned the Agreement with officials of KfW.

“The signing of the agreement is an important milestone as it paves way for commencement of project implementation,” says Escom, EU, German Technical Cooperation (GIZ) and KFW in a joint statement.

Besides the EU support, the World Bank has earmarked US$ 15-million while the German Government through the KfW is contributing EUR 30-million to Mozambique’s power utility, EDM, for the construction works on the Mozambique side.

Through the 218 km long 400 kV transmission line, Malawi will start importing electricity from Mozambique and other Southern Africa Power Pool (SAPP) countries from 2023.

The statement reads: “The interconnector will see Malawi connecting to the SAPP for the first time since the nation became a member of SAPP in 1995 and expects the country to effectively upgrade its position from an observer to a fully operational member of SAPP.”

“The development will benefit the country as more clean energy will be supplied once the transmission line is functional.”

“The Increase and stabilization of power supply will significantly improve the access to clean energy for the private sector and consequently contribute towards sustainable economic growth.”

“Importantly, this clean energy will aid mitigation of climate change. As households will be supplied with adequate and reliable electricity each day, consumption of firewood and charcoal will be reduced.”

EU Ambassador to Malawi Sandra Paesen; German Ambassador to Malawi Juergen Borsch; and Senior Government of Malawi officials from both Ministry of Finance, Economic Planning and Development and; Ministry of Natural Resources, Energy and Mining witnessed the signing ceremony of the Agreement.

The Ambassadors bemoaned Government’s delays in the finalization of agreements with Independent Power Producers (IPPs) saying increased power availability and successful private investment in the energy sector attracts further investments in other sectors of the economy.

On the Malawi side, the interconnector will start at the 400 kV Phombeya substation in Balaka district and will traverse into Mozambique to connect to a new 400 kV Matambo substation in Tete province, in Mozambique.

The Consumers Association of Malawi (CAMA) has pleaded with the Business community to refrain from hiking prices of essential commodities and services in response to the recent fuel price hike.

Malawi Energy Regulatory Authority (MERA) announced new fuel prices last week, and petrol is now selling at K930 per litre from K868, representing a 7.14% increase while the price of diesel has increased with 5.72% as a litre now costs K924 from K874, while MERA maintained the price of Paraffin at K710 per litre.

MERA stated that it resolved to adjust the prices upon assessing recent trends in the world petroleum products prices and changes in other macroeconomic fundamentals in the local market and their impact on energy prices.

Among other factors MERA said “the average prices of Petrol, Diesel and Paraffin increased by 16.12%, 11.55% and 6.05%, respectively, when compared to the averages obtained in the month of December 2018 used in determining the ruling pump prices, and the last In Bond Landed Cost (IBLC) review in January 2019, when pump prices were last revised.

It also said the Malawi Kwacha slightly depreciated by 0.30% to K742.01/USD from K739.78/USD.”

“The Board also considered liquidity of Price Stabilisation Fund (PSF). Since the last price revision in January 2019, MERA has been using the PSF to cushion importation losses as Free On Board (FOB) prices remained higher than the prices used in December 2018 due to geo-political factors and Organisation of Petroleum Countries (OPEC) member countries’ decision to reduce production in support of oil prices,” said MERA in the statement.

Commenting on the development, CAMA Executive Director John Kapito, says it is unfortunate that government has little control over the incident as MERA has made the decision to allow importers recover importation costs directly as the PSF can no longer contain the difference between demand and actual landed cost of petroleum products.

However, Kapito argued that the business community including bus operators should not use the price hike as a token to skyrocket prices of essential commodities and services as a lot of Malawians are in financial problems.

“At the moment we cannot deny what the market requires to be done, but our appeal as consumer body is for business operators to restrain from raising prices as the current amendment is very mean hence has very little impact on prices of social amenities.” Kapito says.

MERA maintained the retail price for Liquefied Petroleum Gas (LPG) at MK1,744.75 despite the landed cost of LPG increasing by 8.42% as it resolved to apply the Price Stabilization Fund to cushion anticipated importation losses.