Wednesday, April 29, 2009

Uncertainty over 2009 cotton prices

By Richard Chirombo
There is uncertainty over this year’s cotton prices, a development that threatens to kill the euphoria created over reports of improving production figures after decades of a downward spiral.
President Bingu wa Mutharika two weeks ago announbced new cotton prices, but ginners claim he did not consult them and would, therefore, not take heed of the new prices since their side was not heard in the price fixing process.
Cotton production and area coverage has been peaking up over the past two decades, though not fast enough to beat records set in the late 1070’s when good policies and prices combined to motivate Malawian farmers.
Industry and Trade Minister Henry Mussa announced last week that the country had touched the 77, 000 metric tones ceiling in cotton production in 2008, up from 62, 233 in 2008. In actual fact, the figure for 2008 was 76, 761 metric tones, pointing to improving prospects still.
This has created excitement among cotton farmers who think the changing fortunes could be replicated with attractive prices on the market. Last year’s prices averaged between K40 per kilogram to K60, while most farmers speculate that this year’s prices could start from the K60 per kilogram mark.
This was indicated in interviews with members of Malimidwe Aphindu Cotton Farmers Club from the area of Traditional Authority Karonga in Salima, who said last Saturday they were up beat that things would to pick up from last year’s ground prices.
Chairperson for the group, Fineas Chilipa Phiri said, however, they wanted government to come out in the open on this year’s prices so that they could have to strategise over marketing opportunities.
“We would expect the Ministry of Agriculture and Food Security to come out in the open over what they have planned for us (cotton farmers) this season, in terms of prices. If government can not fix prices for cotton, as is the case with tobacco, at least they should give us some indication on what we should expect on the market. This helps us to plan properly on issues like transport, so that we do not incur more costs than we can realize at the market,” said Chilipa Phiri.
However, he will have to wait a little longer for any such move following delays by the Ministry of Agriculture and Food Security to meet the country’s major cotton buyers or ginners. The two parties have often met before the opening of the cotton market to strategise on prices as well as review such issues as that year’s production, though the long-awaited for meeting is long coming this year.
Through the cotton ginners representative body, Cotton Development Association of Malawi- which has such members as Iponga Cotton, Great Lakes Company, Nadhi Cotton, Toleza, Malawi Cotton Company and Cargill- the cotton buyers are able to liaise with the ministry on various crucial issues pertaining to the crop many tout as the possible replacement to tobacco.
The ginners, have, however been kept in suspense over the actual dates for the meeting, a development that threatens market prospects for the crop, apart from frustrating hopeful farmers.
Principal Secretary for Agriculture and Food Security, Andrew Daudi, kept a tight lid on the specific date for the much-awaited meeting, only saying “it will be organized very soon”.
Daudi could not be drawn to mention the specific date, as time was fast running out for most farmers to plan, maintaining it would be held very soon.
“We will meet them (the ginners) very soon; there is no need to worry over that. Tell them the meeting is on very soon,” said Daudi.
Malawi seems to be reeling up from a myriad of threats that include very low productivity, declining quality, low ginnery capacity utilization and uncoordinated synthetic fabrics, according to Mussa and Daudi, who saw good prospects for improvements in production and area- now that government had put in place a specific project aimed at resuscitating the sector.
Adverse state interventions in the market and unattractive market prices are said to have brought the industry tumbling down.
“We will rise up from this situation and become a star performer again,” said Mussa.

Seasonality, inadequate raw materials affect prospects for tinned fruit exports

By Richard Chirombo
Malawi is missing out on existing foreign market opportunities for fruit exports due to glaring inadequacies in raw materials supply, high costs of production and lack of rebates to encourage exports and improve competitiveness among Malawian suppliers, challenges Dairibord Malawi Limited, one of the country’s leading fresh and dairy products manufacturers, says have forced it to refuse large export orders.
Seasonality of most Malawian fresh products, such as tomatoes, jam, and pineapples is one the biggest challenges facing the tinned products industry, and is said to be one the driving factors behind government’s adoption of the One Village One Product (Ovop) concept from Japan as it strives to empower farmers in advanced fruit preservation technologies.
Dairibord Malawi Managing Director, Theodora Nyamandi, said through a written response to a questionnaire the country had the potential to turn fruit products into one of leading export products to supplement other established foreign exchange earners such as tobacco, tea, cashew nuts (where Malawi has established herself to be one of the leading exporters.
Nyamandi said the supply side inadequacies, lack of rebates and long term concessions for farmers wishing to venture into long term fruit tree cultivation had translated into a relatively small domestic market thus increasing costs of production due to low economies of scale.
“ (However) some products such as jams and tomato products have done very well (that) Mulanje Peak Foods – a subsidiary of Dairibord- Mixed Fruit Jam and Tomato Puree have attained leadership status in their domestic market segments although their market share is still below 50 per cent,” said Nyamandi.
According to Nyamandi, efforts aimed at drumming up the support of local consumers were hampered by high unit costs of production leading to uncompetitive pricing of products, a development that meant most products being perched beyond the buying power of most consumers.
Drastic improvements in the raw material supply chain were needed to enable production of large consignments of canned products, she said, adding this was be the prerequisite towards meeting the huge foreign orders of local products. Currently, Dairibord was eying the regional export market in a bid to widen its market base.
Despite all this, we have managed to “improve livelihoods for more than 300 farmers who supply fruit and vegetables, implying that employment for at least 1000 people was created at farm level with prospects for growth. We have also created down stream employment for sellers and marketers of finished goods, while creating markets for package manufacturers. Advertisers, telecommunications”.
The company currently exports tinned foods to Mozambique and Zimbabwe earning the country the much needed foreign exchange, but Nyamandi said the country could exploit more opportunities for exports if there were more deliberate policies on part of policy makers to create long term financing to suppliers at concessionary rates for agricultural projects with more gestation periods.
She said, for instance, that growing some fruit trees could take as long as 3 to 5 years before harvesting of the first fruits, processes that act as disincentives to farmers wishing to invest in cultivating long maturing fruit trees like mangoes and oranges, let alone produce the adequate volumes required to satisfy market demand.
To come around this problem, the company was working hand in hand with government in offering technical and financial assistance to enable farmers increase productivity.
“We have the potential to do better at the international market and help raise employment prospects and the economic status of our people,” she said.
Industry and Trade Minister, Henry Mussa, said government was committed to help local industries come over supply side challenges in a bid to raise the country’s export profile.
Mussa said his ministry would continue to engage industry players on how to improve the playing ground and attract increased supply side investment, saying that was the only way the country could diversify its range of export products.

Unfair procurement requirements leave SMEs behind


MALAWI’S attainment of foreign debt cancellation three years ago may take long to yield the desired trickle-down effect, in the long run, in the absence of clear pro-Small and Medium scale Enterprises (SMEs) Procurement policies, business analysts and captains warned this week.

Also at the mercy of foreign devices, is the country’s overall economic – policy agenda to turn Malawi into a pre-dominantly producing and exporting economy, from a background of predominant imports and consumption, as foreign investors would easily squeeze weak domestic enterprises out of the market due to glaring inefficiencies and lack of competitive capacity.

They argue that since SMEs are widely touted for being key turbines behind the economic turn – around of great economies, the country cannot embrace meaningful development without initiating favourable strategies aimed at developing the sector.

“(External) debt relief remains one of the best milestones accomplished by Malawi, and Malawians stand to benefit a lot because instead of paying loans, the funds will be channeled towards development initiatives, especially in rural areas. But you may appreciate that our culture values the concept of extended families where people – most of whom (some 86 percent according to the National Statistical Office) live in rural areas – send money of farm inputs such as fertilizer to the village.

“It is also a fact that many of these bread – winners engage in business of some sort, be it small or medium scale, and if these people do not earn enough profits because of procurement policies that subject small and large firms to similar conditions, it means there will be no trickle – down effect, in the end those who depend on them will end up vandalizing development infrastructure to earn quick money, and it is national development that suffers” said Mike Mlombwa Indigenous Business people Association of Malawi(Ibam) interim president.

Malawi had a land-mark year in 2006 when, in August, the International Monetary Fund (IMF) and World Bank boards agreed that the country had reached the Highly Indebted Poor Countries (HIPC) completion point, resulting in the write-off of US$3 billion of the country’s debt. This translates into annual savings of US$100 million in debt service costs.

The gesture was replicated immediately by the Parish Club, a grouping of creditors – agreeing to reduce the amount of debt owned to them from US$363 million to US$9 million mainly as a result of purported government commitment to fiscal discipline and good macro-economic policies.

What remains, however, is for the benefits of such cancellation to start trickling down and possibly, change the economic fortunes of the country, especially for the 65 percent who live below the poverty line (one dollar thresh-hold a day).

Mlombwa, whose organization aims to economically empower Malawian entrepreneurs, most of whom fall within the small and medium scale sector, says there is need to modify requirements for the bid – bonds and procurement documents so that small scale entrepreneurs pay half or quarter the requirements expected of larger firms and companies which, he hopes, will help level the playing field and leave SMEs as competitive.

According to the local business magnet “it is unfair to pit small traders against big entities under the same monetary requirements” as it works against ideals of local empowerment, adding that it is also goes against Ibam objectives as such policies frustrate the participation of indigenous Malawians in social economic development of the country; discourages them from owning viable business that would equally complete with those of foreign investors’ marginalize indigenous people in accessing business opportunities; as well as depriving most people of the opportunity to earn honest income.

In addition this state of affairs has thus far hindered Malawians from forming joint venture partnerships with foreign investors wishing to invest within the country as they nurse a hung over of capacity deficiencies and nurture deflated entrepreneurship egos.

The case of Thomas Munthali, who runs KGA Enterprises in Blantyre-Malawi’s commercial city – may be a good point. When Munthali, 42, set out to start his business in February 1993, leaving behind more than 50 relatives still living below the dollar-a day thresh-hold, he hoped he was sharing in the first steps to bail his kinsmen out of the poverty trap.

But fourteen years down the line, quantity of the contents in the small room that is his business hall have almost always remained unchanged, albeit for the room becoming dingy and drab. Of course he sells and replaces replenished products, but the stationery and paper work business simply doesn’t grow.

“That is where the problem is. The cost of living has gone up and there are people I look after, all from this same business. Of course there are tenders flighted in the newspapers but small traders like me do not apply because most procurement charges are far too expensive for us.K5000 to my business is quite a lamp sum of money almost a whole lot of profit. How if I buy six bidding document at K3000? That is K18000. I cant risk it in a process I am not sure to win,” Said Munthali, who plies his trade behind Blantyre Post Office.

He pleads for an end to the chilly attitude portrayed by policy makers towards small scale entrepreneurs, arguing that if the playing field separated small firms from the large, he would willingly take part without any quarms, as was the case last year.

“When the Malawi Polytechnic ( a constituent college of the University of Malawi) requested tenders for the supply of stationery materials last year and the bidding documents were pegged at a reasonable cost of K1000, I expressed interest and was picked among the ten, or so, successful bidders. Other than that, many others are expensive and would force my business to go bust.

“After all, why should one government department peg such documents at K5000 another at K3000 and yet another (department) at K1000? What criteria do they use to come up with such charges?” queries Munthali who is at pains to understand why small and medium scale entrepreneurs are made to pay K1000 for them to be gazetted as qualified suppliers of various products and materials to government in the first place, only to be bombarded with restrictive procurement charges later.

He added; “I don’t understand how they arrive at their decisions. If your products are a bit on the higher side they do not pick you saying its too expensive. When you decrease the price, they don’t pick you, they say you do not qualify, you cannot meet supply. They charge K5000 for the documents yet photocopying process (of binding documents) does not even surpass K300. In what government account does the money realized go?”

So, unless the myriad of challenges faced by SMEs in Malawi, mainly attributable to fundamentally misplaced policy and strategy emphasis are rounded up, the country’s economy may lose out on high employment-generation created by the sectors labour-intensive nature and a meaningful push on Gross Domestic Product(GDP) - major advantages associated with SMEs the world over, according to analysts.

Despite there being no comprehensive study on the number of SMEs in Malawi, observers estimate them to be between the ranges of 97 to 99 percent calculated around the percentage number of SMEs within the European economy (99 percent).

The challenges of prohibitive procurement charges and bid-bonds aside, the SMEs sector is also plagued by lack of money – borrowing opportunities by lending institutions as they are considered high-risk borrowers. This comes against the background of most business climate and enterprise papers and surveys supporting the need for deliberate policies in favour of the sector due to their employment generation trickle-down effect, key in the reduction of poverty – a top agenda within the Malawi Growth and Development Strategy (MGDS) and the Millennium Development Goals (MDGS).

For instance, a policy discussion paper, “Small Scale Enterprise and Sustainable Development – key issues and policy opportunities to improve impact,” published with support from the Swiss Development Corporation, International Institute of Environment and Development (LIED), and the UK Government is Department for International Development (DFID) calls for policy interventions in favour of SMEs if long-term sustainable development is to be attained.

It argues that the sector often has a numerical significance and reaches into the poorest communities that large scale enterprises lack; irrespective of any other advantages that they might have, market failures disproportionately (inequitably) affect SMEs; and that , lastly, the economic, social and environmental advantages intristic to some types of SME in certain particular contexts warrant deliberate and appropriate support.

The paper further points to three pragmatic areas that are billed to produce significant impact, top of which is the setting-up and implementation of SME- tailored procurement policies, added on to good incentive and competition practices. The other two areas are the adoption of ownership and association partnerships that secure greatest economic, social and environmental benefits, and processes of standard – setting and labeling and constructive consumer engagement that enhance the benefits of the sector.

The concerns about restrictive procurement policies come quick in the wake of a Euro 30 million (about MK5.7 billion) line of credit approved by the European Investment Bank (EIB) for the benefit of SMEs in Malawi, and will be administered through three yet-to-be-named commercial banks.

Reacting to the concerns in a separate interview Office of Director of Public Procurement (ODPP) Public Relations Officer, Mac Pherson Mdalla, acknowledged having received complaints on the same, but insists the charges are meant to cover the administrative costs incurred in the course of production. The charges, according to Mdalla, fall within the context of the Public Procurement Act and should be followed to the letter, so long as they are not profit – oriented, reasonable and understandable.

“Yes, we have received complaints in the recent past, and we explain clearly that the charges are not for profit, but to be used towards production of bidding documents,” said Mdala.

He said technical documents especially attracted a fairly higher cost – attachment as a lot more goes into the course of their preparation and production. Such documents call for through preparation and vigorous arrangements, sometimes resulting into the production of a whole booklet, according to the ODPP Spokesperson.

However, to make sure that the positive effects of debt relief still trickled down to the poor through SMEs, Mlombwa disclosed that Ibam is in the process of organizing a meeting between Malawian business people and ODPP to iron out issues that mill small entrepreneurs out of competitive business.

This, according to the Ibam president, is because his lobby group has, too, been inundated with complaints from small scale traders. Mlombwa however dispelled out the notion that only small entrepreneurs and “not most of the big people in Ibam” bear the brunt of the unfair procurement charges, as they too had problems hence need for consolidated efforts.

50-50 gender campaign monitoring, evaluation starts in two weeks’ time

By Richard Chirombo
The Ministry of Women and Child Development, in collaboration with Civil Society Organizations that were taking part in a project aimed at ensuring that, at least, half of parliamentary sits after the May 19, 2009 elections are amassed by women (50-50 campaign), have announced that monitoring and evaluation (M and e) of the campaign process commences in two weeks’ time.
The campaign was initiated following perceived continued suppression on Malawian women, especially leadership positions that could influence over-all national development programmes. The Malawian woman is said to be disadvantaged by traditional, cultural stereotyping, poverty and high levels of illiteracy, challenges that have cast women to the far end of most national processes despite their constituting over half of the country’s population (52 per cent).
Linley Kamtengeni, the Ministry’s expert on Women, Girls, HIV and AIDS, said in an exclusive interview in Blantyre M and E was crucial to successful implementation of future women empowerment projects- a requisite process if Malawi was to meet Southern African Development Community and other international protocols on gender and female empowerment.
She defended the idea to sponsor only women when gender encompassed both the sexes (male and female), saying while both men and women faced a fair share of challenges, it were the women who were more disadvantaged hence the campaign to help them attain positions of influence in society.
“We can say so far, so good. We have seen most women coming out of their cocoons to challenge men for political positions, but we can not fairly say how deep we have gone in up-rooting misconceptions about women without monitoring and evaluation. That is why we are starting the process in two weeks’ time,” said Kamtengeni.
The Non-Governmental Organizations Gender Support Network (NGO-GCN), a network of Malawian civil society organizations that was coordinating the campaign, confirmed the development. NGO-GCN’s Coordinator, Eunice Chamgomo, said the process, to start in two weeks time, would help implementers of the 50-50 campaign to plan forward because campaigning for women empowerment was an on-going process.
Chamgomo said, while the process could not be of immediate benefits to women contesting in the May 19, 2009 parliamentary and presidential elections (due to the time factor to the polls), it could help Malawians gauge where they could have done better and where they did better.
“This is a very importance process for us. We are committed to women empowerment, especially in electoral processes, that we are leaving no stone unturned. We want to help our women to stand up for their rights and be counted,” said Chamgomo.

Electoral body urges no panic over electoral calendar

By Richard Chirombo
The Electoral Commission (EC) has dispelled fears Malawi could miss out on the May 19, 2009 Parliamentary and Presidential elections date in the wake of delays to finish the Voters’ Roll verification process in good time.
The Voters’ Roll verification process is yet to be finalized, a development that has prompted the EC to cast its net wide in search of personnel, culminating into advertisement messages for prospective workers to come forth. It is intimated that the process could take five days, with prospects for extension.
EC Spokesperson, Fegus Lipenga, said the development should not scare voters, as everything was still under control.
“Nothing has changed, in terms of the dates for the elections. In fact, that is what we are working towards in all our efforts and preparation. We strongly believe that we will finish the verification process in good time,” said Lipenga.
Lipenga said everything was going according to plan, though developments enveloping the issue of voters’ verification could not have been foreseen. All the same, there was no need to press the panic baton, he said.
Some political parties have expressed concern over delays to finish off with the verification process, saying that could affect timing of the elections.

Friday, April 24, 2009

The future in a box: May 19, 2009

Come shake the future's back,
Lying idly in a poorly ventilated box,
Your stroke,
The vote is a stroke,
Awakening the powers through the ballot,
On May 19, 2009 as you go to vote.

In the little speechless box,
What? They call it ballot box
You may, again, stroke the future awake
So that again,
The future for five years may again be born.

The next light,
Let's put it two dark nights,
Another future is born
The Third Republic,
Stroked alive by Malawians,
Eager, strong- to shake the living ballot box.

See you again my friend,
When again the ballot we stroke.
A soft paper that is,
The voters' certificate,
To stroke the future again awake.
Five whole years; the future that couldn't be awake.